CFIB asks feds to grandfather pre-2019 passive income

By Staff | August 8, 2018 | Last updated on September 15, 2023
2 min read
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Canada’s small business lobby is asking the federal government not to include passive investments accumulated before 2019 in determining eligibility for the small business reduction.

The Canadian Federation of Independent Business (CFIB), one of the most vocal critics of the Liberal government’s tax changes for private corporations, is continuing to push against elements of the plan. In its pre-budget submission, the organization highlighted concerns around passive income, the tax on split income (TOSI) and transferring businesses to family members.

The federal budget, to be released next winter, will be the Liberal government’s last before the 2019 election. The finance committee will hear testimony from groups this fall.

The CFIB wants the passive income rules changed to grandfather investments accumulated inside a corporation before 2019.

“While the rules on passive investment income announced in the federal budget were simpler than the original proposals, some small business owners who already have passive investments in their business may be unfairly punished with higher corporate tax rates,” the CFIB submission says.

In the 2018 budget, the government introduced a new threshold for passive income, gradually reducing access to the small business tax rate for those with passive investment income exceeding $50,000.

The CFIB is also asking for changes to new rules on the tax on split income (TOSI). The organization wants spouses exempted from the rules, and the implementation of the rules delayed until Jan. 1 or later.

Concerns about transferring businesses are also raised in CFIB’s submission. As more business owners prepare to retire and transfer their businesses to a family member, capital gains rules make this harder than selling to a third party, the submission says. The organization is calling for solutions for intergenerational small business transfers to family members.

Advisor.ca staff

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.