tag:blogger.com,1999:blog-4402283548766807872.post981357910444988292..comments2024-03-29T02:47:49.234-04:00Comments on The Blunt Bean Counter: Tax Planning Using Private Corporations - The Liberal’s go with Piecemeal Announcements The Blunt Bean Counterhttp://www.blogger.com/profile/11358868550072516313noreply@blogger.comBlogger28125tag:blogger.com,1999:blog-4402283548766807872.post-90746189083894621372017-11-29T23:19:13.120-05:002017-11-29T23:19:13.120-05:00Hi Anon
Glad you like the blog. Your question is ...Hi Anon<br /><br />Glad you like the blog. Your question is a great one. It is very unfair the Liberals are creating an atmosphere where guessing is now tax planning. Anyways, I cant answer you, since I have no idea what the actual legislation will say. If you want a guess, I would make sure at Dec 31st the money is invested either with the new firm or the old one. The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-22893274911223704592017-11-29T00:35:18.925-05:002017-11-29T00:35:18.925-05:00I have stumbled across your blog here. And have l...I have stumbled across your blog here. And have learned more in 2 hours of reading your blog than several hours of spending time with advisors and accountants. Thank you so much for your clear and cogent writings. <br /><br />I'm a small business working professional with about 500k in investments (mutual funds) in my corporation. The mutual funds are all investing under one investment firm. I am strongly thinking of switching to another investment firm shortly. Is this important to do before the january 2018 so the new investments in the new firm are grandfathered in the old tax laws? <br />In your best estimate, do you think that the new tax law will begin in January - can you comment if this a bad or a safe assumption?<br /><br />Thanks again.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-30270495636370011832017-10-27T16:27:13.898-04:002017-10-27T16:27:13.898-04:00It is our understanding, again verbally, that RDTO...It is our understanding, again verbally, that RDTOH in existence to Dec 31, 2017 will remain. After that, you will need to see the new legislation to know where it will exist and where it wontThe Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-34615976686579253372017-10-27T16:25:52.485-04:002017-10-27T16:25:52.485-04:00Andres, speak to your accountant. An AJE does not ...Andres, speak to your accountant. An AJE does not change the issue and creates some documentation issues. Be careful and again speak to your accountantThe Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-20475750800507044372017-10-27T09:27:04.902-04:002017-10-27T09:27:04.902-04:00In another small comp. we have a good amount of RD...In another small comp. we have a good amount of RDTOH that was created around 10 years ago.<br />As of this date has this been affected or are we ok to keep receiving these when we pay ourself dividend.<br /><br />Thank YouAnonymoushttps://www.blogger.com/profile/00971316470449665807noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-41915449891029700342017-10-27T09:22:28.265-04:002017-10-27T09:22:28.265-04:00Ok thanks for sharing that.
Perhaps another approa...Ok thanks for sharing that.<br />Perhaps another approach would be by doing a "Ajusted Journal Entry" AJE..rather that paying actual dividend.This would create a Tax Free loan owing from my company to the shareholder.Probably wise to also to exchange a promisary note and a resolution be done...showing a dividend paid and receive.<br /><br />Would this be a better approach at this time!<br /><br />Thank YouAnonymoushttps://www.blogger.com/profile/00971316470449665807noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-6179589747390896212017-10-26T20:03:18.869-04:002017-10-26T20:03:18.869-04:00Hi Andres:
Great question. As of last week, my fi...Hi Andres:<br /><br />Great question. As of last week, my firm and others had suggested the proposals had inadvertently prevented the payment of CDA dividends for typical arms length transactions. The Liberals announcement last week that they would not move ahead with the dividend stripping rules seems to remove that obstacle. However, you should first speak to your accountant to get their opinion, as you are relying on the Liberals verbal pronouncement they will not proceed. Not great when tax planning is based on verbal pronouncements.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-61827980591078908372017-10-26T19:54:14.124-04:002017-10-26T19:54:14.124-04:00Hi Anon
It is my understanding they will apply to...Hi Anon<br /><br />It is my understanding they will apply to all corps, but I am still unclear exactly how they will affect passive corps not claiming the SBD and already paying high rate tax - there is talk of some kind of election mechanism. Sorry, I cannot really provide much clarity here.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-92051508817340022502017-10-26T08:35:07.873-04:002017-10-26T08:35:07.873-04:00In my small company we have a good amount of funds...In my small company we have a good amount of funds in our CDA acct .Im debating if it would be prudent to pay these funds out to shareholder tax free and loan back to my company if we need them!<br /><br />Or has existing CDA rules changed already...<br /><br />Thank You.Anonymoushttps://www.blogger.com/profile/00971316470449665807noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-50323046028790565502017-10-25T21:48:12.226-04:002017-10-25T21:48:12.226-04:00Great post. For clarity do the changes the Liberal...Great post. For clarity do the changes the Liberals announced apply to all Private Corporations or only those that qualify for the Small Business Deduction.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-59384087035897892672017-10-25T20:41:53.448-04:002017-10-25T20:41:53.448-04:00Hi Anon
I cannot provide advice on verbal comment...Hi Anon<br /><br />I cannot provide advice on verbal comments made by the Liberals. From what we heard, your approach is likely ok, but I would need to see some legislation.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-54152349138425483512017-10-25T20:40:00.467-04:002017-10-25T20:40:00.467-04:00Hi Anon
No one is quite sure of the implementatio...Hi Anon<br /><br />No one is quite sure of the implementation date and when they will issue legislation and if it will be backdated to Dec 31, 2017. part of the frustration, we have no idea of any detailsThe Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-91787332900959440142017-10-25T20:37:48.201-04:002017-10-25T20:37:48.201-04:00Hi Nathan
Well said, i could not agree moreHi Nathan<br /><br />Well said, i could not agree moreThe Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-34253484162195008382017-10-25T20:36:50.710-04:002017-10-25T20:36:50.710-04:00Passive will include div and cap gainsPassive will include div and cap gainsThe Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-24134563365241376232017-10-25T13:00:28.836-04:002017-10-25T13:00:28.836-04:00Tks for commentary, very helpful. Talk about bad t...Tks for commentary, very helpful. Talk about bad timing, but 2018 is the first year I will leave retained earning in my company (I am a prof and not entitled to small bus rate). My plan is to invest using Horizons ETFs which do not pay interest/dividends so only issue will be capital gains tax rates when I sell (or wind down the co). Any thoughts on this approach including downsides, apart of course from Govt going after these types of ETF products or hiking capital gains rates. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-1453186235904052362017-10-25T08:27:57.612-04:002017-10-25T08:27:57.612-04:00Thanks so much for the insight. don't know wha...Thanks so much for the insight. don't know what I'd do without these posts!!<br /><br />I am perplexed as to what the timeline for implementation of the passive inv. rules. Could they be effective January 1 2018? Am I right that the budget doesn't come out until a few months later??<br />Thanks so much!!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-9073194195920906632017-10-25T02:30:07.566-04:002017-10-25T02:30:07.566-04:00Couldn't agree more. All of this confusion cou...Couldn't agree more. All of this confusion could and should have been trivially foreseen. I can't fathom what the government is about putting forward these half-considered tidbits. They're just creating a ton of unnecessary stress and confusion, along with negative publicity.<br /><br />I don't mind the basic goal of removing some tax advantages for CCPC owners, even though I'll end up paying more. IMO some of them are indeed inequitable. Certainly it's something reasonable people could consider. But the way it's been approached is just mind-bogglingly incompetent. Overreaches on the policies, but more importantly, just a complete lack of planning, forethought, and effective communication.Anonymoushttps://www.blogger.com/profile/13903169117125578441noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-73244972979121293492017-10-24T23:51:29.040-04:002017-10-24T23:51:29.040-04:00Re passive income: I wonder if that would exclude...Re passive income: I wonder if that would exclude cap gains and dividends. "income" means something specific to me. Of course RDTOH would kick in on cap gains and dividends.<br /><br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-6956558436569277732017-10-24T19:53:13.255-04:002017-10-24T19:53:13.255-04:00Hi Melissa
Yes, if new earnings (post 2017) or in...Hi Melissa<br /><br />Yes, if new earnings (post 2017) or income from those earnings exceed the thresholds, you will likely ensure you do not exceed such. However it is my understanding the 73% is a bit misleading, since while the rate is 73%, the actual flow through of say $100 earnings personally and corporately will still be somewhat equivalent and the 73% is the equalizer to make up for the lower taxed active income. So from calculations i have seen your are not paying 73% in absolute dollars but still mid fifties even if earned and flowed through from a corp.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-45234515695932317242017-10-24T19:45:43.465-04:002017-10-24T19:45:43.465-04:00Hi Anon
I thought the passive rules would be the ...Hi Anon<br /><br />I thought the passive rules would be the proposals the Liberals decided to forgo and the dividend stripping rules would remain. Shows what I know :(<br /><br />However, we got the reverse showing the government does not have any idea still what professionals and small biz owners find acceptable. I am not very hopeful they will sweep them under the rug since that would mean they not only modified the rules, but then changed their minds again, which optically is not great though practically the way to go. My hope is when they try to draft these complex rules they have so much trouble they do give in.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-19874661728942659272017-10-24T19:40:56.386-04:002017-10-24T19:40:56.386-04:00Hey Cdn Small Biz Owner
I feel for you too. This ...Hey Cdn Small Biz Owner<br /><br />I feel for you too. This is a dogs breakfast as you say and many people in your position have huge uncertainty while the tax profession is paralyzed and the government does not seem to really care or understand the position they have left small biz owners and their advisors . The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-8875062789567678682017-10-24T19:37:52.199-04:002017-10-24T19:37:52.199-04:00Hi Tim
No idea and based on discussions at the On...Hi Tim<br /><br />No idea and based on discussions at the Ont Tax Conference I was attending this week, no one is quite sure. You are 100% correct, this whole thing is still unclear and the Liberals are doing everyone a huge disservice not providing details, let alone making these complex passive rules.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-16078361612821784032017-10-24T18:08:31.788-04:002017-10-24T18:08:31.788-04:00Thanks so much, BBB. I, for one, am relieved that ...Thanks so much, BBB. I, for one, am relieved that they're going to take at least a year to work things out instead of reaming it through.<br /><br />For the passive income portion, your take is that, based on their nebulous comments, if we earn more than $50K passively, per year, they may tax it at "the new punitive tax rate" of up to 73%, correct?<br /><br />If so, it means we shouldn't keep more than $1M in our corporations, if we can get a lower tax rate by taking dividends or salary.Melissa Yihttps://www.blogger.com/profile/01714047923814805076noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-8477553840614806382017-10-24T14:49:19.852-04:002017-10-24T14:49:19.852-04:00Do you think that based on the complexities / issu...Do you think that based on the complexities / issues they will end up deferring the passive income changes to a later date and "sweep them under the rug" after the 2018 budget and subsequent election. I have moderate holdings and the proposed requirements seem ludicrous.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-59982232235743127432017-10-24T09:05:05.131-04:002017-10-24T09:05:05.131-04:00Mark: I feel for you and all the other professiona...Mark: I feel for you and all the other professionals trying to do what's best for their clients. This is a dog's breakfast. My greatest concern is similar to above. I have no idea what I need to do to ensure the work I have done in our family business is recognized after hubby and I retire, given I've done a whole whack of work over the years but have never taken a penny out. Really looking forward to those government FAQ's! :-)Canadian Small Business Ownerhttps://www.blogger.com/profile/11066132248420165436noreply@blogger.com