Prime Minister Justin Trudeau and Finance Minister Bill Morneau announced that the small business tax rate would decrease to 9% (from 10.5%) by 2019 as part of new changes to the private company tax proposals.
While the government stated that it is committed to its proposed private company tax measures to address tax planning involving income sprinkling effective January 1, 2018, it is cancelling changes to limit access to the Lifetime Capital Gains Exemption (LCGE).
Finance reiterates that it intends to proceed with its proposals to address income sprinkling using private corporations, but that it will make amendments to “simplify” these planned changes. Finance says that businesses with family members who “meaningfully contribute” to the business will not be affected.
Finance is cancelling proposed measures to address income sprinkling by multiplying the LCGE across multiple family members. Finance further notes that it intends to address unintended consequences of its passive income proposals. Finance has not yet provided further details on how it will address the unintended consequences that were identified.
Small Business Tax Rate Drops to 9% by 2019″.
Authored by KPMG TaxNewsFlash – Canada October 16, 2017 No. 2017-46
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