Canadian Prime Minister Justin Trudeau announced that the Federal government will cut the small business tax rate from 10.5% to 9%, starting Jan. 1, 2019.

The Recreation Vehicle Dealers Association (RVDA) of Canada reported that the announcement follows the recent backlash the Liberal government received from its tax planning proposal earlier this summer and is aimed at resolving criticisms that the proposed changes would hurt the middle-class and small business owners across the country.

In regards to the recent tax planning consultations, which the RVDA of Canada participated in (read the full submission here), the government also announced that it no longer intends to change the lifetime capital gains exemption rules. They will, however, end income sprinkling for family members who do not make contributions to family businesses, effective Jan. 1, 2018.

This new definition of “reasonable contribution” states that such a contribution must include either labor, capital, taking on a financial risk such as co-signing a loan or past contributions along those lines.