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Inside Internal Controls

News and discussion on implementing risk management

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Department of Finance

New proposals on the taxation of private corporations can result in double taxation

This article discusses the new proposals on the taxation of private corporations that will prevent some normal post death tax planning aimed at preventing double taxation of the same economic gain.

 

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Upcoming corporate income tax changes to curb income sprinkling issues

On July 18, 2017, the federal Department of Finance released legislative proposals and a consultation paper dealing with tax planning affecting private corporations. The goal is to close loopholes that allow wealthy Canadians to avoid higher tax rates, largely by targeting people who incorporate themselves and then draw income from their businesses while paying lower corporate taxes. These proposals, if enacted, will potentially affect most Canadian business owners who carry on their businesses through private corporations, significantly increase the complexity of the tax rules applicable to private corporations and reverse many long-standing tax policies that have encouraged business growth.

 

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