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Merry Christmas

Please note that our offices will be closed for the Holidays from December 22, 2017 @ 2:00 PM to January 1, 2018 and re-opening January 2, 2018 @ 8:30 AM.

EPR CLIENT NEWS BULLETIN

Dec 15,  2017

This week, Federal Finance Minister Bill Morneau announced revisions to the income splitting proposals set to take effect in 2018. The announcement served to clarify income splitting rules amongst family members and introduced specific tests to determine whether or not a family member is able to receive income from a small business.

For all family members who receive income from a small business that do not meet the revised conditions outlined in Morneau’s announcement, all income will be taxed at the highest marginal tax rate.

Family members who meet the following conditions will not be subject to taxation at the highest marginal tax rates:

  • The business owner’s spouse, provided the owner meaningfully contributed to the business and is aged 65 or over.
  • Adults aged 18 or over who have made a regular, substantial labour contribution—generally an average of at least 20 hours per week—to the business during the year, or during any five previous years.
  • Adults aged 25 or over who own 10% or more of a corporation that earns less than 90% of its income from services, and isn’t a professional corporation.
  • For those who do not meet these requirements, there is an option to self-assess if they meet the qualifications for “reasonable” payments on their tax return. Self-assessed income to family members would potentially face a review by the Canada Revenue Agency in order to prove “reasonability”.

EPR COMMENTARY

These proposals will drastically increase income taxes for Canadians operating small to medium sized businesses.  They are effectively removing the ability for companies to allocate income to legitimate corporate shareholders.   Furthermore, the wording of the rules is vague and open to interpretation.  It would appear that the government wants business owners to pay 50% tax on their personal incomes.

EPR RECOMMENDATIONS

As these rules take effect in 2018, we would recommend that increased distribution to family members be made for 2017 rather than delaying and paying resulting higher taxes in 2018 and beyond.

Please contact us to discuss what would work for your situation:

Maple Ridge:  eprmr@eprcpa.ca
Langley:   eprly@eprcpa.ca

Download a copy of this bulletin.

The proposed changes are complex and may be far-reaching with respect to how private corporations are taxed in the future. EPR Maple Ridge Langley will continue to monitor these developments to be able to provide you with timely updates and advice.

WE’RE HIRING!

SEASONAL TAX PREPARERS

Our public practice office has openings for full-time, seasonal tax preparers for the upcoming tax season.  Openings are available in our Maple Ridge and Langley locations.

Applicants should have a minimum of 3 years T1 Personal Tax preparation experience using Profile or similar programs. The openings are full time starting from either February 15 or March 1 and ending April 30, 2018.

Responsibilities will include preparation of T1 personal tax returns for individuals and sole-proprietors. The successful applicant must maintain a professional attitude and appearance. Excellent English communication skills, both verbal and written, are essential. Experience working in a paperless environment an asset.

Please send your resume and cover letter with salary expectation to vspindor@eprcpa.ca.

Successful applicants will be contacted by email to set up an interview.  No phone calls.

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