Finance committee  There is certainly an increase in the use of CCPCs, as has been observed in the data, very strong growth in recent years.

Finance committee  It was in the fall update, I believe, but we can definitely provide information.

Finance committee  I think there are a lot of reasons why CCPCs or entrepreneurs would choose to incorporate. The preferential tax system that applies to corporations is aimed at supporting firms to reinvest in their business and supporting them in raising equity in all this.

Finance committee  Is your question that the reduction in the small business rate will encourage incorporation, or...?

Finance committee  The $50,000 will have to be shared amongst the associated corporations. It's based on rules that already exist for the small business deduction. In your example, where the entrepreneur would own the other company and just split up its operations to benefit from more of the $50,00

Finance committee  Just to make sure that we understand each other, the 50 is the overall tax that applies on investment income. That's not changing.

Finance committee  On the $5, 50% of the $5 will be taxable, so if you're taxed at the general rate—that's 15%—the overall tax will be, if I'm calculating this correctly, 75¢. But the change is 30¢.

Finance committee  It was 9%. So it goes from—

Finance committee  On the $5 of active income, the change is 30¢, and there's no change on the 50, so I don't think you can add the 50 to the 30 directly.

Finance committee  But to pay those additional taxes, you need $6 of additional income, so I don't think you can just add on $1 the taxes that you would pay on $5 of active income. You would need overall to have earned $6 in order to pay those additional taxes.

Finance committee  As is currently the case.

Finance committee  That's correct.

Finance committee  That's a decision to be made by provincial governments.

Finance committee  Under the proposed measure, for each additional dollar that you earn above $50,000 of passive income, the eligibility for the small business deduction will be reduced on $5 of active income. On those $5 of active income, the tax rate at the federal level in 2009 is proposed to be

Finance committee  The tax rate that applies on investment income is around 50% right now at the corporation. That is not going to change.