As confirmed in the Fall Economic Update
(FEU), the Government of Canada has now retreated
from some of the private corporation tax proposals set out in the
July consultation paper. In what may be described as a partial
retreat, the proposal to increase tax on passive investment income
will be modified to exclude the first $50,000. Commentators have
suggested that this proposal could result in tax rates exceeding 70
per cent of investment income.
Given the public backlash against the July proposals, and to the
Government's credit, the FEU provides expanded statistical data
in support of the need for tax changes. In a table contained in the
economic update, the Government set out data showing that the
number of Canadian-controlled private corporations
(CCPCs) has grown – on average – by
8.4 per cent per year between 2010 and 2015, and by 8.7 per cent
per year between 2001 and 2015. The table also shows data for
selected industry sectors, including professionals
