What will federal tax changes mean for real estate Investors and businesses?

October 18, 2017 3:41 pm

the vancouver sun

Boy, oh boy, oh boy, has the poop ever hit the proverbial propeller in the wake of the feds’ announced proposed CCPC (Canadian-Controlled Private Corporation) tax changes.

Most of the fallout is negative, with a smaller proportion of the commentary opining that it will actually help small corporations. Tough to know which it will be until the axe finally falls, and how big the blade is. Will Trudeau, Morneau et al stick to their leftist guns and implement their new “socially levelling” tax legislation pretty much unchanged? Or, in the face of some rather withering attacks from groups such as incorporated doctors, will they water it down somewhat? If they do not, will we experience a “doctor brain drain” (again) to places such as the US?

In this space, we’re not as concerned for doctors as we are for smaller landlords and PREC (Personal Real Estate Corporation) realtors. Because this legislation, especially if passed intact, will hit those people every bit as hard as incorporated doctors and other self-employed professionals.

The federal Finance Minister Bill Morneau comfirmed on October 16 plans to cut the small business tax rate from 10.5 per cent to 10 per cent by January 1, 2018, and to 9 per cent by January 1, 2019.

As well, the government says it will not be moving ahead with previously proposed changes to access to the lifetime capital gains exemption, which had been met with backlash from many small business owners, particularly farmers. Morneau also said the government intends to simplify proposed changes to limits to business owners splitting income with their family members. Still, until changes to income splitting are clarified, the move continues to draw criticism.

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