On July 18, 2017, the Department of Finance released its consultation policy paper on the taxation of private corporations first announced in Budget 2017, along with proposed legislation on some of the topics addressed.
The Minister’s introductory letter acknowledges the Government’s objective of reducing taxes on the middle class and raising taxes on the richest one percent of Canadians. The proposed changes will, however, have much broader implications than the Government’s stated mandate. If enacted, the proposals will significantly affect most Canadian private corporations, including family businesses, farmers, independent contractors, self-employed tradespeople, and incorporated professionals. Furthermore, new income-splitting proposals specifically target stay-at-home spouses and young Canadians who are attending post-secondary education.
Here is a quick summary of some of the key tax changes proposed by the Federal Government:
- Do you employ family members? The Government wants to scrutinize their compensation to apply a much higher tax rate on income they consider “unreasonable”.
- Do you pay dividends to family members? The Government is proposing tax dividends to children between the ages of 18 to 24 at the highest combined tax rate. Dividends to non-active spouses will be under scrutiny as well.
- Do you invest the profits from your business? The Federal Government is proposing to tax that income at an effective rate of 70%.
- Do you want to pass your business on to your children? Tough new rules make it difficult for younger kids to get the capital gains exemption.
Small and medium-sized businesses (SMEs) are the engine of the Canadian economy – estimates range from 85 to 90% of all businesses in Canada are SMEs.
We have attached a template letter to send to your local Member of Parliament. Government needs to know that this tax reform will harm businesses of all sizes.
Don’t know where to send the message to your Member of Parliament? Look up their address using your postal code.
EPR MAPLE RIDGE LANGLEY
CHARTERED PROFESSIONAL ACCOUNTANTS
As an owner of a small business, the danger of crippling litigation should also be at the top of your priorities. Legal headaches, especially in America can take you by surprise and severely hurt your business’ bottom line.
As a business owner, this will be one of the most common legal headaches. Employees have far more rights, in the form of unions and reasons for “wrongful termination”. If you terminate a non-performing employee, make sure he or she signs documents carefully drafted by an attorney upon termination to make the terms of dismissal crystal clear…
by Trevor Wilson
If reporting metrics were the solution to gender equity, the past 40 years should have demonstrated that it does not work. “Hire and promote first on the basis of integrity; second, motivation; third, capacity; fourth, understanding; fifth, knowledge; and last and least, experience.”
I am always struck that in this profound quote by Dee Hock, founder and former CEO of Visa Inc., neither diversity nor gender is mentioned as a criterion for hiring. However, when he wrote it, Hock’s organization did not fall under a “comply or explain” instrument such as last year’s rule amendments to the OSC Disclosure of Corporate Governance Practices (National Instrument 58-101), which require the annual disclosure of the number and percentage of women on boards of directors and in executive positions for publicly traded companies.
According to the latest report from the approximately 700 TSX companies that have provided information, the results are less than stellar. Fewer than 50% of companies have at least one woman on their board and only 15% have added a woman in the past year.
More disturbing the fact that more than two-thirds of organizations have not even taken the time to write a policy for the identification and nomination of female directors. This raises two questions: is the rule working? Or is it too simplistic an approach?
Reprinted from CPA Magazine, January 2016, with permission Chartered Professional Accountants of Canada, Toronto, Canada. Any changes to the original material are the sole responsibility of EPR Maple Ridge Langley and have not been reviewed or endorsed by the Chartered Professional Accountants of Canada.