As announced in the 2017 Federal Budget, legislative changes that target tax reduction strategies employed by private corporations have been proposed by the Department of Finance.
Kim Drever, the Peace Region’s Tax Leader with MNP says when it was first spun it was for “wealthy” Canadians who are using a company to pay less tax.
“That’s really not who it’s attacking. It’s actually going after every single business that you see in Grande Prairie, other than a public company, is essentially you could be at risk,” said Drever. “So, if you drive through the streets of Grande Prairie and through the industrial parks every single one of those businesses could be impacted and it the tax consequence could be really significant to families.”
Drever said it’s going to hurt capital gains and make it infinitely more difficult to pass a business down to a child, as well as going after rental income.
Potentially, these business owners could be taxed at the highest rates for both company and personal tax, resulting in these owners coming out with less money.
Drever also said the Department of Finance has given a 75-day window to get input from Canadians before the final version of the legislation comes out in the fall.
“I think that interested parties should definitely become familiar with what’s in here and how it’s going to impact their business and themselves and talk to their MP’s about it and also submit documents if they feel strongly about it to the Department of Finance,” said Drever.
The legislation will come into effect in January.
MNP’s full analysis of the Proposed Changes for the Private Corporations can be found on their website.