18 Oct Further Updates on Proposed Changes to Corporate Tax Planning and Tax Reduction Strategies
(October 18, 2017) – Today, further details regarding some of the controversial proposed tax measures that were originally proposed on July 18, 2017 were released. The Federal Minister of Finance announced certain measures to be released in March as part of the 2018 Federal Budget. The measures relate to passive income being earned inside of a corporation and the government’s concern that personal tax is being deferred by retaining income within a corporation (which is generally subject to lower tax rates).
Below is a summary of today’s announcement:
- The changes will only apply on go-forward basis which is meant not to impact private corporations that already have passive income being earned inside a corporation;
- Relief will be provided by way of a minimum threshold of $50,000 of passive income per year to allow some passive investments to be held inside a private corporation ($1 million in savings based on a 5% return). There will be no tax increase on investment income earned below this threshold.
We will keep you aware of further changes as more information is released throughout the day and week.