Elbows Up: The Time for Personal-Corporate Tax Reform is Now

One can’t avoid the messaging of the economic pain to come. Our deteriorating economic relationship with our biggest trading partner will require us to “pivot and prosper” in order to emerge “stronger and more resilient” says our Prime Minister. While exactly how we will do this is still unclear, there is one clear opportunity: for both federal and provincial governments to initiate a significant personal and corporate tax reform in the upcoming fall budget.

The bad news? The Ontario budget is introducing $1.3 Billion in tax hikes over three years and the annual debt servicing costs on a total debt of $325.3 Billion will be $11 Billion. The good news?

The Department of Finance recently released proposals to amend certain sections of the Income Tax Act (the Act) that pertain to the tax treatment of certain trusts. The proposed changes restore fairness in matters relating to spousal trusts.

“I told you so. . . .” These four dreaded words are often on the tips of tongues at this time of the year, although polite tax practitioners try to resist uttering them when skimpy recordkeeping results in higher taxes – or reduced tax credits - for their clients.

It was a lovely visit at Knowledge Bureau head office with designate Vongsa Phommarath, MFA – Business Service Specialist™.

The Finance Department released its 37th report on federal tax expenditures last week; it has published estimates of tax expenditures for personal and corporate income taxes, as well as for the Goods and Services Tax, since 1944. It’s an interesting read, especially in advance of the March 22, 2016, federal budget, when the government is expected to announce new tax expenditures.

As a way to simplify the tax system, an overwhelming majority of respondents, 87%, to Knowledge Bureau’s February poll agree that investment income under $1000 should not be taxed. Will their wish come true?