Changes to Private Corporation Tax proposed by DoF

Come 2018 and there’s a lot that can happen in private corporation tax sector. A consultation paper on taxation of Private Corporation was released on July 18 2017 by Finance and it’s still under consideration. The proposed legislation deals with raising taxes on large corporations while reducing the tax burden on middle class.

But it’s not as simple as that as it affects small business holders, home-based business owners, farmers, and people employed in private corporations. The implications of these proposed legislations are wide. KPMG has asked the Ministry of Finance to delay the implementation of the proposed legislature as it’s a major shift in private sector taxation. ZRPC, the leading corporation tax consultancy firm in Scarborough, brings to you the key changes mentioned in the paper and its effect on you. 

• Income Sprinkling

It’s a form of income splitting that reduces family income taxes by realizing individual income (subject to high income tax) as family income (subject to low income tax).

• Holding a passive investment portfolio inside a private corporation   

The Government is proposing to tax the investments inside a private corporation. It attempts to neutralize the financial advantage one has by passively investing in a private firm.

With the recommendations, the rules will most likely to be implemented in 2018 and following years. Contact ZRPC, the corporation income tax consultants, for a complete information about the new tax proposals.