CFIB is urging the ministers to delay the planned CPP expansion and the federal carbon backstop as well as to reject adopting the new federal rules for passive investment income
* Excess net passive income tax: Imposed if an S corporation has accumulated earnings and profits at the end of the tax year and its passive investment income
exceeds 25% of the corporation's gross receipts.
The taxpayer represented that it was aware that having excess passive investment income
could subject it to tax but was unaware that this could cause a termination of its S election.
About 83 per cent of passive investment income
is earned by Canadian-controlled private corporation (CCPC) owners making more than $250,000.
Price would also resign from his managing partner position at the Georgia-based Chattahoochee Associates LP, a surgical group, but would still receive "passive investment income
Nevertheless, Zucman reflects the common view that the so-called benefits principle still makes sense, because most active business income is earned by corporations and most passive investment income
is earned by individuals.
It's been said that income tax, because of the new 3.8 percent XIII on passive investment income
, is the new "estate tax" for many clients.
Secondly, if you have income over the $200,000/$250,000 threshold, you will be subject to an additional 3.8 percent tax on the lesser of passive investment income
or modified adjusted gross income in excess of the threshold.
However, certain caveats apply--one of the most important being that the new tax applies only to passive investment income
Examples of non-core assets owned by a manufacturing or service company might include: real estate that is lying idle, or generating passive investment income
from third parties; shares or bonds that are not related to the company's main line of business; subsidiaries or investments in other companies unrelated to the company's core business.
In addition, a tax is imposed at the corporate level on excess "net passive income" of an S corporation (passive investment income
reduced by certain expenses connected with the production of such income) but only if the corporation, at the end of the tax year, has accumulated earnings and profits (either carried over from a year in which it was a nonelecting corporation or due to an acquisition of a C corporation), and if passive investment income
exceeds 25% of gross receipts.
For most of its existence, the I&D tax was narrowly focused on passive investment income
It was not intended in 1923 or thereafter to tax income earned from the performance of services, or other forms of investment income, such as capital gains or rents.