October 28, 2021

The Queens County Citizen

Complete Canadian News World

Budget 2021-2022 | Experts say they have discovered a tax hike in disguise

Budget 2021-2022 |  Experts say they have discovered a tax hike in disguise

Eric Brassard, an accountant and financial planner at BGY Integrated Financial Services, and his team have discovered hidden tax increases in the Girard budget.


Andre DubakAndre Dubak
Tap

The author of several landmark books on personal finance in the 2000s Tap Quebec raises the tax rate on ineligible dividends by 1Is January 2022.

In doing so, the dormant millions of dormant shareholders in SMEs and management companies will be heavily taxed on the day the dividends are paid to the shareholders.

The tax credit rate for ineligible dividends, which is currently 4.01% of the amount of dividends collected, is expected to be reduced to 3.42% of the amount of dividends collected or received after December. 31, 2021.

This gesture in the name of the principle of economic integration is entirely logical. This principle stipulates that compensation received from a company in the form of dividends or personally earned is taxed fairly. In the case at hand, Quebec is lowering the taxable income of SMEs and, logically, raising the tax on dividends in the name of the consolidation principle.

However, this higher tax rate on dividends also applies to income that does not benefit from a reduction in the rate of SMEs. This is the revenue stream from SMEs and management companies. There are also hundreds of millions, billions in Quebec, Mr. Brassard estimates.

Net increase in tax rate on ineligible dividends is 0.68 percentage points. For higher tax rates, the US federal + regional rate ranges from 48.02% to 48.70%.

READ  Melissa Blaise: Four vehicles pulled out of the waters of the Saint-Maurice River in Shavinigan

Finally, with the increase in the tax rate on dividends, the government will collect much more revenue, which will be lost to SMEs as the tax rate falls, according to Mr Brassard.

The government did not see the impact of the tax rate increase on ineligible dividends on cash flow as adequate to indicate in its budget documents.