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How Trudeau’s plan to target corporate passive investment got it so wrong

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 Both Prime Minister Justin Trudeau and Finance Minister Bill Morneau have stated that the government’s private-corporation tax proposals will not affect businesses earning less than $150,000 a year. But one of the coalitions opposing the changes says that two-thirds of Canadian small businesses earn less than $73,000 a year, and that the proposals will hurt the majority of these middle-class business owners. How to make sense of these different analyses?

The government’s package has three parts, one of which — and the most contentious — involves passive investments, such as mutual funds, held by Canadian-controlled private corporations (CCPCs). At present, a CCPC pays immediate tax of 50 per cent on its investment income. Under “tax integration,” a large portion of this tax is refunded when the CCPC pays dividends to its owner. As a result, there is generally no further net personal-corporate tax when dividends are paid

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