There's a clear challenge, in that CRA and maybe the people who are using private corporations as a means of savings don't know in advance what they're going to do with that money. Maybe they will use the money to invest in their business and grow the Canadian economy, or maybe they'll use that money as a deferred RSP, which is not how it was intended.
The philosophical question is how you separate out the groups of people. People might be using that money for some productive purpose, or abusing the corporate structure as a means of retirement savings, for instance, or income sprinkling, or income sprinkling combined with passive income for their children's university education, for example.
I think one of the ways you can do that is that this distribution of passive income with this relatively high threshold of $50,000, or say roughly a million dollars in actual holdings in the corporation, eliminates the vast majority of private corporations, so there's a very small number of people who have this amount of money. Moreover, it's not that if you have a million and one dollars it's taken away by the government. You just pay a slightly higher tax rate. If you're saving for a couple of years for a new piece of equipment, or for a construction project, for instance, it's possible you might pay a higher savings rate, but again it's difficult to determine, nor is there any specific...whether it's $55,000 or $45,000.
I think the goal, hopefully, is to eliminate folks who are using private corporations as a means of retirement savings. I think that this obvious red line does that reasonably well but does not unduly punish people who are saving for a couple of extra years for actual investment.