Personal Finance

Trudeau going after Personal Services Corps disguised as small businesses

  • Last Updated:
  • Dec 17th, 2017 10:14 am
Deal Addict
May 22, 2003
2332 posts
1054 upvotes
Vancouver
So are they going to increase the $50k limit over the years to match inflation at least? Also, have they figured out they can implement this in a simplified manner that won't lead to an administrative nightmare for small businesses to keep track?
Member
Apr 14, 2015
495 posts
111 upvotes
Tsuu T'Ina, AB
No details yet! You all just have to trust them that they won’t screw this up... again...
Deal Addict
Oct 7, 2007
3164 posts
742 upvotes
This has all been handled very poorly by the Feds. I am assuming that if they proceed with it, they will still need to vote on it in the House, no?
Deal Addict
May 22, 2003
2332 posts
1054 upvotes
Vancouver
choclover wrote:
Nov 24th, 2017 10:28 am
This has all been handled very poorly by the Feds. I am assuming that if they proceed with it, they will still need to vote on it in the House, no?
They have majority of the house and will push it through.
Deal Addict
Oct 7, 2007
3164 posts
742 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
1146 posts
175 upvotes
1 month to go and these guys didnt even pass anything who knows maybe this is for 2019
Deal Addict
Oct 7, 2007
3164 posts
742 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
4212 posts
1188 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
16741 posts
1796 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
3164 posts
742 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
399 posts
177 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
16741 posts
1796 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.
Member
Apr 14, 2015
495 posts
111 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
1922 posts
679 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.

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