Proposed Tax Changes 2017 – Will they effect you?

There has been a lot of talk in the media about the proposed tax changes that according to the government will “close loopholes” but according to accountants and small business owners will harm small business.

What do you need to know about the proposed tax changes?

There are 3 proposed changes:

1. Income sprinkling
   1. Basically if you are dividing income between shareholders or household members this will effect you – possibly very negatively.
   2. Discussion is that any amount paid to someone who did not earn it (as you would in an arms length transaction) would get taxed at the maximum tax rate.
   3. Will also effect capital gains allowed by minors or held in family members.
2. Passive income
   1. If you hold money in your business as a rainy day fund or for later income and invest it into anything besides the business the tax on this investment will be at a much higher rate than currently.
3. Converting Income into Capital gains
   1. Goes after holding companies to add to the tax paid overall.

All of these changes will increase tax for small business owners using any of these items

For more information go to the

CFIB here  for a small business perspective

or

CPA- Alberta here for how the Chartered Professional Accountants of Canada is  proposing changes to the legislation

Overall it is a confusing proposition and until it is tabled and discussed it will be hard to figure out how badly it will effect your business, but it will effect just about every small business.

Talk to your accountant or us for more information