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Proposed Tax Changes and What You Need To Know To Protect Your Business

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September 14, 2017
The federal government is proposing tax changes that will have a significant effect on small businesses across Canada. 
The three proposed changes are:
  1. The curtailment of "income sprinkling," a method by which business owners shift a portion of income to family members, either through salary or dividends.
  2. The curbing of "passive investment income," which the government describes as the investment of money left in a corporation, for purposes other than to invest directly in growth.
  3. The conversion of a corporation's regular income into capital gains, which typically attract a lower tax rate.
One change would restrict the ability of business owners to lower their tax rate by sprinkling income to family members in lower tax brackets. Another would limit the use of private corporations to make passive investments in things like stocks or real estate. The third would limit the ability to convert a corporation’s regular income into capital gains, which are typically taxed at a lower rate.
How to respond to the Government? 
As businesses owners, make your voice heard. Send written comments to fin.consultation.fin@canada.ca. The deadline for submissions will be October 2, 2017. You can also contact your local chamber of commerce and add your voice to their efforts, or utilize their template letter to send to you MP or submit to the government. 

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