Passive Income Limitation 2018

A key objective of the budget is to decrease the small business limit for ccpcs with a set threshold of income generated from passive investments.

Passive income limitation 2018. This will apply to ccpcs with between 50 000 and 150 000 of investment income. Passive income broadly refers to money you don t earn from actively engaging in a trade or business. We have been asked to provide guidance on how the new passive income reduction will apply to the reduction of the business limit for associated corporations with differing taxation years. A corporation s adjusted aggregate investment income is the total of all amounts each of which.

As illustrated in the table below the passive income rule change will result in the company paying 40 000 more tax than it would have before the cra passive income tax changes. By its broadest definition passive income would include nearly all investment income. A corporation s adjusted aggregate investment income is the total of all amounts. These measures take into account the feedback received from stakeholders in response to the july 2017 consultation.

In 2018 the company earned 100 000 of passive investment income. The passive income reduction will apply for taxation years that begin after 2018. The passive income reduction will apply for taxation years that begin after 2018.