SENATORS BLAST OTTAWA'S NEW PROPOSALS FOR SMALL-BUSINESS
Dec 13, 2017
By Bob Komsic
Federal Finance Minister Bill Morneau’s released a new tax proposal with changes to one that received a lot of criticism in the summer.
However, the Trudeau Liberals still intends to apply the new rules for the 2018 tax year to restrict the illegitimate use of ”income sprinkling” by business owners and family members as a way of paying less tax.
The new proposal would exempt any situations involving a business owner aged 65 or over with a spouse, who ”meaningfully” contributed to the business, and exempt those 18 or over who worked at least 20-hours-a-week for the business during the year or during any five previous years.
Businesses will have until the end of next year to adjust before filing 2018 taxes.
The Zoomers advocacy group CARP welcomed the changes that’ll allow sprinkling among those 65 and older.
In a statement, CARP said ”Legislative changes that enable seniors to better care for themselves and their spouses in retirement will help ensure peace of mind and financial security for Canadians as we age”.
”Income sprinkling” was one of three main parts of the government’s package of proposals in the summer.
In October, Finance Minister Bill Morneau said Ottawa would not be proceeding with the conversion of dividend income into lower-taxed capital gains while it would exempt the first $50,000-a-year in ”passive income,” which is equivalent to a 5% return on $1-million in savings.
Meanwhile, the Senate finance committee is siding with critics of the government’s plans after months of cross-country hearings on the earlier proposals.
The senators feel the government should either delay their plans by one year to 2019 or scrap them and review the country’s tax laws.