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Here are the latest news on the government’s proposed tax measures to address tax planning strategies used by private corporations.  ·         Liberal MP Wayne Easter, Commons Finance Committee chair, has voiced out his stand on the government’s announcement of the proposed tax measures.  He denounced the government’s proposals saying it has wrongly portrayed small business owners as tax cheats.  ·         Other Liberal MPs are requesting for an extension to the October 2 deadline for public consultations on the government’s proposals.  Many said additional consultations are needed. ·         Tax expert Kevyn Nightingale, an accountant with MNP, said MPs are right to call...
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The problem with Section 84.1, according to the Department of Finance is the wording as it describes a specific type of avoidance transaction.  Therefore, the section does not apply to transactions that avoid its specific terms.  In particular, the section can be avoided to enable an individual shareholder to obtain capital gains treatment rather than taxable dividend treatment with respect to taxable capital gains that are ineligible for the Lifetime Capital Gains Exemption.  With the case of intergenerational business transfers, the government did mention that they are reviewing the current income tax system that may have had adverse effects on genuine...
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For the past weeks, our blogs have been focused on the proposed changes that the Government announced to address tax planning strategies used by private corporations.  We’ve already reviewed the proposed changes to the first two strategies: income sprinkling and holding passive investments in the corporation.  This week, we’ll take a look at the proposed changes to address the third tax planning strategy – converting a private corporation’s regular income into capital gains. This strategy, according to the Department of Finance, can reduce income taxes by taking advantage of the lower tax rates on capital gains.  Generally, income is paid out...
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In this blog, we will continue our detailed review of the approaches that the Government is considering with regards to the tax treatment of passive investment income.  We’ve already touched on the first approach which is the 1972 approach.  Here is the 2nd one. 1.    Deferred Taxation – As an alternative to the 1972 approach, the current regime of refundable taxes on passive investment income could be replaced with one that will maintain a tax rate on the passive investment income of private corporations equal to the top personal tax rates, as is the case under current rules, but which would...
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