The Federal Liberals’ small business tax reform: Four ways it may affect you

Federal Finance Minister Bill Morneau has faced a lot of fury from Canadian small business owners over the past three months, as his bureaucrats conducted “consultations” with affected groups on pending legislation to “reform” (translation: increase) taxes paid by professional and private corporations.

Opponents of the plan to reduce the ways in which small businesses can shelter their profits from taxes include renovation contractors and custom homebuilders, farmers, doctors, architects, accountants and other individuals running self-incorporated small businesses.

Tax legislation is complicated. But courtesy (and copyright) of Toronto-based accounting and tax experts Zeifmans, here are links to brief descriptions of each of the four main “areas of concern” of Morneau’s plan that self-incorporated Canadian contractors need to be aware of. We highly recommend you take five minutes to read through EACH of these short pieces that reside on Zeifmans’ very informative website.

Please note also that the final version of the legislation has not yet been written.

1. Holding passive investments through a Canadian-Controlled Private Corporation (“CCPC”)
2. Income splitting
3. The enhanced capital gains deduction (“ECGD”)
4. The conversion of income into capital gains

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If you have specific questions about your tax situation, Zeifmans can help. (1) Post your question below and Zeifmans will answer it publicly or (2) contact Zeifmans directly at info@zeifmans.ca or 416.256.4000.

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