CANADA — Prime Minister Trudeau has announced that the federal government will cut the small business tax rate from 10.5 percent to 9 percent – starting January 1, 2019. This announcement follows the recent backlash the Liberal Government received from their tax planning proposal earlier this summer and is aimed at resolving criticisms that the proposed changes would hurt the middle-class and small business owners across the country.
In regards to the recent tax planning consultations, which the RVDA of Canada participated in – read the full submission here – the government has also announced that they no longer intend to change the lifetime capital gains exemption rules.
They will however end income sprinkling for family members who do not make contributions to family businesses, effective January 1, 2018. This new definition of ‘reasonable contribution’ states that such a contribution must include either labor, capital, taking on a financial risk such as co-signing a loan or past contributions along those lines.
The RVDA of Canada reports that more details regarding passive investment will be available on Wednesday. RVDA of Canada has been advocating strongly to ensure that the voice of small-businesses is heard in this process and will continue to do so.
Source: Recreation Vehicle Dealers Association (RVDA) of Canada press release