In Part I of our blog series on the new proposed tax code changes for Canadian business owners and farmers, we discussed the implications of the new tax laws on a number of different tax planning strategies.
To recap the four major areas where change is expected:
- Income Splitting – There may be new tax regulations that include heavier tax burdens for family members who are share holders over the age of 18.
- The Lifetime Capital Gains Exemption – The proposed new legislation may deny requests to use the exemption in certain specific cases.
- Tax Treatment of Passive Investment Income – Business owners would now be taxed differently to encourage investments of earned income back into the business.
- Income Conversion to Capital Gains – Shareholders may no longer be able to extract earnings from a corporation as a capital gain, rather than as a dividend.
These new proposed changes to the tax law are very complex, and knowing how to best plan ahead for your business and your family is an important step. Here are four things you can do:
- Talk with your BlueRock Wealth Management financial advisor about your succession planning, trusts, and other shareholder structures to determine if there are any changes that need to be made.
- Update your estate planning documents as needed to address any issues that may arise as part of your succession and estate planning goals.
- Make sure to stay informed about proposed changes and any updates to the new tax legislation, so you and your family members know what to expect.
- Contact your MP to express your concerns.
You must raise your issues with your MP by October 2, 2017. Lobbying efforts are critical at this stage to shape the tax issues surrounding your business or farm ownership.
And, as always, you’ll find our team at BlueRock Wealth Management prepared to assist you with all your financial planning needs. Contact us today.