On July 18, 2017, the Federal Department of Finance released their discussion paper with proposed measures on the use of private corporations for tax planning. Most of the proposals would be effective in 2018.
The proposed measures would mean significant changes to the following four areas:
- Income splitting with family members.
- Limiting multiplication of claims of the lifetime capital gains exemption.
- Converting a private corporation’s regular income into capital gains.
- Holding passive investments inside a private corporation.
Many of our clients would be significantly impacted by these changes.
The Department is inviting public comments until October 2, 2017. While it is early in the process, we want to assure you that we are actively engaged with DFK Canada, (our nationwide affiliate of member accounting firms), in developing responses aimed at protecting our small business clients from potentially damaging implications of the proposals as they are now written.
This is the first of what will be several messages to you on this topic. We will keep you informed as our response to the Department of Finance develops, and we will be working hard to ensure that both the Minister and his staff clearly understand the financial complexities of operating a successful small business and the benefits of keeping this vital component of our economy financially viable and vibrant.
Our team at Davis Martindale is currently studying the proposals which can be found here: http://www.fin.gc.ca/activty/consult/tppc-pfsp-eng.pdf.
We welcome your input! Please direct comments to this newly-created email address: firstname.lastname@example.org. As always, the partners and managers at Davis Martindale are here to discuss directly any concerns you might have.