Proposed Measures to End Certain Tax Planning Strategies Using Private Corporations

In its 2017 budget, the federal government signaled its intention to address tax planning strategies involving private corporations that can result in high-income individuals obtaining tax benefits not available to other individuals. Accordingly, on July 18 the Minister of Finance of Canada tabled certain legislative proposals and a Consultation Document: Tax Planning Using Private Corporations.

The legislative proposals tabled by the Minister basically address income splitting and tax planning designed to convert income from a corporation (dividends, salary) into capital gains. The government also announced plans to change the rules with respect to corporations that hold passive investments. Consultations are then also being held on this subject. Here is a brief overview of the various proposed measures.