CREA says that the government listened to the concerns of its members which focused on ‘income sprinkling’ and the application of ‘reasonableness’ tests.
Realtors are among the many Canadian professionals who use personal incorporation and the benefits of passive investment income to effectively manage their business finances.
Finance minister Bill Morneau said Wednesday that the government intends to move forward with measures to limit the tax deferral opportunities related to passive investments, while providing business owners with more flexibility to build savings for business purposes – for example to deal with a possible downturn or finance a future expansion – as well as to deal with personal circumstances, such as for parental leave, sick days or retirement.
There will also be protection for past investments and the income from those investments, and a $50,000 threshold for passive income in a year.
"This was a true consultation, the government listened to diverse voices, took the time to meet with us to understand our members' pre-occupations and ultimately came up with a solution that met the Minister's goals and addressed some unintended consequences for our industry", said Gary Simonsen, CREA's CEO.
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The amendments to the federal government’s tax proposals for personal incorporation have been welcomed by the Canadian Real Estate Association.