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ARTICLE · 15 JULY 2022

What Should I Do With My Non-CCPC?!?!

Miller Thomson
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Taxpayers who previously engaged in non-CCPC tax planning have a decision to make – and ideally soon.

CanadaTax
Andrew C. Bateman
Andrew C. Bateman
Pierce Quaghebeur
Pierce Quaghebeur
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Taxpayers who previously engaged in non-CCPC tax planning have a decision to make – and ideally soon.

For context, in recent years, a number of Canadian taxpayers implemented planning that involved causing a Canadian-controlled private corporation ("CCPC") to cease to qualify as such. The general objective was to realize capital gains or earn certain investment income in the "non-CCPC" at the general corporate tax rate, rather than at the higher investment income tax rate, which includes refundable taxes. A number of these non-CCPC structures remain in existence today.

On April 7, 2022, the Federal Budget proposed to introduce a new "substantive CCPC" regime that generally would cause the higher investment income tax rate to apply to all investment income of a non-CCPC that is controlled in law or fact by one or more Canadian resident individuals. Thus, if these rules are passed into law, the advantage of a non-CCPC structure in most cases will be eliminated.

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