Small business owners, along with incorporated doctors, lawyers and other professionals, breathed a collective sigh of relief on Tuesday night as they started to parse through the government’s entirely new approach to dealing with passive investment assets held by Canadian controlled private corporations (CCPCs).
You’ll recall that the small business tax debacle began last summer when the government announced that it was conducting a review of tax planning strategies involving private corporations. The Department of Finance released a paper in July 2017 outlining three areas of concern: income sprinkling using private corporations, converting a private corporation’s regular income into capital gains and passive investments inside private corporations. The government announced in October 2017 that they were not proceeding with the proposals regarding converting regular income to capital gains. The income sprinkling proposals were revised in December 2017 and the detailed rules concerning restricting the earning of passive investment income inside a corporation were to be released as part of the 2018 federal budget.
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