CDA Essentials 2017 • Volume 4 • Issue 6

12 | 2017 | Issue 8 CDA at W ork C A $50,000 threshold on passive income in a year (equivalent to $1 million in savings, based on a nominal 5% rate of return) is available to provide more flexibility for business owners to hold savings for multiple purposes, including savings that can later be used for personal benefits such as sick-leave, parental leave or retirement.  Lifetime Capital Gains: The government will not proceed with any changes regarding lifetime capital gains and would consult in the coming year on how to facilitate intergenerational transfers of businesses.  Income Sprinkling: The government intends to move forward with changes to the rules regarding income sprinkling. These changes would include the introduction of a reasonableness test for adult family members. This test will be comprised of 4 basic principles to determine whether a family member has contributed to the business. Any combination of these 4 would be sufficient: 1. Labour contributions 2. Capital or equity contributions to the business 3. Taken on financial risks of the business (e.g., co-signing a loan or other debt) 4. Past contributions in respect to previous labour, capital or risks. The Minister also indicated that the government will work to reduce the compliance burden with respect to establishing the above-mentioned principles. Next Steps Thanks to the massive amount of input the government received on the proposed changes from all sectors, including dentistry, amendments to its initial proposals may be significant and could result in a far less dramatic impact for dentists and their dental practices. However, none of the changes announced by the Minister in October were accompanied by draft legislation. Therefore, CDA will continue following this issue closely in the coming months until there is more clarity. The government intends to introduce its tax changes as part of the Budget Implementation Bill in spring 2018. CDA met with MPs and Senators in October to help ensure that dental offices, like all small businesses, are not adversely affected by these changes. a (L. to r.) The Hon. Wayne Easter, Chair of the Parliamentary Standing Committee on Finance and Dr. Larry Levin, CDA president, after CDA presented to the Committee on Parliament Hill in October 2017. 