Recently, the federal government proposed significant changes to tax law, which may affect your ability to save for retirement, and will reverse many years of accepted tax planning.
The current administration is planning to end three tax practices:
- Income Sprinkling, which involves diverting income from a high-income individual to family members with lower personal tax rates;
- Passive investments funded from after tax active business earnings;
- Capital Gains conversion from a private corporation’s regular income for lower tax rates and limit access to the life time capital gain exemption.
These measures will be taken in the name of “fairness” to Canadians, who are not self-employed. What the proposal does not take into consideration, is financial risk, job security, the absence of benefits, and pension plans which professionals and other small business owners do not ordinarily have.
It is not too late.
Together with my colleagues in the Official Opposition, we have stopped a number of new taxes from being implemented. The government is accepting submissions until October 2, 2017.