The Minister of Finance unveiled his long-awaited federal budget
on February 27, 2018. Long-awaited because the tax community has
been in a tizzy since the Liberal government announced changes to
the taxation of private corporations in the summer of 2017, as
discussed in
our prior update on this topic.
Here are three things that everyone needs to know about Budget
2018:
1. Passive Investment
Income – Its Bark Was Worse Than Its Bite
The talk leading up to Budget 2018 was that the changes to the
passive investment income regime (i.e., the taxation on investment
income earned by a Canadian-controlled private corporation (a
"CCPC")) would be a complex, inoperable
set of rules designed to ensure "tax fairness." The rules
proposed in Budget 2018 are significantly less complex than
originally proposed and back off certain anticipated changes. The
proposed changes are two-fold: (i) a gradual reduction in the
availability of the small business corporation tax rate as
