Canadian accountants await Morneau tax message on Monday morning
Latest Angus Reid poll shows disappointment with Liberals, support for tax proposals
TORONTO, Oct. 16, 2017 – At a news conference in Stouffville today, the Trudeau government launched a divide-and-conquer strategy on its controversial tax proposals, doubling down on its election pledge to tax the wealthy.
At a press conference in Stouffville, Ontario today, Finance Minister Bill Morneau announced that the small business tax rate will be lowered from its current 10.5 per cent to nine per cent. The announcement comes as the Liberals have been criticized for proposed tax changes aimed at incorporation.
Today’s announcement comes as the Finance Minister is embroiled in controversy over the non-disclosure a private corporation held by his family that includes a villa in France. The Liberals have also faced vociferous criticism over the proposed changes from a variety of groups and politicians.
Today’s announcement is the first of several planned by the Finance Minister at stops across the country. The government is expected to modify their proposals rather than scrap them altogether.
Despite the controversy, government officials tell CTV News that the Liberals will only tweak their proposed tax reforms, not scrap them altogether. Those tweaks are expected to be announced gradually throughout the week, by Morneau at stops throughout the country.
The first announcement will be on so-called “income sprinkling,” which allows business owners to split their income among family members and lower their income tax rate.
The government will continue to allow income sprinkling, but only if business owners can prove that they are splitting their income with family members who actually work in the business.
It’s expected the passive investment provision will be changed in some way as well.
The changes, as they were first proposed in July, also targeted methods of converting income into dividends and capital gains.
The government has already drafted legislation on the income sprinkling and capital gains changes, but had yet to write its plan on passive investment.
The consultation window on the changes ended on Oct. 2, and the government has signaled the changes coming are a result of the feedback they heard and would insure that female entrepreneurs are not disproportionally impacted; and that farmers won’t face new challenges in passing on the business to their children.
Colin Ellis is editor-in-chief of Canadian Accountant.