The proposed small business tax rule changes are expected to be in place January 1, 2018 and will impact incorporated small businesses in Canada. These laws will hit those splitting income in families and saving assets inside corporations. To help our clients assess their exposure we have developed a Risk Assessment Tool (RAT). We hope you find the name amusing.

To assess our client’s exposure and understand the impact of these changes, we have started a project where we are taking each client’s 2016 income and redoing it under the new rules to see if there is a tax increase. In most cases there is. The surprise is that the most heavily affected are not those in the top tax brackets, but rather the most heavily affected are those with modest incomes. This means the majority of small business owners are likely to be affected in some way.

To help us determine the exposure of each of our clients and develop a plan of action, we developed the RAT as a tool to be applied in one on one meetings with each of our corporate clients.

The first level of the RAT highlights exposure through an analysis of your corporate structure, typical income distribution mechanisms, industry classification and regulatory requirements. The second level of the RAT allows us to integrate these risk factors with the reasonability markers of effort, capital, risk and benchmarks to develop a plan of action.

If you want to discuss your exposure of the proposed small business tax rule changes, please contact Grant Gilmour below.

Have other questions? Contact Grant Gilmour 

Your comments are welcome!