BDO Provides Submission on Government’s Private Corporation Consultation Paper

October 2017

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BDO is participating in the ongoing discussions on the impact that the proposals outlined in the “Tax Planning Using Private Corporations” consultation paper released by the Department of Finance on July 18, 2017 will have on Canadian private businesses and the individuals and families owning these businesses. We outlined our concerns with the proposals in a submission to the Department of Finance, as part of the 75-day consultation period that closed on October 2, 2017.

The government consultation paper includes proposed changes in many areas, including:

  • Income sprinkling between family members from a family business, which will increase the overall tax cost to families of income received from the business;
  • Availability of the Lifetime Capital Gains Exemption for family members, which will increase the tax cost when family businesses are sold and also when transferred to the next generation;
  • The taxation of passive income of private companies, aimed at eliminating the tax deferral advantages of earning business income in a corporation and investing those after-tax corporate profits in passive investments owned by the corporation; and
  • Anti-avoidance rules designed to ensure that corporate surplus is only taxed at tax rates that apply to dividends when removed from the company, rather than tax rates that apply to capital gains.

BDO believes that significant Canadian tax policy changes should only be introduced after a comprehensive review of the Canadian tax system with the goal of supporting the growth of the Canadian private sector and being fair to all Canadians. We recognize that the government has certain valid concerns that inspired the introduction of these proposals and our view is that these proposals be withdrawn so that a comprehensive review can begin. BDO has held discussions with many government officials through this process and have made ourselves available to work with the government, the Canadian business and professional tax communities, and all other relevant stakeholders to reform Canadian tax law to better support the Canadian economy. We have an overall goal of achieving tax simplification and tax fairness for all Canadians and Canadian businesses.

Our full submission to the government on the consultation paper is available for your review.

READ OUR FEDERAL GOVERNMENT SUBMISSION DOCUMENT

Learn more about these changes in our report: A detailed review: The government’s private company consultation paper.

View all of BDO's related content in our Private Corporation Tax Changes Round-up resource.

For further information, please contact one of our trusted BDO Tax advisors or one of our BDO Canada Tax Leaders:

Dave Walsh
Partner, Tax Service Line Leader

Rachel Gervais
Partner, GTA Group Tax Service Line Leader

Peter Routly
Partner, Central Group Tax Service Line Leader

Daryl Maduke
Partner, West Group Tax Service Line Leader

Shelley Smith
Partner, East Group Tax Service Line Leader

Learn more about BDO's Canadian Tax Services today.


The information in this publication is current as of September 29, 2017.

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.