Canada: Taxation of private companies | KPMG | GLOBAL

Canada: Taxation of private companies; consultation period has closed

Canada: Taxation of private companies

The Canadian government’s 75-day consultation period on its proposed private company tax changes ended 2 October 2017.

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With the close of the consultation period, it remains to be seen what changes (if any) the government would make to the proposals, and whether there would be any delay in the effective date of the proposed tax regime for private companies.

KPMG observation

The government’s proposed approach to the taxation of private companies would represent a major shift in tax policy for private companies, and would significantly change taxpayers’ tax planning involving “income sprinkling,” claims for lifetime capital gains exemption, and converting a private company’s regular income into capital gains. Tax professionals have asserted that delaying the effective date of these proposals would allow for a more comprehensive review of the government’s tax fairness objective and, at the same time, allow for any new rules not to be unduly complex for taxpayers and their private corporations. A delay could also give business owners more time to fully comply with any new requirements.

 

Read an October 2017 report [PDF 76 KB] prepared by the KPMG member firm in Canada

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