The Department of Finance Canada (Finance Canada) published a consultation paper entitled Tax planning using private corporations as well as legislative proposals to address tax planning strategies involving the use of private corporations, namely:
- Income sprinkling;
- Holding a passive investment portfolio inside a private corporation;
- Converting regular income into capital gains.
If the proposed measures are adopted, they will have a significant impact on private corporations and their shareholders. Hereinafter is a summary of those proposed measures.