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Tax

Changes to the Small Business Deduction

Why is this important? The SBD provides corporate tax savings of approximately $70,000 per year

The Small Business Deduction (SBD) provides certain Canadian-controlled Private Corporations (CCPCs) with a combined Federal and Provincial annual corporate income tax savings of approximately $70,000 per year.

 

What is changing? Certain corporate and partnership structures will no longer get the benefit of the SBD

These broad new rules curtail the ability to claim the SBD resulting in an increase in corporate income taxes on active business income.

 

When is the effective? For taxation years beginning after March 21, 2016

The new SBD rules are currently enacted and will need to be considered now as they are effective for taxation years beginning after March 21, 2016. Thus, we are approaching corporate taxation year ends coming up in March 2017 where these new rules are in effect.

 

What should you do? Consult with your KPMG Enterprise tax adviser to review your structure to ensure you retain this benefit, or qualify if you currently do not

Review your corporate and partnership structures now to determine whether there are opportunities to restructure to continue to benefit from the SBD.

 

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KPMG Enterprise Canadian Tax Advisor is a regular communication series informing you of the latest developments in tax that may affect your business.

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