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ARTICLE · 20 MARCH 2018

Budget 2018: Developments Affecting Private Companies

Miller Thomson
Miller Thomson
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Miller Thomson

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Budget 2018 contains two new measures to deter the accumulation of passive assets within private corporations. These changes are a welcome departure from the Federal Government's July 18, 2017 ...

CanadaTax
Wendi Crowe
Wendi Crowe
Stephen Sweeney
Stephen Sweeney
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In this edition:

  • Passive Income Proposals for Private Corporations
  • Increased Reporting Requirements for Trusts

Passive Income Proposals for Private Corporations

Budget 2018 contains two new measures to deter the accumulation of passive assets within private corporations. These changes are a welcome departure from the Federal Government's July 18, 2017 announcement on the treatment of passive income, which many commentators criticized for resulting in total taxes of over 70% in some situations, and for creating unintended consequences which were inconsistent with good tax policy.

The measures included in Budget 2018 are aimed at (1) discouraging small businesses from earning relatively large amounts of passive income by restricting access to the small business deduction, and (2) eliminating tax deferral advantages by restricting the refund of tax on investment income upon payment of eligible dividends.

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