2. What will these changes mean to you?
If you have family members as shareholders, whether directly or indirectly through a family trust, this legislation may require you to
defend the reasonability of the work performed. It may require you to have formal job descriptions for people and consider what
the business would pay a third party for the same duties. Record keeping and documentation will be important, as will establishing
a methodology for determining and justifying reasonableness.
If there are preferred shares outstanding, consider paying dividends on the preferred shares rather than the common shares, as
they may be reasonable based on capital contributed.
There may be a renewed bias to remunerate family members with salaries as opposed to dividends. This will create CPP
contributions (in theory, increasing eventual payments from the CPP), earned income room for RRSP purposes and will have
source deduction requirements.
The proposed rules are complicated and your MNP Tax Advisor can help you make sense of it all.
• Is your current business structure still suitable for your needs?
• Do you have to develop a new remuneration strategy?
• Should you elect on a deemed disposition to access your capital gains deduction?
These are the types of questions that need to be addressed in order for you to be prepared if these proposed rules are passed into
Consultation with Government
MNP will be preparing a written submission to the Department of Finance on the technical aspects of the proposed legislation. The
consultation period ends on October 2, 2017. Following the consultation period, the government will table a revised form of this
3. What do you need to do?
Contact your local MNP Advisor to understand how these changes may affect your interests. Even though the government is still in
consultation phase, it is best to understand the effect these proposed changes could have on your business as well as your
options to minimize the effect if the legislation moves forward.
When it comes to tax, it’s all about the details. Knowing the rules and regulations, what qualifies, what doesn’t and how to structure
your business and claims most effectively. Our specialized teams are focussed on every facet of tax. We have the in-depth
knowledge and experience that will allow you to capitalize on all the opportunities available. We know what to look for, right down
to the smallest details. And it’s the small details that can add up to make a big difference.
Click here to find an MNP Professional