Canada’s small business lobby is calling on provincial finance ministers to push the feds to delay new income sprinkling rules set to go into effect Jan. 1.
As provincial ministers gather in Ottawa to meet with federal Finance Minister Bill Morneau, the Canadian Federation of Independent Business (CFIB) wants them to pass on the call for a one-year delay to the tax changes.
CFIB president Dan Kelly calls the coming change one of the largest in 40 years for small business owners, for which “zero detail or implementation advice” has been provided.
“The new rules to the way small business owners share income with family members may require changes to existing business structures, and there will be no time to make any of this happen before year-end,” Kelly said in a release. “Even if government releases the detail today, it will land at one of the busiest times of the year for thousands of firms in the retail and service sector.”
The changes to income sprinkling are part of the tax proposal the Liberal government introduced in the summer, which sparked wide resistance from business groups. In October, Morneau scrapped many of the proposals but maintained the changes to income sprinkling for Jan. 1, 2018. The department said draft legislation would be released “later this fall.”
A departmental backgrounder said the “vast majority of private corporations” would not be affected by the rules, estimating that 50,000 family-owned corporations—or 3% of Canadian controlled private corporations—benefit from income sprinkling. It also said family businesses where the spouse or adult children are “meaningfully contributing to the business” would not be affected.