Recent international tax changes proposed by the OECD could significantly impact the cross-border activities of Canadians – particularly with respect to tax planning strategies that shift profits to low or no-tax jurisdictions.
On July 18, 2017, the Department of Finance released its much-anticipated consultation paper, “Tax Planning Using Private Corporations”, announced in the 2017 federal budget (the “consultation paper”). The consultation paper, along with the draft legislation released therewith, contain a number of fundamental changes to the taxation of private corporations and family trusts.
On July 18, 2017, the federal Department of Finance released legislative proposals and a consultation paper dealing with tax planning affecting private corporations. The goal is to close loopholes that allow wealthy Canadians to avoid higher tax rates, largely by targeting people who incorporate themselves and then draw income from their businesses while paying lower corporate taxes. These proposals, if enacted, will potentially affect most Canadian business owners who carry on their businesses through private corporations, significantly increase the complexity of the tax rules applicable to private corporations and reverse many long-standing tax policies that have encouraged business growth.