Passive Investment Income

On July 18, 2017, the Government released a consultation paper with proposals to address tax planning strategies using private corporations, including an outline of possible approaches to limit the tax deferral opportunities that are associated with holding passive investments inside a private corporation. Taking into account feedback the Government received from stakeholders in response to the consultation process, Budget 2018 proposes changes to the small business deduction rules and the dividend refund rules, to limit these tax deferral opportunities, effective for taxation years that begin after 2018.

 

Notice to the reader 

The consultation paper also included draft legilsative proposals to address income sprinkling by extending the application of the tax on split income rules. Taking into account the submissions made with respect to the consultation, the Government released revised draft legislative proposals on December 13, 2017.  These measures have received Royal Assent.
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