Changes to business taxes ‘complex’

Richard Froese
South Peace News

Proposed changes to federal business taxes were presented at the High Prairie Business Support session Oct. 26.

CGA Bonnie Bonnie Nash of Nash Giroux LLP of Slave Lake, presented the complex and complicated changes proposed by Prime Minister Justin Trudeau and Finance Minister Bill Morneau of the Liberal goveernment.

The rules are very complex, what they’ve come up with,” says Nash, a CGA, in business since 1996.

We still don’t know what it’s exactly going to look like.”

Details ar scheduled to be presented in the 2018 budget, and she doesn’t know when the changes will become effective, or retroactive.

The finance department issued draft legislation on July 18 that would fundamentally overhaul the tax system for privately owned companies and their shareholders,” Nash says.

The government has proposed to decrease the tax paid by small business corporations from its current 10.5 per cent to 10 per cent starting January 2018, and nine per cent beginning in January 2019.

What we don’t know is if the provincial tax will change in response,” Nash says.

In order to preserve integration, which is ensuring salaried employees and corporate owners ultimately pay the same amount of tax, there will need to be some tweaking to increase the way dividends are taxed personally.”

Increasing the tax on passive investments has also been proposed.

The government feels the current system of taxing investments in corporations provides an unfair advantage to corporate owners compared to salaried employees,” Nash says.

The proposals include eliminating the portion of the taxes that were previously refundable and eliminating the tax-free portion of any capital gains can be paid to the shareholders tax free.

In response to submissions, they have proposed the new tax will apply only to new investments on a “go-forward basis” and will only apply to passive income that exceeds $50,000.

There may still be a potential that the government will continue with the proposal to tax capital gains as though they were ordinary dividends which has the potential of increasing taxes on capital gains by up to 17 per cent.

The next BSN session is Nov. 23.

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