Today, Prime Minister Justin Trudeau, Finance Minister Bill Morneau, and Small Business and Tourism Minister Bardish Chagger announced that our government is fulfilling its commitment to lower taxes on small businesses, from 11 per cent in 2015 to 9 per cent by 2019.
To support this change, the Government will be moving forward on changes to the tax system that will ensure that Canadian-Controlled Private Corporation (CCPC) status is not used to reduce personal income tax obligations for high-income earners rather than supporting small businesses. This will include limiting the ability of largely high-income owners of CCPCs to lower their personal income taxes by spreading their income with family members who do not work in the business.
In the coming days, the Government will announce further steps towards fairness for the middle class that will also take into account feedback received from Canadians during the consultation period. The modified proposals will ensure the measures are focused on a small number of wealthy individuals who get the biggest advantage from existing rules.
This is great news for the middle class, and there is more to come! For more information or any questions you may have, please reach out to my office via email: Gudie.Hutchings@parl.gc.ca or by phone: 1-800-563-9934
- Only an estimated 50,000 family-owned private businesses are sprinkling income. Only a portion of these families would be affected by the proposals to ensure tax fairness.
- CCPCs will benefit from a combined general corporate tax rate that is at least 12 percentage points lower than Canada’s largest trading partner, the United States.
- Small businesses in Canada will benefit from support that includes a reduced federal income tax rate of 9 per cent on their first $500,000 of active business income.
- The combined federal-provincial-territorial average tax rate for small business will be 12.9 per cent, by far the lowest in the G7 and fourth lowest among Organisation for Economic Co-operation and Development countries. Small businesses can retain more of their earnings to reinvest, supporting growth and job creation.
- Lowering the small business tax rate will save small business owners between $7,500 and $1,609 annually.
- In the course of the consultations, over 21,000 written submissions were received by the Department of Finance Canada.