Taxation Of Investment Income; Voluntary Disclosure Program and Automatic Exchange Of Tax Information

Topics to Discuss

1. Introduction: Tax Reform in Canada and Internationally
2. Proposals to Modify the Taxation of Passive Investment Income of Private Corporations
3. Proposals to Amend the Voluntary Disclosure Programme
4. Proposals to Commit to the Common Reporting Standard and Provide Automatic Exchange of Tax Information to Foreign Tax Authorities

Taxation of Passive Investment Income of a Private Corporation

• Policy Statement in Budget 2017
• When private corporations earn income beyond what is needed to re‐invest and grow the business, fairness and neutrality require that such corporations not be used as a personal savings vehicle for the purpose of gaining a tax advantage
• This use of a private corporation's lower tax rate to invest after‐tax proceeds in passive investments results in a realization of returns that exceed what individual investors saving in a personal investment can achieve
• The objective of the "integration" rules for taxing investment income is to ensure that a dollar of such income earned through a corporation bears a tax burden, when corporate and personal taxes are combined, that is roughly similar to that of a dollar of such passive income earned directly by an individual

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