Budget 2016 Changes

Aceti & Associates - Friday, November 18, 2016

MULTIPLICATION OF THE SMALL BUSINESS DEDUCTION

Draft legislation was released on July 29, 2016 meant to prevent business owners from multiplying access to the $500,000 small business deduction (SBD)

The new provisions will apply to tax years commencing on or after March 22, 2016. Generally speaking the new rules will result in any revenue earned from providing services to another company you own shares in from benefiting from the SBD. In some cases unused SBD limit can be assigned between companies, however there is the additional obligation of filing an election.

Each individual case must be examined on its own merits but there are two main points to be aware of:

- Some corporate structures with multiple companies & varied ownership among partners enjoy multiple SBD limits; this benefit will be lost under the new rules.

- Billing between companies in your group will have to be more closely examined & you may have to restructure how this occurs & pay attention to a process that was taken for granted in the past.