Prime Minister Justin Trudeau, Finance Minister Bill Morneau and Small Business and Tourism Minister Bardish Chagger today announced that, as it has committed, the Government intends to lower the small business tax rate to 10 per cent, effective January 1, 2018, and to 9 per cent, effective January 1, 2019. To support this change, the Government will take steps to ensure that Canadian-controlled private corporation (CCPC) status is not used to reduce personal income tax obligations for high-income earners rather than supporting small businesses.
Based on what it heard from Canadians in a series of country-wide consultations on tax planning using private corporations, the Government will this week set out its approach to better target strategies used by the relatively small number of high-income individuals who get the biggest advantage from existing tax rules.
Ministers Chagger and Morneau today announced the Government's intention to simplify the proposal to limit the ability of owners of private corporations to lower their personal income taxes by sprinkling their income to family members who do not contribute to the business. The vast majority of private corporations will not be impacted by the proposed income sprinkling measures. Corporations with family members who meaningfully contribute to the business will not be impacted by the proposed measures on income sprinkling. In addition, the Government today announced it will not be moving forward with proposed measures to limit access to the Lifetime Capital Gains Exemption.
Since the launch of public consultations on July 18, Canadians engaged in an important discussion on proposed measures to address tax planning using private corporations. Through town halls and roundtables held from Vancouver to St. John's, Ministers and Members of Parliament heard and carefully considered the views and perspectives of small business owners, farmers, fishers, professionals and experts. In the coming days, the Government will announce further steps towards fairness for the middle class that will take into account this feedback.
About Ish Jindal CPA Professional Corporation in Scarborough, Ontario:
Our firm (since 2004) is dedicated to serve the business community with Accounting, Tax planning and Business Financing needs. Our goal is keep our clients and network partners in the loop with all the up to date tax developments and changes. Each month, we send out important newsletters regarding tax changes and other government decisions. You can contact Ish Jinda, CPA, CGA, CMA (USA) - the Director of Ish Jindal CPA Professional Corporation in Scarborough, Ontario at 416-414-3100.