Consultation on the Small Business Deduction–Active versus Investment Business Income

If you have a business that incorporates any sort of rental of space, or allowing customers to use your space, (particularly self-storage facilities)  this may impact you!

The federal government is reviewing the rules surrounding active versus investment business income and the implications for the federal small business tax deduction.  Businesses are able to submit comments until August 31 on this matter and if this impacts your business we encourage you to participate! 

The federal small business deduction is available on up to $500,000 of active business income of a Canadian-controlled private corporation. The deduction is intended to enhance the deferral of income tax on active business income that is retained in a private corporation, therefore encouraging the reinvestment of after-tax income for further growth.

Active business income does not include income from a “specified investment business”, which is generally a business the principal purpose of which is to derive income from property and has fewer than 5 full-time employees.

Stakeholders have expressed concern as to the application of these rules in cases such as self-storage facilities and campgrounds. Budget 2015 announces a review of the circumstances in which income from a business, the principal purpose of which is to earn income from property, should qualify as active business income.

The Government invites interested parties to submit comments by August 31, 2015. Please send your comments to