Why the federal budget’s passive income changes have many breathing sigh of relief
Small-business owners, incorporated doctors, lawyers and other professionals will be relieved after the announced passive income changes in the 2018 federal budget. The government listened after receiving heavy criticism from their original plan, and they decided to take a brand-new approach. The new plan is much simpler. They’re still targeting the “tax deferral advantage” and removing some of the tax deferrals through the new passive investment income proposals. In the new plan, the government has set the “business limit” to the first $500,000 of active business income (ABI), which will be taxed at the small business deduction tax rate (SBD rate) as opposed to the higher corporate tax rate on ABI.