OTTAWA—Embattled federal finance minister Bill Morneau has announced the government plans to cut the small business tax, from 10.5 to 9 per cent.Morneau is kicking off a week of tax-change announcements by the feds.Morneau and Prime Mnister Justin Trudeau went to a Main Street pizzeria in Stouffville Monday morning to say the government would lower the small business tax rate to 10 per cent, effective January 1, 2018, and to 9 per cent, effective January 1, 2019. The tax cut would take full effect 10 months before the next federal election.Morneau is ditching altogether one of three other controversial tax changes that would have targeted the ability of incorporated businesses to convert income into capital gains, which are taxed at a lesser rate. But he will keep a modified version of a change targeting the ability of corporations to “sprinkle” income among family members to cut the tax bill. The government said that “to support” the small business tax cut, it must “take steps to ensure that Canadian-controlled private corporation status is not used to reduce personal income-tax obligations for high-income earners, rather than supporting small businesses.”Earlier Monday Morneau briefed a nervous Liberal caucus on the government’s surprise decision to move on the tax cut, which was first promised in the Liberal platform more than two years ago.The Liberals promised, in the 2015 election campaign, to drop it from 11 per cent to 9 per cent over three years, but have only cut it by a half per cent.The plan to cut it further is a dramatic move as Trudeau and Morneau struggle to regain their footing on tax policy after announcing, this summer, the proposals, which angered the business community.They had aimed at limiting the ability of incorporated business owners to: shift income among family members to benefit from their lower tax rates; shelter money in passive investments within a corporation, and convert income int ...
|
