Personal Finance

Trudeau going after Personal Services Corps disguised as small businesses

  • Last Updated:
  • Jul 17th, 2018 2:51 pm
Deal Addict
Oct 7, 2007
3633 posts
994 upvotes
Jermyzy wrote:
Nov 24th, 2017 4:57 pm
They have majority of the house and will push it through.
I would think you are right. However, there are two reasons that may interfere with this:
1. Many of those in the House have corporations themselves and will be directly affected by whatever is in this bill, AND
2. Some of the Liberals already stated that they were opposed to this legislation

I will expect the worst but it will be interesting to see how this plays out especially given that Trudeau and Morneau both have corporations and somehow have exempted themselves from these rules.
Deal Addict
Jul 3, 2006
1654 posts
309 upvotes
1 month to go and these guys didnt even pass anything who knows maybe this is for 2019
Deal Addict
Oct 7, 2007
3633 posts
994 upvotes
J_u_n_i_o_r_3 wrote:
Nov 25th, 2017 10:40 pm
1 month to go and these guys didnt even pass anything who knows maybe this is for 2019
It could be although it makes me wonder if they would ram it through really close to an election. When is the next federal election, by the way? Is it in 2019?
Deal Addict
Nov 24, 2013
4907 posts
1534 upvotes
Kingston, ON
choclover wrote:
Nov 26th, 2017 12:08 pm
It could be although it makes me wonder if they would ram it through really close to an election. When is the next federal election, by the way? Is it in 2019?
Oct 2019 by the fixed date, so still almost 2 years away. Technically the govt could request an early dissolution (snap election) or pass legislation overturning the fixed date, so that’s not set in stone, just the most likely date.

It’d probably be to the government’s advantage actually to make any rule changes effective the 2019 tax year. Then no 2019 returns will have been filed by the election date. They definitely still could make everything effective 2018 though.
Deal Expert
Feb 29, 2008
18816 posts
2064 upvotes
Montreal
Yeah this is getting annoying. I usually plan out our dividend payouts for the year in January. Now I'm scared if I pay my wife dividends they will be surtaxed.

I plan not to invest any corp money starting in January until I see how this shakes out.

Can they make the regulations retroactive?
Deal Addict
Oct 7, 2007
3633 posts
994 upvotes
mr_raider wrote:
Nov 27th, 2017 10:15 am
Yeah this is getting annoying. I usually plan out our dividend payouts for the year in January. Now I'm scared if I pay my wife dividends they will be surtaxed.

I plan not to invest any corp money starting in January until I see how this shakes out.

Can they make the regulations retroactive?
They can but someone I trust very well says that this would be a big mistake and that the government could be sued for doing this. What they are trying to do is so unpopular as it is that I would imagine them making any changes retroactively would have people out with their pitchforks.
Member
User avatar
Jan 15, 2017
442 posts
189 upvotes
mr_raider wrote:
Nov 27th, 2017 10:15 am
Yeah this is getting annoying. I usually plan out our dividend payouts for the year in January. Now I'm scared if I pay my wife dividends they will be surtaxed.
Are you referring to the 73% effective tax rate that could apply without RDTOH?
Deal Expert
Feb 29, 2008
18816 posts
2064 upvotes
Montreal
taxrage wrote:
Nov 27th, 2017 11:59 am
Are you referring to the 73% effective tax rate that could apply without RDTOH?
No. The reasonableness test for dividends to family members.
Sr. Member
Apr 14, 2015
527 posts
142 upvotes
Tsuu T'Ina, AB
I read they are planning for the income splitting rules to be effective January 1. The passive investment rules should come into effect with the next budget. Any other changes, they are planning to do more “consultation”, so no date is set.
Deal Addict
Nov 9, 2013
2225 posts
904 upvotes
Edmonton, AB
mr_raider wrote:
Nov 27th, 2017 10:15 am
Yeah this is getting annoying. I usually plan out our dividend payouts for the year in January. Now I'm scared if I pay my wife dividends they will be surtaxed.

I plan not to invest any corp money starting in January until I see how this shakes out.

Can they make the regulations retroactive?
I'm meeting with my accountant tomorrow to discuss a special dividend this year, for money that would normally be paid out in 2018.
Member
User avatar
Jan 15, 2017
442 posts
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Operatime wrote:
Nov 27th, 2017 6:58 pm
I read they are planning for the income splitting rules to be effective January 1. The passive investment rules should come into effect with the next budget. Any other changes, they are planning to do more “consultation”, so no date is set.
@CFIB has some tweets out today on this.
Deal Addict
Oct 7, 2007
3633 posts
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treva84 wrote:
Nov 27th, 2017 7:19 pm
I'm meeting with my accountant tomorrow to discuss a special dividend this year, for money that would normally be paid out in 2018.
There are 2 taxation years to be considered here as follows:
1. Personal taxation - this is set in stone as the calendar year so the current one ends Dec 31st, 2017
2. Corporate taxation - this is customized for each corporation

My question is if it has been established when the new rules apply to corporations? For example, if a company's year end is June 30th, then paying dividends out in December 2017 vs. January 2018 will have the same effect on the corporation under these new rules, no?
Deal Expert
Feb 29, 2008
18816 posts
2064 upvotes
Montreal
choclover wrote:
Nov 29th, 2017 10:53 am
There are 2 taxation years to be considered here as follows:
1. Personal taxation - this is set in stone as the calendar year so the current one ends Dec 31st, 2017
2. Corporate taxation - this is customized for each corporation

My question is if it has been established when the new rules apply to corporations? For example, if a company's year end is June 30th, then paying dividends out in December 2017 vs. January 2018 will have the same effect on the corporation under these new rules, no?
You could technically issue a dividend until the 30th, and back date it before december DEc 31st in your minutes. You would then need to issue an amended 2017 t5 to account for the extra revenue.

Not sure how kosher it is, as my account prefers I pay all my dividends before the end of the calendar year.

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