Our Speaker Kim Moody

Posted by Craig Henderson
 
Club President Bill Avery introduced our guest speaker, Kim Moody of Moodys Gartner Tax Law. Kim's presentation provided an update on the federal government's efforts to revise the Tax on Split Income (TOSI) rules. As he had previously addressed the club in August 2017, this week's presentation brought us up with developments leading to the finance department's 2018 budget.
 
 
Proposed changes to the taxation of private corporations and their shareholders, which were previously only vaguely hinted at, were released by the finance department on July 18, 2017. These propsals, couched in political language heretofore not seen from the finance department, would have resulted in large changes to the way small businesses are taxed. The major changes announced at that time were
  • Extension of current "kiddie tax" rules to all non-arm's length persons in an effort to combat income splitting or "sprinkling".
  • Changes to the capital gains rules for extracting money from corporations to reduce surplus stripping.
  • Proposals to completely overhaul the tax rules for passive investments held inside corporations.
A strong "backlash" to these changes began to emerge during a rushed consultation period in which the government mounted a vigorous defence of its proposals.
Opposition to these proposed changes resulted in the federal government receiving over 21,000 submissions, followed by an almost  immediate government "climb down". The tax proposals have since gone through several refinements, including the federal budget released on February 28th, and the third version of the TOSI rules released on March 22. Although, the surplus stripping and passive investment proposals were abandoned in the 2018 federal budget, the V3 TOSI rules still add complexity in relation to the income splitting rules.
 
The government's stated intention in introducing these proposals was to ensure tax fairness by eliminating the "loopholes" that form the basis of many tax planning strategies. Paridoxically, these proposals have led to taxpayer consideration of more aggressive planning strategies. In fact, Moodys Gartner is busy assisting high net worth clients in leaving Canada.
 
At the conclusion of Kim's presentation, club member Lori Farand thanked our speaker for his informative talk, and presented our customary CAWST certificate in appreciation of his presentation.
                                                                                                           
Lori Farand Thanks Our Speaker Kim Moody