Life in the Tax Lane - October 2017 (Episode 29)

This FREE 10-minute video for Canadian Tax Professionals includes rapid-fire discussion of select recent developments in the wonderful world of Canadian tax presented by the Video Tax News Team. 

Source - Tax Consultation on Private Corporations - Source 1 , Source 2  , Petition 

Supplementary Video - https://www.videotax.com/update

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Life in the Tax Lane is for general information purposes only and deals with dynamic, time-sensitive and complex matters that may not apply to particular facts and circumstances. The information provided should not be relied upon as a substitute for specialized professional advice in connection with any particular matter. For more information visit videotax.com/disclaimer. ©Video Tax News Inc. 2017, All Rights Reserved.

Hockey and Tax – What happens when the rules change?

by Caitlin Butler CPA, CA

Consider this… Two teams, two coaches and a few referees participating in a good old hockey game. All, by and large, understand the rules and if someone fouls, the ref calls it and penalizes. This is analogous to taxes – the players are taxpayers, coaches are advisors and CRA is the referee trying to administer the tax rules as drafted by the Department of Finance.

Normally, what happens when the rules change? Players, coaches and the referees learn the changes, suggest tweaks to make them more efficient, and then they comply. The game carries on.

What happens if the rule changes are so convoluted and complicated that the coaches, players or referees cannot fully understand them or apply them to their situation? Potentially a lot of things, many of which are not good for anyone involved, including the good old hockey game.

Perhaps, players and coaches take advantage of the ambiguity and push the envelope. Some may play it particularly safe so as to not offend. Some may get frustrated and stop playing. Others may completely disregard the rules, but continue playing. The refs are left to deal with the chaos. Bottom-line – the quality of the game suffers greatly.

It doesn’t seem fair to anyone involved – taxpayers, advisors, CRA or the observers of the game.

This is how I, and many others, that have carefully analysed the proposed tax changes, perceive the impact. Without clarity and simplicity, one can’t fully comply as intended. All involved are set up to fail. How does that impact the overall integrity of Canada’s self-assessment tax system?

Regardless of your position on the policy behind the proposals, I think we can all agree on one thing – the rules must be clear and understandable. At a minimum, provide taxpayers the opportunity to comment and comply. The proposals, as drafted, don’t do this.

If there is too much tripping or abuse in the game, changes the rules.  But, make sure that they are clear enough so that the game doesn’t freeze in confusion, or worse.

Let’s slow down and clarify the rules so that the game can go on.

Thanks.

If you want better dialogue and consultation, consider signing this petition.  https://www.videotax.com/petition

Proposed Tax Changes - Get Involved?

Submission deadline: October 2, 2017

You have undoubtedly now heard and read about the consultation launched on July 18, 2017 relating to proposed changes to private corporation taxation.  These proposals have sparked significant debate and emotion in the small business and tax support world.

As an accountant or advisor, you may be considering the impact on both past and future planning.  Questions are coming in from clients, you may find yourself in front of the media, or, you may simply feel the need to speak out.  So, what do you do next?  

The first step, which many of you have already done, is to get familiar with the proposals.  Please see this short video clip, read the consultation paper, and scan through the plethora of articles written.

One conclusion that our team has unequivocally come to is that a longer and more appropriate consultation is needed to properly address these significant and far reaching proposals.  Please sign our petition.

The second step many will take is to inform clients about the proposed changes.  Some methods include: posting on social media, holding a client seminar, sending client emails, or simply calling clients directly.  Many of your clients, or even your firm, may want to participate in the dialogue or provide feedback.  Video Tax News strongly encourages you and your clients to make positions, concerns and suggestions known.  You and your clients have unique and powerful insights which are direly needed in the making of strong, fair, and efficient law.

If you decide to take action, or if you would like to provide your clients with a list of options, consider the following:

1. Contact your Member of Parliament and the Honourable Minister of Finance, Bill Morneau (their contact info can be found here).
2. Sign this petition to slow things down and allow for better dialogue.
3. Make a consultation submission.
4. Contact a special interest group such as CPA Canada, Canadian Chamber of Commerce, Canadian Federation of Independent Business
5. Share articles on social media (such as LinkedIn, Facebook, Twitter etc.) which express your views, or provide relevant information.

Once again, don’t forget that Canadians have been given until October 2, 2017 to submit their concerns.

We will be covering these issues and implications in our newsletters and fall series of Tax Update courses, however, we are hoping that this message will assist with the first few challenges you may be facing right now.

Sincerely, 

The Video Tax News Team

Watch! Video Tax News video commentary on the proposed changes to private corporate tax planning.

Additional reading - https://www.videotax.com/web-tips-articles/proposed-changes-to-private-corporation-taxation-in-canada-july-182017

Source - http://www.fin.gc.ca/n17/17-066-eng.asp

The changes will be discussed further at Tax Update 2017.  We hope to see you there. 

This video is for general information purposes only and deals with dynamic, time-sensitive and complex matters that may not apply to particular facts and circumstances. The information provided should not be relied upon as a substitute for specialized professional advice in connection with any particular matter. For more information visit videotax.com/disclaimer. ©Video Tax News Inc. 2017, All Rights Reserved.

Proposed changes to private corporation taxation in Canada - July 18,2017

Proposed changes to private corporation taxation in Canada:

1) Dividends and other amounts received from a business, by an adult family member of the principal of the business, may be subject to a reasonableness test, which will be stricter for 18-24 year olds. Reasonableness will be based on the contributions made by the family member to the business. Top tax rates would apply.

2) Measures are also proposed to address other income sprinkling issues, including the multiplication of claims to the Lifetime Capital Gains Exemption. No LCGE in respect of capital gains from a disposition after 2017 (subject to the transitional rules) for minors, for gains while the corporation was held by a trust, and where income relating to the gain period was caught by point 1) .

3) Several proposes issued to discourage passive investments in corporations. This includes a new "elective" taxation method.

4) An expansion of Section 84.1 to reduce the ability to strip value out of corporations as capital gains rather than dividends.

Get your submissions in!

Source - http://www.fin.gc.ca/n17/17-066-eng.asp

Watch! Video Tax News video commentary on the proposed changes to private corporate tax planning.