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July 25, 2017

Is Tax Planning Dead?

Written by Jordan Cahill

Bill Morneau’s July 18, 2017 Announcement on Tax Planning for Private Corporations. 

On July 18, 2017 the Federal liberals through the department of finance announced some major tax changes that could potentially affect millions of small business owners across Canada. Draft legislation was proposed including the following:

  1. An additional tax on dividends to certain shareholders to discourage income splitting,
  2. The elimination of the ability to multiply the capital gains exemption on the sale of shares of small business corporations
  3. A set of extremely complex rules to eliminate the benefit of using after-corporate tax dollars to invest.
  4. Elimination of the ability to convert dividends to capital gains

What does this mean to the private corporation owner?

In the past, a large portion of income tax planning that we conducted relied on the ability to split income with family members and shelter after tax corporate income within a private company for investment purposes. This was achievable using completely legal and vetted structures. The announced changes will limit if not eliminate most of these strategies.

Do we need to panic?

There is no need to panic (yet). This legislation is only in draft form at this point. The department of finance has consulted public feedback on the proposals and has given a deadline of October 2, 2017.  We are waiting to see what will actually be enacted into law. In the meantime we are working to develop new planning strategies based on the proposed tax regime. We plan to keep up-to-date and provide our clients with options going forward.


Overall, these are some of the largest changes to the taxation of private corporations that any of us have seen in our careers. We are currently assessing the details of these proposals and waiting to see what the Liberals will ultimately decide with respect to them.

For more information on this please contact one of our professionals and we would be happy to discuss what we know so far and our opinions. 

Here is a link to the Department of finance website with further details


Jordan Cahill

Jordan Cahill is a Chartered Accountant (CA) and Chartered Professional Accountant (CPA) with a bachelor degree in business from Simon Fraser University. He articled at a national CA firm in Vancouver,BC and previously held a position at the Canada Revenue Agency as a business auditor.

Jordan Cahill on LinkedIn



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