Hi:
This is not real life example, but I just finished a seminar on SBD grinding on passive income, I tried it in taxcycle, but looks like the grinding rule didn’t apply. Just want to see if anyone has done T2 with passive and the grinding is working?
I tried capital gain, rental income, up to $500,000 net, with 100,000 active income, but it looks like the SDB is still being applied in full on the active income.
Thanks for sharing.
Enter the amounts in the previous tax return; and then carry forward. SBD will be ground down.
Atul
I haven’t tried it, but logically, this would mean problem with the program would it not? Because if carry forward is the only way the SBD is grinding down, what about new corporation filing for the first time? I don’t think they are exempt for the first year.
Jeff:
Please read the definition of AAII – it talks about the investment income by the corporation (or the group) in the ‘previous calendar year’. I hope this will clarify your doubt.
Atul
Wow. you are right. I should have looked at the example, it did say, AAII in the preceding year. Thanks for the clarification.
A CCPC’s passive income business limit reduction for a particular taxation year will be the amount determined by the formula:
BL/$500,000 x 5 (AAII - $50,000)
where
BL is the CCPC’s business limit otherwise determined for the particular year (i.e., its business limit as described above); and
AAII is the total of all amounts each of which is the adjusted aggregate investment income of the CCPC, or of any corporations with which it is associated at any time in the particular year, for each of their taxation years that ended in the preceding calendar year.