Passive Investment Portfolios within a Corporation
There is now a threshold for passive income within a private corporation to $50,000 per year. Passive income is made up of dividends, interest, and 50% of capital gains. For example is that if you have a $2M portfolio that generates $50,000 through a combination of dividends, interest, and capital gains (50%), you would still fall under the threshold. Once your company generates more than $50,000 in passive income within a private corporation, the small business tax deduction reduces until it is eliminated all together at the $150,000 passive income threshold.
The small business deduction limit will get reduced by $5 for every $1 in excess passive income.