TO ALL MEMBERS OF PARLIAMENT AND MEMBERS OF THE SENATE
Ladies and gentlemen,
You are all aware of the Liberal tax proposals introduced on July 18th, 2017.
You have now heard from many constituents and professionals about the impact of these proposals on ALL small businesses and farm families.
A couple of points need to be stressed.
The Canadian Tax Foundation is currently holding a Policy Conference in Ottawa concerning Tax Planning Using Private Corporations.
One speaker, Rachel Gervais from BDO opined that the way to avoid the new tax rules is to avoid going into business with your children. Is this really a reflection of Canadian values? Do we really want to discourage family businesses?
Michael Woolfson, the University of Ottawa economist whose writings have formed the basis of many of the proposals, has suggested that people wind up their private corporations - he didn't discuss the tax complications and costs of doing so. He either doesn't understand, or sees it as yet another way to grab tax dollars from small businesses. Do we really want to penalize family businesses in this manner?
Mr. Woolfson also seems to ignore the fact that the proposed income splitting rules will also apply to unincorporated businesses.
Mr. Morneau has suggested that the new rules will not affect taxpayers making less than $150,000 per year. Below you will see a table showing the increased tax cost of earning passive income in a corporation. You can clearly see that the impact is higher for the taxpayer with taxable income of $30,000 or $40,000.
Clearly, these tax proposals need further study. The Senate National Finance Committee is now scheduling four weeks of public hearings. One can only hope that these hearings will constitute a true consultation.