tag:blogger.com,1999:blog-2855832589372200011.post2050415529348620025..comments2024-03-25T00:14:28.212-07:00Comments on The Sour Grapevine: The Market, the State and the Monkey in the MiddleJay Sour, PhDhttp://www.blogger.com/profile/15820570825725679971noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2855832589372200011.post-6078797122101412752019-08-13T17:53:11.197-07:002019-08-13T17:53:11.197-07:00By the way, Ryan, kudos for your analogy. The ide...By the way, Ryan, kudos for your analogy. The idea that we (voters/consumers) are 20 feet under water trying to figure out what is going on between the state and the market is an apt representation of the point I was trying to make in this post.Jay Sour, PhDhttps://www.blogger.com/profile/15820570825725679971noreply@blogger.comtag:blogger.com,1999:blog-2855832589372200011.post-2930527200972624302019-08-12T06:51:20.626-07:002019-08-12T06:51:20.626-07:00Thanks for the comment and additional information ...Thanks for the comment and additional information T. I don't doubt your numbers or expertise, but just so readers understand that I didn't pull my numbers out of nowhere, I think I should explain. My numbers refer exclusively to the federal tax under discussion and did not include any of the 12 different provincial/territorial rates. This is a typical summary which I have seen repeated in various sources (this one is from Realagriculture):<br />With the new rules proposed in the budget, tax rates assessed directly to passive income are unchanged, but Canadian-controlled private corporations (CCPCs) would gradually lose the ability to access the small business tax rate when annual passive income exceeds $50,000.<br /><br />In other words, the amount of business income eligible for the small business tax rate shrinks as passive investment income grows.<br /><br />The current small business deduction limit allows the small business tax rate to be applied to the first $500,000 of business income in most provinces. This small business rate is set at 10 percent for 2018 and will be dropping to 9 percent in 2019, whereas the general corporate rate federally is 15 percent.<br />https://www.realagriculture.com/2018/03/tax-treatment-for-passive-income-simplified-in-federal-budget/Jay Sour, PhDhttps://www.blogger.com/profile/15820570825725679971noreply@blogger.comtag:blogger.com,1999:blog-2855832589372200011.post-10979950041535303142019-08-10T05:59:13.892-07:002019-08-10T05:59:13.892-07:00The combined federal-Ontario income tax rate on pa...The combined federal-Ontario income tax rate on passive investment income is about 50.17% (rather than just 10%). This has been the case - with minor variations - for many years for Canadian Controlled Private Corporations, whether or not they are "small businesses". The small business pays combined Ontario and federal income tax on its ACTIVE INCOME at about 12.5% - it has to separate what is ACTIVE INCOME from what is PASSIVE INCOME, and pays tax at the appropriate rate on each type of income. When a dividend is paid, then about 30.67% of the "50.17% passive income tax" is refunded to the corporation - this offsets the personal tax that has to be paid when the dividend is received. That's how it works, and, with slightly varying rates, has worked that way for a long time (new rules mean corporations pay more tax when their passive income exceeds $50,000 in a year). We're fortunate in Canada to have had a talented Finance Department for many years - this is a clever way to tax income in a corporation and integrate it with personal tax.Anonymoushttps://www.blogger.com/profile/16961440331235496465noreply@blogger.comtag:blogger.com,1999:blog-2855832589372200011.post-79567727386457460562019-08-09T05:20:45.869-07:002019-08-09T05:20:45.869-07:00My accountant friends have been telling me that th...My accountant friends have been telling me that the issues are a lot more complicated than I have represented here, but I'm waiting to hear exactly what I have gotten wrong. As always, thanks for reading and the comment.<br />Jay Sour, PhDhttps://www.blogger.com/profile/15820570825725679971noreply@blogger.comtag:blogger.com,1999:blog-2855832589372200011.post-71240909367059075292019-08-09T04:26:37.697-07:002019-08-09T04:26:37.697-07:00I have a Conservative bias but trying to understan...I have a Conservative bias but trying to understand what is really going on is like trying to see what's going on at the surface from 20 feet under water. So, I try not to take my beliefs or anyone else's too seriously. I do appreciate thoughtful discourse such as is always the case with your blog.Ryanhttps://www.blogger.com/profile/03952732529873095067noreply@blogger.com