What the new ‘income sprinkling’ rules mean for tax planning

tax

By Jamie Golombek

Small business owners, including incorporated professionals such as doctors, lawyers, accountants and others, will likely face a higher tax bill in the years ahead as a result of Finance Minister Bill Morneau’s announcement this week targeting several common, and until now, perfectly legal, tax strategies used in conjunction with private corporations.

The strategies under attack can be categorized into three main areas: income sprinkling, earning passive investment income in a corporation and converting a corporation’s ordinary income into tax-preferred capital gains.

Among these changes, it’s the first one — income sprinkling — which is perhaps deemed the most offensive of the three and the one that will likely have the broadest financial impact on small business owners and incorporated professionals.

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Arnaldo Rodgers Posted by on 10:18 am, With 0 Reads, Filed under Personal Finance, Small Business. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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