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PostPosted: Wed Aug 30, 2017 7:26 am    Post subject: Concerns mount over Morneau's proposed tax changes Reply with quote

( its not yet clear what they have planned but it doesn't appear small business owners will be the winners when they are done )

Concern mounts over Morneau’s proposed tax changes affecting small businesses

Open this photo in gallery: THE CANADIAN PRESS

Finance Minister Bill Morneau holds a press conference at the National Press Theatre in Ottawa, on July 18, 2017.


Bill Curry


12 hours ago

August 29, 2017

Concern over proposed federal tax changes appears to be mounting as nearly 300 small business owners crammed a small briefing on the topic Tuesday in Calgary.

Kim Moody, a tax expert with Moodys Gartner who hosted the free seminar at Mount Royal University, said that level of interest is unprecedented.

"This is by far the biggest response we've ever seen," he said. The accountant presented a 158-page analysis of the changes and said some business owners were furious after learning more about the government's plans.

Similar briefings by accounting firms and tax policy groups are taking place across the country. Small business lobby groups, such as the Canadian Federation of Independent Business and organizations representing doctors, have been urging their members to speak out against the changes and write to their MPs.

The issue is expected to be discussed behind closed doors when Prime Minister Justin Trudeau holds a gathering of the Liberal caucus beginning Sept. 5 in Kelowna.

On July 18, Finance Minister Bill Morneau released a detailed package of tax changes affecting small businesses. The consultations are open for 75 days, meaning they will be closed two weeks after Parliament resumes on Sept. 18. Many business owners are petitioning the minister to extend the consultations.

Daniel Lauzon, a spokesperson for the minister, said the strong negative reaction was expected given the effect the changes will have on high-income earners. However, he said many small businesses are unlikely to be affected at all. He also said the government is standing by its plans but is open to suggestions about how they will be implemented.

Mr. Morneau took to social media this week in defence of his proposals. In a series of Twitter posts Monday afternoon, Mr. Morneau said the proposals are designed to help businesses grow, rather than allowing business owners to shelter personal income from tax.

"We're consulting about closing unfair loopholes," Mr. Morneau wrote. "We will not raise taxes on small businesses."

Mr. Moody's firm responded to the minister online, describing his comments as "totally false." Mr. Moody says he takes issue with Mr. Morneau's rhetorical approach, describing it as populist class warfare that shows little interest in genuine consultation.

"If these proposals go through, they will literally have a devastating effect on the small business [community]," he said. "That's not trying to be hyperbolic. That's just the truth. I already have meetings lined up from now until Christmastime with people who want to deploy their capital outside of Canada."

The proposed changes are highly complex. They relate to the tax treatment of small businesses and fall into three general categories.

The first change involves draft legislation that would restrict the use of income sprinkling as of Jan. 1, 2018. This is a practice in which a business owner in a high income tax rate can reduce the total amount of tax paid by his or her family by "sprinkling" income to family members in lower tax brackets. The government says this practice would still be allowed if the payments – through dividends or capital gains – were "reasonable" compensation to family members for actual contributions to the business.

Critics question how such a reasonableness test would be applied.

The second proposal – which has not yet advanced to the stage of draft legislation – would restrict the use of private corporations as a vehicle for making passive investments unrelated to the business.

The government says this is an "unintended" tax advantage that is primarily used by higher-income individuals who have savings that go beyond the annual contribution limits to Registered Retirement Savings Plans and Tax-Free Savings Accounts.

Business groups counter that passive investments provide a buffer for businesses to get through leaner years.

The third proposed change involves draft legislation that would limit a business owner's ability to convert income into capital gains – rather than as a salary – as a way of paying less tax. The draft legislation states the third set of changes would take effect retroactively as of July 18, 2017.

The package of changes is inspired by the work of several tax policy academics who have written papers that criticize existing small business tax rules as a source of unfair advantage.

The Liberal Party's 2015 election platform specifically highlighted the work of University of Ottawa professor Michael Wolfson, a top researcher on income and equality issues. He has referred to small business rules as the "dark corner of the tax system" that allows couples to split income for tax purposes in ways that are not allowed for families who are not part of a business.

Dr. Wolfson praised the minister's proposals earlier this month.

"No, the sky is not falling on Canada's small businesses," he wrote in The Globe and Mail. "The minister's proposals would clearly increase tax fairness. Indeed, the extra revenues collected from mainly higher-income individuals, by bringing their effective income tax rates more in line with their salaried counterparts, could be used to benefit the poor and those in the middle class."


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PostPosted: Wed Aug 30, 2017 10:48 am    Post subject: Reply with quote

This is 'in the weeds' stuff. I take it to mean that the taxes on small business are being increased, bottom line.

"Tax fairness"? What is that? Why is progressive taxation "fair" in the least? Isn't it a tax on having more than others? It's very essence is to restore 'fairness' by taking money away from the productive and giving it to the unproductive, with a fair chunk used to create careers for managers. Where's the "fairness" in that?

What's "fair" is if we all pay the same taxes. We're way past that. But never mind that fake news rhetoric.

The beast is going into debt at the rate of $28.5 billion a year, and experts say there is no prospect of them returning to a balanced budget until 2050. You will be 33 years older than you are now when that happens. Except what political prediction made 33 years before bears out?

Already, we need another Mike Harris ... maybe the leader after this one.

You know, we aren't feeling the effects of this, which is disturbing. We should be feeling the kind of euphoria that typifies the early stages of inflation, but we aren't. We are paying, but we aren't getting much bang for our buck.

This suggests to me that we are on a course to disaster. We don't feel it because the consequences are so subtle at first. But they're juicing the economy to the tune of $28 billion, and nobody notices? That's a bad sign.

It doesn't take an accountant to do a rough accounting of what we have gained by all this increased spending -- a future of higher taxes and a declining standard of living, into the interminable future, that's what. What's on the plus side? Did we get a noticeably more dynamic economy?

By 2050, the country won't look anything like the predictors are predicting. That's one prediction you can count on.

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PostPosted: Thu Aug 31, 2017 7:25 am    Post subject: Reply with quote

Anger over controversial Liberal tax proposals to be focus at caucus retreat

Joan Bryden and Andy Blatchford

Wednesday, August 30th, 2017

OTTAWA – Liberal backbenchers have been getting an earful this summer from small business owners outraged by the Trudeau government’s proposals to end what it calls “unfair tax advantages.”

And now they’re preparing to unleash the concerns of their constituents — and pressure Finance Minister Bill Morneau to adjust his plans accordingly — during the government’s summer caucus retreat next week in Kelowna, B.C.

“From what I’m hearing right now, the highest priority thing is to engage in a meaningful discussion of the proposed tax changes to Canadian-controlled, private corporations,” said Stephen Fuhr, who represents the riding that encompasses Kelowna.

“There are a whole host of people – i.e., the ones that are on the receiving end of the tax proposals — that are not happy … My job is to deliver their input or that message to my colleagues.”

Fuhr is far from alone.

“I think we’re all hearing from small business” about the planned tax changes, said Liberal caucus chair Francis Scarpaleggia, a Montreal MP.

“The small business people that I’m speaking to obviously would like to see some changes … I’ve told them that I’m going to take their concerns to Kelowna, for sure.”

The backlash from doctors, lawyers, accountants and other small business owners has been building since mid-July, when Morneau released a controversial, three-pronged plan aimed at closing tax loopholes used by a growing number of small businesses, creating what he called an “unfair playing field.”

One change would restrict the ability of business owners to lower their tax rate by sprinkling income to family members in lower tax brackets. Another would limit the use of private corporations to make passive investments in things like stocks or real estate.

A third would limit the ability to convert a corporation’s regular income into capital gains, which are typically taxed at a lower rate.

The government is allowing 75 days for consultation on the proposed changes, a period that ends Oct. 2. Backbenchers are hopeful that it means Morneau would be open to adjusting the plan in order to address the concerns.

“There is a genuine outrage among people who have made all their financial calculations and planning based upon a certain set of tax assumptions and are now seeing those tax assumptions challenged,” said Toronto MP John McKay.

“I don’t know at this stage how locked-in the government is on their proposals, but I do know there is significant outrage among a relatively influential group of people.”

Those people would be “really irritated” if the consultation turns out to be strictly pro-forma, McKay added.

Winnipeg MP Robert-Falcon Ouellette said he’s heard loud complaints in his riding about the proposed changes, but has also received feedback from others who say it’s time for a more level playing field when it comes to taxes.

Ouellette, who represents one of Canada’s poorest ridings, supports his government’s plan and believes a system that enables people to divide their income up among family members in order to save on taxes is “inherently unfair.”

“How much income does one really need to earn in life in order to have a good life?” Ouellette asked.

“I think everyone has to contribute to help pay our taxes because these government services aren’t for free. They have a positive impact on the world around us.”

Still, if necessary, he believes Morneau will be open to changes, tweaks and suggestions.

Another Toronto MP, Rob Oliphant, says he’s heard from accountants who oppose the proposals and others who agree with Morneau that the loopholes need to be closed.

“We have to make sure that we have a fair tax system that people have confidence in. At the same time, I think it’s incumbent on us to make sure there’s no unintended consequences.”

On that score, Fuhr says he’s heard from some tax professionals that the restriction on passive investments could result in fewer small business owners investing in rental properties which could, in turn, exacerbate the existing shortage of affordable housing.

“It may have an adverse effect on the rental market and that’s something that we’ve already got an issue with so that’s something we may want to consider, for an example.”

Fuhr is hoping the government can find some middle ground that increases tax fairness but avoids unduly penalizing small business owners.

“I think there’s a mediated solution in there somewhere. I think, I hope.”


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PostPosted: Thu Aug 31, 2017 7:40 pm    Post subject: Reply with quote

Don't you think this is only the first wheel to squeak? Small business people notice small differences because they aren't small to them. But other groups are going to notice, too. All the progress the country made during the Martin-Harper years is being pissed down the wall by the thugs that are fronted by our favourite fop, Justin Trudeau. The folks may not see the connection, but they will feel the smaller pay-checks.

If only we have some instrument that would help them see the connection -- like a political party?

Instead we get a party that is making sure it is as 'diverse' as the Liberals on both geographical and gender grounds.

I find myself wondering: Is there no way the membership can slap some sense into this clown? Think about it, he's trying to match the sissiest government we have ever had, one that ignores merit completely, on what is essentially the feminist agenda. "Diversity", "inclusion", "intersectional racism" -- are all words that originated in Women's Studies Programs at universities. This world-view is like a delusion that young millenials are having because some significant fraction actually believe what they've been taught.

What Canada needs is someone who would stand up for MERIT!

Well, it doesn't look like our young millenial leader understands that. There are supposed to be two sides represented politically in the hot political discussion -- that is, the policies being debated in Parliament.

He is young. You can't expect anyone to have the career he's had (on the basis of his 'Jacquie Kennedy' French alone) without having a hard time keeping his head from exploding with vanity. What are his real political accomplishments? He got elected in 2004, no doubt on Harper's coattails, at the tender age of 25! Good for him! He became Speaker when the Conservatives began their run, so he doesn't even have cabinet experience.

Instead, he became Speaker of the House. You know, when I kicked around Ottawa, the Speaker's office -- which matches a senate seat in terms of generous perks -- was looked on as a plum patronage appointment. When was it ever a road to power? Or a reward for long service?

That's how he spent his 30ies -- at least from 32 to 36. He's still only 38.

What makes anybody think this guy has any starch in his backbone? ... or if he'd be any good in a scrap? Has he picked up any political scars en route to expense account heaven? You know something about picking up scars -- you learn a lot.

It's looking to me like Scheer's lost. He has no vision. He doesn't know where to go to win, and he probably doesn't know what he wants to do with power if he gets it. It seems like he just wants to continue what Harper was doing -- gradual persistent change.

I don't know about you, but experts are suggesting it will take us 30-35 years to get the budget back in balance. What have they done? I think it's an emergency.

It's absurd for a nation to burn through its credit to pay social benefits -- yet that's what we are doing. On another front, our central bank is trying to create inflation -- which is another way of saying, they want prices to rise! How could you have better proof of the failure of policy?

What it actually says is if the government and central bank can make Canadians poorer, we'll be better off! Are we going to let them sell that idea?

Canadians, in the main, don't even know that they want inflation. It seems to me that it's up to our side to make that evident for more and more people.

Somebody should familiarize young Mr. Scheer with the fact that while he's the leader of the Conservative Party of Canada, it's because slightly more people felt he was a better 13th choice than the other guy. He should get some strategy other than playing "Me, too ..." to Justin Trudeau.

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PostPosted: Fri Sep 01, 2017 9:10 am    Post subject: Reply with quote

As 50% of small business fail, Liberals plan to tax them more

Bonokoski 2016
By Mark Bonokoski, Postmedia Network
First posted: Thursday, August 31, 2017 03:35 PM EDT | Updated: Thursday, August 31, 2017 03:45 PM EDT

Finance Minister Bill Morneau
Finance Minister Bill Morneau addresses The Canadian Club of Toronto and The Empire Club regarding Budget 2017 in Toronto on March 24, 2017. THE CANADIAN PRESS/Frank Gunn

If the Trudeau Liberals do not back down from their plan to basically tax small business owners out of business, based on the illusion they’re all rich and dodging taxes to make them richer, then Finance Minister Bill Morneau had best update his tetanus shot.

Conservative Leader Andrew Scheer, who named his shadow cabinet earlier this week, did not appoint Ottawa MP Pierre Poilievre his finance critic because he has vast experience in the business world.

In fact, he has none.

No, the reason Scheer chose Poilievre, one of the most polarizing figures in Canadian politics, is that he is a tenacious attack dog, as loyal to the party as a junk-yard mutt, and willing to bite deep into the soft tissue of Liberal financial policy and not let go.

He may be young, having just turned 38, despite 13 years on Parliament Hill. And he may be baby-faced.

But he is no lapdog.

The Liberals are essentially railroading their proposed tax changes to small business. They introduced their proposal in the dead of summer when few were watching, and have made Oct. 2 the deadline for feedback.

Small business owners are rightfully outraged.

For those on the outside looking in, the “unfair tax advantages” the Liberals claim small businesses have are not unfair at all, but when the Liberals start talking about doctors and accountants as targets, the average Canadian gets sucked in.

They do not think of the majority of small businesses out there. The garage with two or three mechanics. The mom and pop convenience store where long hours are slogged for the smallest of margins.

This is how they get misled by the Trudeau crowd.

As Winnipeg tax consultant Dan Kostenchuk put it, in citing one example of supposed tax-dodging by small business, “One of the main reasons for the ability to split (small business) income among family members is that when you are starting a business, you are talking on a lot of risk — nothing is guaranteed.

“You pay all your employees before you take a cent,” he said.

Yet, the naive still believe the Liberals are onto something.

Let’s not leave Winnipeg, however, without first hearing from Liberal MP Robert-Falcon Ouellette, his riding being one of the poorest in the land, who has turned his back on his own hard-working constituents in small business to support his party’s latest tax grab.

“How much income does one really need to earn in life to have a good life?” he asked. “I think everyone has to contribute to help pay our taxes because government services aren’t free.”

Is Ouellette wants to put his money where his socialist-sounding mouth is, perhaps he should try living on the $50,000 average Canadians earn rather than his $167,400 base MP’s salary.

According to Canadian Business, 50% of small business in this country will not make it to their fifth birthday.

That’s with today’s taxation, not with Morneau’s upcoming changes.

If 50-50 were the odds of surviving major surgery, one suspects there would not be a rush to face the scalpel.

But small business faces the same coin-flip odds.

Next week, the Liberal caucus meets for its summer caucus retreat in Kelowna, B.C., with many of its MPs having heard the outrage from small business owners in their constituencies.

Will they listen, and back off?

Or will they wait for Pierre Poilievre to bare this teeth in Question Period, and make them out for the fools they are.

Small business is Canada’s economic backbone.

And it is already struggling enough.


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PostPosted: Sat Sep 02, 2017 2:05 pm    Post subject: Reply with quote

Trudeau acknowledges grumbling, but strikes defiant tone on tax loophole changes

Canadian Press

Friday, September 1st, 2017

SASKATOON — Justin Trudeau says he’s paying attention to the growing dissent over his government’s controversial proposals to eliminate tax incentives that he insists only benefit wealthy small business owners.

But the prime minister says he “will make no apologies” for the Liberal government’s commitment to helping the so-called middle class, even at the expense of the wealthiest Canadians.

Trudeau is acknowledging the backlash over what the government calls a plan to inject more fairness in the tax system by closing loopholes used by a growing number of small businesses.

Entrepreneurs, major industry associations and political rivals have warned the plan would hurt the economy and small businesses, including many whose owners would be considered middle class.

The government has launched a consultation on the proposed changes that ends Oct. 2 and Trudeau says the government will take the feedback into account to ensure the measures have the desired effect.

Finance Minister Bill Morneau held a conference call this week to ease the fears of Liberal backbenchers spooked after complaints over the proposals poured into their riding offices.


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PostPosted: Mon Sep 04, 2017 3:39 pm    Post subject: Reply with quote

Canada's proposed tax changes are casting entrepreneurs as the bad guys, and that's bad news for the economy

Ted Rechtshaffen: I was taught to take responsibility for my own success or failure. I thought that was part of the Canadian culture. In 2017, I am really feeling that that culture is slipping away

Finance Minister Bill Morneau’s tax proposals for small business owners will make many entrepreneurs rethink their growth plans, says Ted Rechtshaffen.Postmedia News

Ted Rechtshaffen
Ted Rechtshaffen

August 31, 2017
11:16 AM EDT

In 2004, I left a big bank to start a new business.

Today we are a successful business with a team of 16 people.

I knew that there would be risks and a long process from start up. I probably spent 7 years of making less money than I would have if I stayed at the bank.

We managed our way through the first couple of wobbly years only to be hit by the market crash of 2008 and 2009.
See Also Four new strategies you can use this year to get ahead of Ottawa’s proposed tax changes
Perrin Beatty: Small business gets scapegoated in the finance minister’s unfair tax attack
The CPP deferral debate: Spend your risky dollars first because they may not be there in your 80s

If we had not made it through, that would have been it — there would have been no support. As a business owner I don’t pay into nor do I qualify for Employment Insurance. There is no safety net. As a family with young children, we took some real risks along the way.

I am not complaining. This is the way entrepreneurship works. You try and build something. You take some risks. If it doesn’t work, you need to figure out what’s next.

In general, most Canadians like to hear about entrepreneurs who build something successful. They know that it is good for the economy and they tend to respect the risks that people take to make it happen. Of course, many business owners don’t make it at all, or are struggling to make it all work. We need to make sure that they know that the struggle will have real rewards if they can be successful. Otherwise, many will never take the risk at all.

So why is it that today I feel like the government is coming along, pointing to me and saying I am not doing my part?

I am fully supportive of a progressive tax system, and for those that can to do more. But when I pay six-figures-plus of family taxes and then six-figures-plus of business taxes, when my tax bill is 53.5 per cent on income, on top of my house taxes, on top of HST, I start to wonder again. How am I the bad guy who is cheating the system and letting down Canada?

Now, with the most recent tax proposals for small business owners, I am going to have to rethink the growth plans of our business. After all, if the business grows, and of every dollar of growth, more goes to the government than to my colleagues or I, then maybe growth isn’t so attractive. Having spoken to many business owners, I can tell you that many are starting to wonder the same thing. Older business owners in particular are thinking that slowing down makes a lot more sense.

Is this good for the Canadian economy? Do we want business owners to turn their back on growth? Is this what “tax fairness” will do for our country?

For those that say ‘the One Per Cent can afford to pay more’, we need to understand that there are consequences to tax rates that put more of every dollar in the government’s hands than ours. There are consequences to removing incentives from business owners to grow their businesses. In a global world, there are options for some businesses to stay in Canada or to move to another country.

I recently heard a story about a couple that moved to Sweden and opened a restaurant. The restaurant had 6 tables, and was open 5 days a week from 5 p.m. to 9 p.m. When they were asked why they moved to Sweden they said, “Life is easy here. We don’t have to work very hard.” Is that what we want Canada to become? A place where taking risks is not rewarded? Where working very hard is not very smart? Where those who are financially successful are viewed as the bad guys and the financial solution to every problem?

I was taught to take responsibility for my own success or failure. I thought that was part of the Canadian culture. In 2017, I am really feeling that that culture is slipping away.

I would much rather live in a culture where all Canadians would do their best to build more for themselves and their families, and to ask less of government. This includes both the 99 Per Cent and the One Per Cent. The business owner and the government employee. The student and the senior. I am afraid that to continue on the path we are headed will eventually make Canada an economic basket case — and that will cause pain to all Canadians.

Ted Rechtshaffen is President and Wealth Advisor at TriDelta Financial, a boutique wealth management firm focusing on investment counselling and estate planning. tedr@tridelta.ca


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PostPosted: Mon Sep 04, 2017 3:43 pm    Post subject: Reply with quote

what I can't get over is how negative the response has been online to these changes , I've seen an endless amount of posts against them and really yet to see much of any in support .

this may or may not hurt the liberals in the polls and it may or may not cost Morneau his job eventually

where I think it may really hurt the liberals is at the fundraising level , a lot of riding associations might not get the kind of donations they were expecting from local businesses and business people , my guess is a lot don't bother sending anything this year

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PostPosted: Mon Sep 04, 2017 9:07 pm    Post subject: Reply with quote

Liberals headed for autumn tax showdown with small businesses

Andy Blatchford — Canadian Press

Monday, September 4th, 2017

Ottawa’s fall parliamentary session is a couple of weeks away and Canadians are already getting a preview of what could be the season’s main event: a scrap over the Liberals’ proposed tax changes.

The Trudeau government’s controversial plan is designed to close loopholes that it says give a growing number of wealthy, small-business owners an unfair tax advantage over other Canadians.

Prime Minister Justin Trudeau himself has rejected criticism over the plan, arguing Friday he “will make no apologies” for his commitment to fairness.

But when it comes to the tax proposals, his Liberals have left themselves room to manoeuvre, if necessary.

The mid-July announcement launched a 75-day consultation period, ending Oct. 2, to allow people to digest the complex proposals and provide feedback that could lead to adjustments.

At the time, Finance Minister Bill Morneau admitted he anticipated some push back.

His prediction is coming true.

Opposition has been growing through the summer and it’s clear critics of the plan won’t watch the changes go through without a fight.

An organized movement argues the tax incentives targeted by the Liberals are critical for Canada’s economically crucial small-business sector. It insists the current tax structure is necessary for entrepreneurs, including those in the so-called middle class, who take personal financial risks when they decide to open a company.

The backlash has been led by a coalition of more than 40 industry associations as well as the government’s Conservative rivals. Individuals, including tax professionals, doctors and engineers, have also spoken out against the changes.

At the centre of the storm is a three-part plan to eliminate tax loopholes and even out what Morneau describes as an “unfair playing field.”

One change seeks to eliminate an incentive that enables small-business owners to use their corporations as a way to shift some their income to family members who face lower personal tax rates, even if those relatives are not active in the business. Ottawa says addressing unfair “income sprinkling” with these changes would provide an estimated $250 million per year in additional federal revenue.

Another change would limit the use of private corporations to make passive investments in stocks or real estate. The proposed change is designed to ensure that taxes on passive investments inside a corporation are treated the same way as those outside the company.

The third reform would limit the ability to convert a corporation’s regular income into capital gains that are typically taxed at a lower rate.

The Liberals have maintained the changes are aimed at creating more fairness in the system, while many opponents have described it as a cash grab.

Complaints over the proposals have washed into riding offices of now-jittery Liberal backbenchers, who will explore the issue at this week’s caucus retreat in Kelowna, B.C.

Last week, Morneau held an hour-long conference call with his fellow Liberal MPs to reassure them that the government is open to adjustments to avoid unintended consequences. He gave them ammunition to fight back against what the feds see as misinformation circulating about the proposals.

He has also scheduled a meeting with journalists in Tuesday to confront the uproar.

But some tax experts who have studied the proposals closely still have significant concerns.

“We’re not misunderstanding this document,” said Joel Cohen, director of Coehn Sanderson Inc. in Toronto, who added he has discussed the document with some of the best tax experts in Canada.

“This is a very, very foolish policy. It’s very poorly conceived, it was rushed through.

“It was initiated by bureaucrats who have never invested in a business, who have no idea what it’s like to get that next sale and to pay the rent and to have employees and have all this exposure – and to not know what tomorrow’s going to bring.”

Cohen, who has been a public accountant since 1969, argues that despite the risks, entrepreneurs don’t have the same protections as employed people, many of whom benefit from severance requirements, pension plans and vacations. He added that small businesses are also often family activities, which make them a “family risk.”

He added the tax-deferred, passive-investment portfolio now in Ottawa’s crosshairs provides business owners with a retirement savings vehicle they otherwise wouldn’t have.

“It will seriously damage entrepreneurship in Canada. That’s not good for anyone,” said Cohen.

Chris Struthers, who owns an engineering firm in Penticton, B.C., said if the proposed changes had been in place six years ago he doubts he would have quit his job to start his own company.

He supports the goal of shutting down abuses of the tax system, but he fears legitimate firms like his will be hurt by the changes.

Struthers, who has 10 full-time employees and often even more depending on the season, also criticized the government’s message for making entrepreneurs feel like tax cheats.

“A lot of business owners, we’re quite happy paying taxes,” said Struthers, who created a website to fight the proposals.

“We pay our fair share, we punch above our weight in contributions to the economy and to suddenly be labelled like that, a lot of us have found that very offensive and insulting.”

Conservative deputy leader Lisa Raitt expects the autumn battle over tax reform will be “huge.”

Raitt, who has been holding roundtables on the proposals in different parts of the country, said the issue deserves a longer, more structured consultation period. She warned it could significantly damage the economy.

Feeling the pressure, the government has already started countering the criticism.

“We’re consulting about closing unfair loopholes. We will NOT raise taxes on small business,” Morneau wrote on Twitter last week in a series of tweets that he began with: “To clear some things up.”

Kevin Milligan, a University of British Columbia economist who has advised the government on tax reform, said he supports the goal of putting business owners on the same level as everyone else when it comes to taxes.

For example, when it comes to passive investments, he said it would only make sense for the small number of business owners who had already maxed out their contributions to both their RRSP and tax-free savings account. Those who can are typically high earners, he added.

When it announced its plan, Ottawa released detailed proposals for income sprinkling and capital gains. However, the more complex issue of passive investment was still under development.

Since then, the government has sent signals it is open to tweaking its proposals.

“I’m happy to have discussions and feedback from interested Canadians who want to make our tax code fairer and we’re going to take all of those reflections into account,” Trudeau said Friday.

Milligan thinks there could be room for improvements.

“I’m really glad that they’ve set up this period of consultation. And the reason is, when you get into writing the legislation, that’s a really tricky thing,” Milligan said.


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PostPosted: Mon Sep 04, 2017 11:09 pm    Post subject: Reply with quote

Does anyone know how much revenue they expect to raise through these new tax rulings?

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PostPosted: Tue Sep 05, 2017 7:40 am    Post subject: Reply with quote


Mr. Trudeau’s government declares class warfare

Margaret Wente

1 hour ago

September 5, 2017

Is your family doctor a wealthy tax cheat?

I don't think mine is. She strikes me as a dedicated, overworked person who is by no means overpaid. But Bill Morneau, our federal Finance Minister, is here to set you straight.

His new proposals for small-business tax reform – which will hit a wide range of professionals – are couched in the rhetoric of class warfare. He refers to law-abiding, tax-compliant people (not all of whom drive Lexuses) as "the richest Canadians," who exploit "unfair tax advantages" and "fancy accounting schemes." In contrast with the middle class families that the Trudeau government is working day and night for, they don't pay their "fair share."

A lot of media like this story line. "Feds propose changes to close tax loopholes for wealthy," said one obliging headline.

My dentist (Jack Slome, known him for 30 years, great guy) sees it differently. "It's extremely dramatic and very devastating," he says. "Everybody thinks I can take what I want from my company, but it doesn't work that way."

The Finance Department released its new proposals in the dead of summer, July 18. They are massive. "It will be very profound, and it will affect almost every profitable private business in Canada," Greg Wiebe, the managing partner in KPMG's tax division, told The Globe and Mail. "Tax Planning Bomb Shell," one prominent tax lawyer announced on his website.

Calgary tax lawyer Kim Moody calls the proposals "the most pervasive and complex policy changes in the last 50 years." Yet the consultation period is just 75 days, ending in early October. Skeptics believe the government isn't really interested in consulting at all. Mr. Morneau has affirmed that impression with a series of populist tweets. "When the rules meant to help businesses grow, are being used for personal gain – we all lose," said one.

In other words, the government is using the words "tax loopholes" to describe the existing law.

Doctors, especially, have good reason to be angry. For years, Ontario and other provincial governments have been vigorously encouraging them to incorporate, even giving them tax tips on how to use the rules to their advantage. Incorporation was sold as a trade-off for forgone fee increases. And now the feds have yanked the rug out. Younger, lower-income doctors who are burdened with giant student loans will be particularly hard hit.

What's unfair here is not the "loopholes" in the system – it's the federal government's abrupt plan to claw back benefits that doctors understood to be a legitimate part of their compensation.

Incorporation allows doctors and other professionals to accumulate retirement savings, and to "sprinkle" income by employing other family members. Unlike salaried employees, they get no vacation, sick time or retirement benefits. It also allows them to save up capital to reinvest in their business. No doubt some of them are tax cheats. But most are not.

Whether they should be taxed differently from salaried employees is a subject of legitimate debate. What's not in doubt is that the number of incorporated companies has soared in recent years. This is partly because provincial governments have encouraged it and partly because personal income-tax rates are now so high that the benefits of incorporation are irresistible. The top marginal personal-tax rate is now above 50 per cent in most provinces, while the small-business-tax rate is about a third of that.

As for whether all this is good for the middle class – that's debatable, too. Plenty of these folks think they're the middle class. And they're right. Many critics believe the changes will discourage entrepreneurial activity.

What's not in doubt is that people are mad as hornets. "The more they find out, the angrier they get," Mr. Moody says. MPs – many of them Liberal – are being besieged by enraged constituents, and a new alliance of business groups and professionals has been formed to fight the changes.

The government is hoping that the furor will quickly pass and that the public will dismiss the howls of anguish as just more griping from the small-business lobby. The trouble is that plenty of the afflicted are good Liberals and party donors. They aren't likely to sit down and shut up.

"It's very discouraging," my dentist says. "We've worked hard for what we've got. Now basically they're saying, 'You've got too much money and we're going to take it away from you.'"


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PostPosted: Tue Sep 05, 2017 7:46 am    Post subject: Reply with quote

Bugs wrote:
Does anyone know how much revenue they expect to raise through these new tax rulings?

that's a good question , some posts seem to indicate the new tax rate will be much higher than before but its unclear exactly how much some people could lose .

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PostPosted: Tue Sep 05, 2017 8:26 am    Post subject: Reply with quote

I gather that it's isn't a change in the rate of taxation, it's a change that will alter that amount which is taxed. So it's sneaky, in that way.

I suspect the gross amount of revenue that this will raise will not be that considerable. I suspect that they're ün-doing" Harper policies just because they were Harper policies.

The same gang of people -- many of them, anyway -- did exactly this to Harris' policies, even good ones.

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PostPosted: Tue Sep 05, 2017 4:16 pm    Post subject: Reply with quote

iPolitics‏Verified account @ipoliticsca · 4m4 minutes ago

Morneau signals he's not planning on backing down on tax changes, which gov estimates will recoup $250M http://ipoli.ca/YNIJ30eW3va #cdnpoli

Morneau signals he's not planning to back down on tax changes

Beatrice Britneff

Tuesday, September 5th, 2017

Finance Minister Bill Morneau on Tuesday defended proposals to close income tax loopholes and “unfair” tax advantages his department unveiled earlier this summer – saying that while the government expected strong reaction to the proposals, he hasn’t heard any arguments that might make him back down or change the plan.

Morneau made the remarks at a media roundtable Tuesday afternoon after meeting with small business owners and professionals in Vancouver to discuss the suggested changes to the tax code – which include clamping down on ‘income sprinkling’ and passive investments for small private corporations.

“What we’re hearing is...


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PostPosted: Tue Sep 05, 2017 4:21 pm    Post subject: Reply with quote

Trudeau's going to pay a heavy price for tax reform

iPolitics Insights

L. Ian MacDonald

Tuesday, September 5th, 2017

It’s one thing to spend down political capital. All governments do it, sooner or later. It’s quite another thing to squander it.

And that’s exactly what the Liberals are doing in the name of closing tax loopholes for incorporated professionals and small businesses, including family farms.

The Finance Department sparked a wave of anger with a discussion paper in mid-July about a proposal to end “income sprinkling” to family members, passive investment in stocks and real estate, and converting income into capital gains. “We’re consulting about closing unfair loopholes,” Finance Minister Bill Morneau tweeted last week.

The proposal has detonated a tax revolt and sets up a fractious fall sitting of the House. Since the discussion paper’s release, the opposition Conservatives have heard about almost nothing else in their summer rounds, while Liberal MPs admit they’ve been getting an earful. They gave Morneau an earful of his own in a conference call last week; in a late set-up, he was set to meet with small business owners in Vancouver today.

The internal blowback is such that that the proposed tax reforms will be the topic of conversation at the Liberal summer caucus Wednesday and Thursday in Kelowna, B.C. While Prime Minister Justin Trudeau maintains the government “will make no apologies” for the proposal, the Liberals need significant wiggle room.

It’s not very complicated: Many of the stakeholders in this professional demographic normally vote quietly for the Liberals — but will vote noisily for the Conservatives if the government doesn’t relent on this. Professionals also write cheques to political parties, and they won’t be writing them to the Liberals. And professionals have high approval numbers among Canadians, which makes them very influential.

An Insights West poll in June found that 89 per cent of Canadians had a positive opinion of doctors, making them the second most respected profession in the country (behind only nurses, at 92 per cent). Farmers were right behind at 88 per cent, architects at 87 per cent, engineers at 84 per cent, while accountants and dentists were tied at 81 per cent. Journalists scored a modest 62 per cent approval rating.

open quote 761b1bWhat does the government hope to gain from this? It estimates that ending income sprinkling would add all of $250 million to federal revenues. More money than that falls off the table before breakfast in Ottawa every day.

Politicians were the least respected, at 24 per cent.

There’s no doubt about where doctors come out on the tax issue. At the Canadian Medical Association convention in Quebec City last month, doctors took it out on Jane Philpott — herself a colleague — in her last appearance as health minister. (One Ottawa health consultant who attended later said she was lucky to escape the room alive.)

As for farmers, they are famous for having the entire family on the payroll. They are also famous for speaking their minds and organizing when they oppose a government policy. You need look no further than the example of dairy farmers who marched their cows down Wellington Street past Parliament Hill and the PM’s office to oppose changes to supply management. In the recent Conservative leadership campaign, thousands of dairy farmers joined the party to support Andrew Scheer — a proponent of supply management — against Maxime Bernier, who had promised to abolish it.

As for small businesses with 1-to-99 employees, Statistics Canada counted 1.14 million of them in 2015, with 8.2 million employees. Forty industry associations have formed a coalition opposing the tax reform.

“They have created an absolute firestorm of anger on the part of the independent business community unlike (any) I have seen in 25 years,” Dan Kelly, president of the Canadian Federation of Independent Business, told the Globe and Mail. Business owners, he said, “feel so unappreciated by their government. So there’s the emotional element of this which is absolutely palpable right now.” Professionals and small businesspeople, Kelly said, “feel they are bring branded as tax cheats.”

The Liberals also have made it hard for themselves to walk this back. The discussion paper points out that small business tax reform was in the budget last March: “In Budget 2017, the government signalled its intention to address specific tax planning strategies involving the use of private corporations.”

But it wasn’t part of the budget bill — so the government still needs to bring forward implementing legislation, perhaps in the fall fiscal update. While the Liberals have the votes to get a bill through the House, it’s far from clear what would happen in the Senate — where the Conservatives, former Liberals kicked out of caucus by Trudeau and some Independents appointed by him might vote against a tax bill hitting professionals and small businesses.

And what does the government hope to gain from this? It estimates that ending income sprinkling would add all of $250 million to federal revenues. More money than that falls off the table before breakfast in Ottawa every day.

This has long been the problem of Imperial Finance: Very few of its officials have ever worked in the real world. For a rather lousy return, the Liberals are buying themselves a whole lot of political grief.

The views, opinions and positions expressed by all iPolitics columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of iPolitics.

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Concerns mount over Morneau's proposed tax changes

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