Once again the current Government is stirring controversy, this time it is not about a $10million payment to a former detainee in Guantanamo Bay, Cuba, or an exotic family vacation in the Bahamas on a private island owned by a philanthropist who receives millions of dollars from the Government every year. Instead it is about removing tax benefits to those Canadians that are responsible for employing 48% of Canada’s Labour market.
The Department of Finance’s consultation paper released July 18 unfortunately does not have many positives for small business owners. The tax community is reeling from Finance’s proposals in general, which the government says “improve the fairness of Canada’s tax system.” The commentaries below are a few of many taking opposition to this Government’s stance:
“The average wage earner doesn’t have the same risk profile as the average small business owner, and the tax rates ought to reflect that,” Jesse Brodlieb, partner in Dentons’ taxation group in Toronto
“To save $250 million in tax loss, this is completely overdone,” James Kraft, vice-president and head of business advisory and succession planning at BMO Wealth Management
“It’s a punishment for holding shares until you die.” “At this point, why would you work for yourself? You’re penalized at every turn — and when you die, they kick you in the pants again.” Jesse Brodlieb, partner in Dentons’ taxation group in Toronto
“I do not see any semblance of economic responsibility from this government, both on the economic and federal level, and frankly someone has to pay the bill.” Jason Pereira, Senior Financial Consultant at IPC Securities Corp.
This discussion paper is specifically targeting the following topics:
1.) Income Sprinkling Using Private Corporations
2.) Multiplication of Lifetime Capital Gains Exemption
3.) Passive Investments in a Private Corporation
4.) Converting Income into Capital Gains
In the event that you would like additional information on how this may impact you, please contact me and I will be happy to assist.