Canada’s federal budget had a strong focus on women, low income workers and minorities, but avoided any big changes according to analysis from two major banks.
CIBC Economics says that apart from some new spending, there was little change from the government’s Fall Statement. Unsurprising it says, given that growth is expected to return to trend following the heat in the economy in 2017.
Meanwhile, TD Economics said the “boat remains unrocked” by the budget and said that any major announcements would more likely be in the pre-election budget next year.
Of note, especially to small business owners, is the changes to passive investment rules, as TD’s economists explain:
“A limit of $50,000 per year of passive income (meant to match a 5% rate of return on a million dollars of savings) will be enforced. Corporations with significant passive savings will lose access to the lower small business tax rate, with access phased out on a straight line basis.
The $500k small business rate limit will be gradually reduced until investment income reaches $150k, at which point the corporation will no longer qualify at all for the reduced tax rate. There is also an adjustment to the treatment of active and passive income payouts to ensure that the spirit of the tax system is met.”
Bruce Ball, vice president (tax) of the Chartered Professional Accountants of Canada, is calling for a comprehensive, independent review of the tax system. But he notes that the government’s passive investment plan has been improved.
"The new plan is much simpler than what was originally proposed, and the government deserves credit for listening to Canadians," says Ball. "We still firmly believe that the best approach to deal with Canada's tax system is not to assess proposals in isolation, but as part of a comprehensive review."
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate
More market watch: