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Trudeau Defends Controversial Tax Proposals

by Mike Godfrey,, Washington

15 September 2017

Canadian Prime Minister Justin Trudeau has said that no one earning less than CAD150,000 (USD123,154) will be affected by his Government's plan to crack down on tax planning strategies used by private corporations.

The Government is currently consulting on proposals to prevent individuals from using private corporations in ways that allow them to reduce their personal taxes. It intends to tackle so-called income sprinkling, the retention of passive investments in private corporations, and the conversion of the surplus income of private corporations to lower-taxed capital gains.

In an interview with CBC, Trudeau stressed that the Government is listening to people with concerns and reassuring them that those earning CAD150,000 or less "will not be negatively impacted by these changes."

Trudeau said that the Government is "trying to ensure that folks who are successful and are paying their fair share, and it's not fair that people who are wealthy have tax rules that they can get out of paying as many taxes and as much tax as middle-class families, and that's something that goes to the heart of fairness."

He added: "We just want to make sure that people using private corporations don't have benefits that aren't available to average Canadians, and that's where we're making a little tweak."

The proposals have been criticized by a range of trade bodies, and earlier this month 35 business organizations wrote to Finance Minister Bill Morneau to ask that he scrap what they described as "sweeping changes that will affect all sectors of Canada's business community." Dan Kelly, president of the Canadian Federation of Independent Businesses, said that in his 23 years of working on behalf of small businesses, he has "not seen this degree of spontaneous outrage toward any other policy."

According to Trudeau, a lot of "wealthy folks are really trying to keep those benefits that they have, and they're making a lot of noise."

TAGS: individuals | capital gains tax (CGT) | compliance | tax | investment | small business | business | tax compliance | corporation tax | tax planning | Canada | tax reform | trade association | trade

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