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Proposed Federal Tax Changes

Tax Planning

 

We’re sure that everybody has heard some discussion in the media regarding the tax changes the Federal Liberal Government is proposing. At this point we along with other tax advisors are suggesting that taxpayers take a “wait and hold” positon until we know definitively what is legislated.  It is worthy to mention that there are three areas they would like to change include:

  1. Income Sprinkling – If you have a small business corporation or family trust and you share income with your spouse or children you may be impacted by the proposal.
  2. Passive Income – If you have a corporation that holds investments and earns inactive income the proposed legislation will increase the amount of tax that you pay on your investment income in your corporation.
  3. Converting Income to Capital Gains – Many tax practitioners have developed strategies to convert income that would normally be taxed as salary or dividends into capital gains. The proposal looks to change legislation to prevent this from happening in the future.

Unfortunately the Liberal Government believes that they are targeting wealthy Canadians with the above proposals. The reality is that the proposed tax changes will impact many small business owners and will result in additional income taxes. If you think that you may be impacted by any of the above proposals, please contact Jeff, Monica or Dave so that we can discuss the impact on you as well as suggest future tax planning strategies.