A set of proposed tax code changes in Canada could potentially have a negative impact on small businesses north of the border. And even though U.S. businesses might not see any immediate impact due to these changes, the impact on partners, clients and others in Canada could eventually make a difference to U.S. businesses as well.
The legislation, according to Canadian Prime Minister Justin Trudeau, is meant to help the middle class and inject more fairness into the country’s tax structure by closing loopholes used by wealthy business owners. But a growing number of small business owners, even those who could be considered middle class, are voicing their disapproval of the changes.
Proposed Small Business Tax Changes in Canada
There are three potential changes included in the proposed legislation. The first would end a practice that allows small business owners to sprinkle income to their family members in lower tax brackets in order to receive a lower tax rate. Currently, those family members don’t even need to be active in the business in order for business owners to use this strategy.
The next proposal would place limits on the use of private corporations to gain tax advantages when making passive investments in things like stocks or real estate. And the third would limit the ability of corporations to transfer regular income into capital gains, which are usually taxed at a lower rate.
Opponents argue that these loopholes are meant to offset and recognize some of the risks small business owners face, like using their homes as collateral for business capital and not having access to unemployment insurance. The government is holding a consultation on the proposed reforms from now until October 2.
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Tom Bigham
I have been a small business owner/operator for 30 yrs. and I am not the 1%, not even the 50%.
My wife and I have sometimes worked an entire year at wage rates below $5/hr to make our business survive but I could never collect employment insurance because I ran my own business. I had to mortgage my house to keep the business afloat. The business has paid ALL THE TAXES REQUIRED for decades as has each member of my family personally. I have no benefits and no pensions because I run my own business. I took all the risk and the government was right there beside me demanding a piece of everything I ever made in my whole life…
During the last 10 years I have saved enough inside my company to retire on if I maintain a frugal lifestyle and don’t live too long. Now the upper class twits in Ottawa have taken the silver spoon out of their mouths long enough to tell me they intend to grab all my life savings inside my business 1 year before I retire because apparently I’ve taken advantage of a tax loophole.
Well guess what, I’m laying off my staff and closing my business because who would be stupid enough to buy a small business in Canada once these changes take effect. I’m moving out of Canada and taking my cash with me so it won’t be spent inside the Canadian economy because I have no benefits & no pensions here so why stick around just to see any transfer of my company to my beneficiaries taxed 90% after I die.
These tone deaf precious snowflakes need to be run out of town on a rail, tarred and feathered for the horse thieves they are. If my business still exists at the next election, nobody who works for me will vote Liberal or they will be fired, and nobody I buy from or sell to will vote Liberal or they will no longer be my customers or suppliers. I guess I should start the process of applying for welfare right now because they are about to steal my retirement because I was stupid enough to play by the rules my whole life. Oh, I forgot, I can’t get welfare!!! I own my own business.
Tom Bigham
Toronto