Category: Small business deduction

In Nicole L. Tiessen Interior Design Ltd. v R, 2021 TCC 29, the court considered the following circumstances. A firm of architects carried on business through a single corporation. In 2010 and 2011, the firm undertook a reorganization that saw…

The adjusted aggregate investment income (AAII) grind might not be the end of the world, especially in Ontario (which did not adopt the grind), because of the lower rate paid by an individual when funds are withdrawn from the corporation…

The authors suggest that corporations might form a partnership to hold an investment portfolio to reduce or avoid the small business deduction grind for passive income in paragraph 125(5.1)(b) of the Income Tax Act (Canada). They counsel caution, however, because…

Suppose that Holdco owns all of the shares of both Realco and Opco. All three corporations have the same year-end. In year 1, Realco sells real property and realizes a large gain that generates passive income in excess of $150,000.…

In November, Ontario announced it would not implement the AAII clawback for the small business deduction (SBD). This creates an integration anomaly. If the federal clawback applies, the related income will be part of GRIP for federal and Ontario purposes…

In Rocco Gagliese Productions Inc. v R, 2018 TCC 136, the corporate taxpayer employed an individual who wrote and recorded music on an active and continuous basis. The taxpayer received royalty income from SOCAN for this work. The CRA took…

In A Ghani, M Lee and M Kakkar, “The Passive Income Rules: New Ways To Grind the SBD” 18:4 Tax for the Owner-Manager (October 18, 2018), the authors note that egardless of whether a corporation has had multiple year-ends, these…

The CRA accepts that a business carried on by a corporation as a member of a partnership is not a specified investment business if the partnership employs more than five full-time employees. The authors suggest that a corporation could earn…

From Jason Pisesky, “Incentive Effects of the New SBD Clawback” Canadian Tax Focus 4:4 (May 2018): an extra $1,000 of rental income creates $1,307 of immediate tax in Alberta, as…

A CCPC might want to assign a portion of is small business deduction limit to another corporation because of the specified corporate income rules. The assignment will be problematic, however, if the assignor’s year-end occurs before that of the assignee.…