New Rules for Passive Investment Income

On July 18, 2017, the government released a consultation paper proposing changes that were intended to remove the perceived unfair tax advantages available to owners of private corporations. One of the proposed changes targeted passive investments inside a corporation.

In October 2017, after a consultation period, the government announced that they were moving forward with the measures to limit the tax deferral benefits of holding passive investments within private corporations and that draft legislation for these measures would be included in the 2018 federal budget (the budget).

On February 27, 2018, the government released the budget. The government departed from their proposals originally outlined in the consultation paper and instead proposed two new measures to limit the tax deferral advantages.  The details of the two new proposed measures are discussed in this article:

Passive Investment Income in a Corporation