Ottawa sheds more light on revisions to tax plan

Law will hurt middle class instead of help, critics say

OTTAWA— The federal government released more details Wednesday on changes to its controversial tax proposals in hopes of further addressing deep concerns over reforms that have angered the small-business community.

The Liberals are tweaking a proposal that, as of Jan. 1, would tighten existing rules enabling small-business owners to lower their tax burden by distributing earnings among family members who do not make significant contributions to their companies — a practice known as income sprinkling.

The changes are among several adjustments the government made to its overall tax-reform package following an onslaught of complaints from doctors, lawyers, accountants, tax experts, farmers, premiers and even some Liberal backbenchers.

Critics have denounced the proposals, contending they would hurt the very middle class the Trudeau government claimed to be trying to help.

Earlier Wednesday, the Senate Finance Committee urged the government to abandon its controversial tax proposals — or at the very least delay it until 2019.

The committee — five Conservatives, five independents and two Independent Liberals — made the demand after studying the potential impacts of the entire package of proposals.

The government insisted that Wednesday’s revisions, this time to the income-sprinkling rules, contain clear tests to determine whether a relative has made a meaningful contribution to — or investment in — the family business. The government will release draft legislation as part of next year’s budget.