Passive Income Rules Unveiled

2018 Federal Budget releases details on Passive Income - CCPC

The Association of Tax & Accounting Professionals (ATAP) is generally pleased with Finance’s treatment of the on-going issue regarding taxation of passive income inside of a Canadian Controlled Private Corporation (CCPC), but remain disturbed that some of the issues raised during consultations remain unaddressed.

While a detailed analysis will need to be completed to determine the cause and effect of the Ways and Means motions attached with the budget, the primary issues concerning the cost of compliance and the ability for small business owners to continue to utilize their corporations as a retirement planning tool, other issues raised are not mentioned.

“Small business owners over the past 20 years have been building their retirement nest egg within their corporation and it now appears that any grandfathering provisions have been removed from the table” states Alan Rowell. 

While the Budget does allow for small business to save for future business investment the legislation penalizes retirement income planning.

ATAP will continue in our endeavors to have Finance recognize the need to address this grandfathering issue as well as the $50,000 passive income threshold.  At the very least the $50,000 threshold should be indexed to inflation and urge our members to keep up the pressure on their respective Members of Parliament to address these issues and other issues.