Feds ‘retreat’ on passive investment taxation changes for Canadian-controlled private corporations – Legal Feeds

Pooja Mihailovich

Feb 27, 2018

The February 2018 federal budget contained a number of tax-related provisions, two of which writer and editor Jennifer Brown examines in an article in Legal Feeds, the blog of Canadian Lawyer and Law Times. First, the government backed down from the passive investment taxation proposals for Canadian-controlled private corporations that it originally released in July 2017 – proposals that caused a great deal of concern in the business community, including lawyers that have private corporations. The government abandoned those changes, but proposed new rules that will restrict access to the small business deduction if the passive income of the corporation exceeds $50,000. Brown also discusses the budget’s provision for $41.9 million over five years to support Canada’s federal courts, including the Tax Court of Canada. In the article, the author seeks input about this funding from Pooja Mihailovich, a partner in Osler’s Taxation Group.

Pooja says the federal government has been “bolstering the capabilities of the CRA to raise more assessments, but without commensurately equipping the Court to handle more disputes.

“The Tax Court has for many years held the enviable position of being a court that resolves disputes in a timely way. The Court manages its docket strictly and makes efforts to ensure that matters are brought to a conclusion as efficiently as possible,” Pooja continues.

“However, disputes are getting bigger, and there are more of them with each passing year. Trials that extend for several weeks at a time are now the norm. The Chief Justice has publicly acknowledged that the Court has been feeling the weight of this pressure for some time. This extra funding is critical, and more may be necessary, but it is about time that the Court was given its due. It is in everyone’s interest that the Court be better positioned in the current environment.”

For more information, read Jennifer Brown’s full article “Feds ‘retreat’ on passive investment taxation changes for Canadian-controlled private corporations” in the February 27, 2018 edition of Legal Feeds.