Federal Finance Minister Bill Morneau announced the government’s intention to close tax loopholes.
He says this is about individuals not paying their fair share of taxes.
There are three loopholes currently in use.
“The first is income sprinkling which is when a business owner spreads, often by paying dividends from private corporations his or her income around to family members that are in a lower tax bracket,” says Morneau.
The second loophole is using a private corporation as a tax advantaged personal savings account.
“Right now, income that isn’t actively being invested back into the company can be left to accumulate while taking advantage of the lower corporate income tax rate,” says Morneau.
He adds the third loophole involves “converting a private corporation’s regular income into capital gains, which can provide an unfair opportunity to reduce income taxes.”
Morneau says this is basic fairness to prevent the wealthy from buying tax avoidance schemes.
The full announcement can be seen HERE
