ARTICLE · 20 OCTOBER 2017

Further Changes To The Tax Proposals

Crowe Soberman LLP

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Morneau stated that the wealthiest benefit the most from the current regime, namely that 80 per cent of these passive investments are held in the top 2 per cent of private corporations.

CanadaTax

Crowe Soberman'S Tax Group

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On October 18, 2017, Finance Minister, Bill Morneau, provided some clarity to the proposed changes to the rules concerning passive income earned in a corporation. The Minister expressed that these new developments were the result of the feedback the government received from Canadians to the originally proposed tax changes released mid-July.

The Department of Finance estimates that there is currently between $200 and $300 billion dollars in passive assets being held in private corporations, which represent funds that have not been reinvested in respective active businesses carried on by these private corporations. Furthermore, it is estimated that these assets are generating approximately $20 billion annually in passive investment income. Morneau stated that the wealthiest benefit the most from the current regime, namely that 80 per cent of these passive investments are held in the top 2 per cent of private corporations.

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