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Proposed Changes to Tax Planning

On July 18, 2017, the Department of Finance proposed important changes that will affect tax planning opportunities available to taxpayers who organize their affairs using private corporations. This development follows on concerns raised in the March, 2017 federal budget that private corporations were being used by shareholders to avoid paying their fair share of tax.

The proposed changes target four main areas of tax planning: income sprinkling (income splitting), multiplication of the lifetime capital gains exemption, passive investments made by private corporations, and the conversion of business income into capital gains.

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