Bill Morneau unveils gentler tax proposals for private corporations
During Hampton stop, minister says new proposals will affect only the very rich
Finance Minister Bill Morneau announced changes to his proposed tax reforms for private corporations on Wednesday, saying they will now target the "unfair" tax advantages used by the wealthiest Canadians.
The vast majority of private corporations — about 97 per cent — will not be affected by the reforms, Morneau said during an event in Hampton, N.B.
He said the federal government will introduce a threshold for passive investment income of $50,000 a year, so small businesses can hold on to money for retirement and other purposes.
"We understand that many, many small businesses are using their corporations to save for the future by making passive investments," he said at the event for small businesses, which raised a storm about his original proposals.
"For the vast number of corporations, this isn't a problem. But in a very small number of cases, it gives wealthy people an unfair advantage over and above everyone else."
He also said the federal government estimates between $200 billion and $300 billion in assets are sitting in the passive investment accounts of just two per cent of all private corporations.
"This is money that's not being invested into active businesses, and it's money that's generating an additional $20 billion a year in passive investment income," he said.