Finance Targets Private Company Tax Planning | KPMG | CA

Finance Targets Private Company Tax Planning

Finance Targets Private Company Tax Planning

Owners of private companies in Canada may want to review and comment on a consultation paper released by Finance.

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Owners of private companies in Canada may want to review and comment on a consultation paper released by Finance. This paper includes significant measures and complex proposed rules and approaches to address certain tax planning strategies involving private corporations that Finance believes “inappropriately reduce personal taxes”. Finance is seeking input on its proposals by October 2, 2017.

The 63-page paper, “Tax Planning Using Private Corporations”, outlines the proposals to address tax planning involving income sprinkling using private corporations and converting a private corporation’s income into lower-taxed capital gains. In addition, Finance is seeking comments on possible approaches to address planning where passive investments are held inside a private corporation. Most of the proposed measures generally apply to the 2018 and subsequent tax years, except for certain measures dealing with the proposed anti-surplus stripping rule which would apply to shares disposed of, and amounts received or become receivable, on or after July 18, 2017 (i.e., the consultation paper’s release date).

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