On July 18, 2017 the Liberal government proposed significant tax changes to small businesses and indicated they would consult with the public about these changes until October 2, 2017. During the consultation period, we made multiple submissions of which the government received over 21,000. This is an immense number of responses especially in light of the fact that there are 50,000 privately owned family businesses in Canada that would be affected by the government’s intent to stop income sprinkling, which is one of the proposed tax changes.
On October 16, 2017 the Liberal government commenced the process of introducing their decisions on the tax proposals. They discussed two tax specific matters, and their intention to bring forward other tax changes, all of which would impact small businesses. One of the tax matters they discussed is they are honoring their commitment to lowering the federal small business tax rate to 10% and 9% over the next two years, effective January 1, 2018. Lowering the federal small business tax rate will save small business owners between $2,500 and $7,500 annually. They also indicated they will not be moving forward with proposed measures to limit access to the Lifetime Capital Gains Exemption. The press release can be found at http://www.fin.gc.ca/n17/17-097-eng.asp.
This is certainly a good sign that the government is considering the views and perspectives of the small business community as they finalize their tax proposals. However, we are hoping that more relief is extended to income splitting measures and aggressive taxation on passive investments which will impact a large number of small businesses.
We will provide further information as it becomes available. In the meantime, if you have any questions or wish to receive additional information, please do not hesitate to contact us at info@fazzaripartners.com.
