The federal government is moving to pare down its controversial tax proposal on passive income so that it will only affect three per cent of small businesses.
A senior government official tells The Canadian Press that Finance Minister Bill Morneau will be in New Brunswick on Wednesday to unveil changes to his passive investment proposal so that it only targets unfair tax advantages used by the wealthy.
The official, who spoke on condition of anonymity ahead of the announcement, says Morneau will also share updated estimates showing there's between $200 billion and $300 billion in assets sitting in the passive investment accounts of just two per cent of all private corporations.
The official says the finance minister will also point out that dollar figure is growing by $16 billion per year as wealthy incorporated individuals reap unlimited benefits from tax-advantaged savings accounts over and above RRSPs and TFSAs.
The government is tweaking its original proposal after hearing concerns that cracking down on passive investments could adversely affect middle-class entrepreneurs who use their companies to save for economic downturns, sick leaves and parental leaves.
The official refused to provide additional details ahead of Wednesday's announcement, part of a week-long Liberal effort to calm the anger surrounding the tax proposals, which have outraged entrepreneurs, doctors, tax professionals, farmers and Liberal backbench MPs.