The Federal Budget, released on March 22, 2017, stated that the
federal government would be reviewing tax planning using private
corporations, with particular emphasis on sprinkling income,
holding passive investments inside a private corporation and the
conversion of dividends to capital gains. The Budget promised that
over the coming months it would issue a report outlining concerns
and policy responses.
On July 18, 2017, the Department of Finance (Finance) released
26 pages of draft legislation, 44 pages of explanatory notes, a
detailed consultation paper and a PowerPoint slide deck, all
focused on tax planning involving private corporations. Topics
addressed in the materials included income sprinkling, the removal
of retained earnings on a tax-effective basis, the lifetime capital
gains exemption and the accumulation of corporate profits for
passive investments. Finance provided a 75-day consultation period,
with a deadline of October 2, 2017 for
