Potential Tax Planning Changes

2017-08article3The federal government has proposed several changes to the Income Tax Act that could affect personal real estate corporations in BC. Until October 2, the government is accepting feedback on its proposals, which will impact a wide variety of Canadians.The federal government has proposed several changes to the Income Tax Act that could affect personal real estate corporations in BC. Until October 2, the government is accepting feedback on its proposals, which will impact a wide variety of Canadians.The federal government has proposed several changes to the Income Tax Act that could affect personal real estate corporations in BC. Until October 2, the government is accepting feedback on its proposals, which will impact a wide variety of Canadians.

Specifically, the proposed changes would limit:

  • income splitting,
  • the multiplication of the lifetime capital gains exemption (that is, the availability of the lifetime capital gains exemption to individuals who aren’t actively involved in the small business for which the exemption is claimed),
  • the conversion of income into capital gains, and
  • the deferral of passive investment income earned through a corporation (that is, leaving after-tax income within a corporation to take advantage of lower tax rates).

Having lobbied successfully several years for the right of REALTORS® to use personal real estate corporations, BCREA takes exceptions to these changes. The Association will participate in the consultation.

The full consultation paper is available here.

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