Changes to passive income rules could net feds $6 billion, PBO says

Changes to passive income rules could net feds $6 billion, PBO says

OTTAWA — Parliament’s spending watchdog says Liberal changes to passive investment rules for small businesses could rake in up to $6 billion annually in new tax revenues after a decade.

The parliamentary budget office’s report out today says the new tax revenues would likely start out at up to $1 billion in the first year that new rules come into effect, and continue to rise.

The report says about 47,000, or 2.5 per cent of Canadian-controlled private corporations, would be affected by the changes the government is proposing.

Finance Minister Bill Morneau said last month the Liberals would establish a threshold of $50,000 on passive income per year, which would be equivalent to $1 million in savings, based on a nominal five per cent rate of return.

The PBO says in its report that it can’t be certain about its estimates without more details from the federal government.

The report warns the figures don’t account for any changes small business owners may take to avoid paying more taxes, which could decrease revenue estimates by as much as 15 per cent.

The Canadian Press

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