Changes to passive income rule for small business could net $6 billion

Changes to passive income rules for small biz could net $6 billion

Here’s some details from the Parliamentary Budget Office

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The Canadian Press: Parliament’s spending watchdog says Liberal changes to passive investment rules for small businesses could rake in up to $6 billion annually in new tax revenues after a decade.

The parliamentary budget office’s report out today says the new tax revenues would likely start out at up to $1 billion in the first year that new rules come into effect, and continue to rise.

The report says about 47,000, or 2.5 percent of Canadian-controlled private corporations, would be affected by the
changes the government is proposing.

Finance Minister Bill Morneau said last month the Liberals would establish a threshold of $50,000 on passive income per year, which would be equivalent to $1 million in savings, based on a nominal five percent rate of return.

The PBO says in its report that it can’t be certain about its estimates without more details from the federal government.

The report warns the figures don’t account for any changes small business owners may take to avoid paying more taxes, which could decrease revenue estimates by as much as 15 percent.

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