Episode 7: Overview of Passive Income in Corporations and Why It Is Important

Thanks for listening to this seventh episode of the Fields of Success podcast. The purpose of this episode, like all episodes, is to provide value for small business owners in rural Ontario. For this episode, I welcomed Bud Arnold, CPA, CA, MAcc. Bud is a Senior Tax Manager with Baker Tilly Guelph Wellington Dufferin.

In this episode, Bud and I discuss some of the changes that were brought about with tax laws enacted in 2018, specifically passive income in a Canadian Controlled Private Corporation (CCPC).

To begin, we touch on the relevance of this information for all small business owners, even those not incorporated. We then go over some terms related to the topic and Bud defines them. After this we move into some more specifics such as how aggregate investment income and adjusted aggregate investment income are calculated and how this is used to calculate a possible clawback of the small business deduction for CCPCs.

We then move on to discuss some practical steps an owner can possibly take to minimize their AAII, things which ought to be considered as part of a thorough financial planning process.

As noted, this episode is not individual tax advice, which can only be given after a tax professional knows your situation, so we encourage listeners to discuss this topic with their tax professionals.

Bud is active in LinkedIn and his profile can be viewed here. As well if you wish to contact him via email he can be reached at bcarnold@bakertilly.ca.

If you’d like to contact me to discuss our financial planning process which looks at all these aspects and coordinates with your tax professionals, I can be reached via my email at brian.hilt@manulifesecurities.ca.