The government is proposing a review of tax planning strategies in three areas:
- Income sprinkling using private corporations
- Converting a private corporation’s income into capital gains
- Holding a passive investment portfolio inside a private corporation
Since 1971, Canadians have been taxed on the gain realized when capital assets – real estate, stocks and mutual funds and other investments – are sold. There are a few exceptions, and the one we are most familiar with is the sale of a residence.
The sale of a “principal residence” is specifically exempted from tax in the Income Tax Act. Here are a few things to keep in mind when selling your home or vacation property:
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