Finance says that its passive investment tax changes will protect venture angel investing.
While the government confirms it will proceed with its private company tax changes, including targeted measures on passive investments, it will keep incentives that encourage venture capital and angel investors to invest in innovative companies.
Finance says it recognizes that firms that raise money from venture capital investors often raise more than they immediately need, and therefore must invest these funds passively before they are used in the business itself.
The government is considering the recommendations put forward by KPMG and other concerned taxpayers before finalizing any planned changes to the proposed tax measures on passive investments (see TaxNewsFlash-Canada 2017-44, "Private Company Tax Changes - What's Canada's Next Move?"). Finance says it plans to consult with venture capital and angel investment sectors on its passive investment proposals.
The government released a consultation paper and complex proposed rules and approaches to address certain tax planning involving private corporations on July 18, 2017 (see TaxNewsFlash-Canada 2017-38, "Finance Targets Private Company Tax Planning"). The consultation paper, "Tax Planning Using Private Corporations", looks at strategies that Finance believes "inappropriately reduce personal taxes".
For more information, contact your KPMG adviser.
Information is current to October 24, 2017. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500