Print Page   |   Contact Us   |   Report Abuse   |   Sign In   |   Sign Up
News & Press: Member Benefits

Update on Federal Government Small Business Tax Proposals

October 18, 2017   (0 Comments)
Share |
On October 16, the Government of Canada announced changes to the proposed tax measures for small businesses, as well as a cut to the small-business tax rate.

The government originally proposed changing three areas of tax planning using private corporations: income sprinkling, holding passive investments in a private corporation, and converting income into capital gains.

Members of IBAC have been very active in voicing the concerns of small business brokers regarding the proposed changes. They facilitated a grassroots campaign whereby brokers could send a letter directly to their member of parliament. IBAC President Scott Treasure met with parliamentarians and policy advisors to emphasize the negative consequences to brokers and small businesses in general. IBAC also submitted an official response to the Department of Finance’s consultation process on October 2nd, and sent its official submission to every MP and senator.

These efforts, along with those in the small business community, have persuaded the government to clarify some of the more problematic areas of these proposals.

The centrepiece of the October 16 announcement is a plan to cut the small-business tax rate from 10.5% to 9%, with an initial reduction to 10% effective January 1st, 2018, and a further reduction to 9%, effective January 1st, 2019.

While the government remains committed to limiting income sprinkling, it has defined a “reasonable contribution" to a business to include labour, capital or equity, taking on financial risks such as co-signing a loan, and/or past contributions along those lines. Finally, the government announced that it will not move forward with its original proposal to change lifetime capital gains exemptions rules.

Today’s announcement demonstrates how a consistent and measured response can help to shape government direction. IBAC will continue to fulfil its core mandate of advocacy for insurance brokers on key federal issues including the Bank Act review, small business issues, and other areas that impact the insurance industry.

To read more about the October 16th announcement on the reduction of small business tax rates, see "Government Moves to Reduce Small Business Tax Rate and Support Fairness for the Middle Class" on the Department of Finance website.

more IBAA Courses and Events

2017-11-22
Understanding Residential Plumbing & Wiring

2017-11-27 » 2017-12-08
Licensing Level 1 Live Online - Evenings

Featured Vendors

Membership Software Powered by YourMembership  ::  Legal