Coalition calls on federal government to rethink tax changesBy The IJ Staff | March 28 2018 01:30PM
After carrying out a review, the Coalition for Small Business Tax Fairness has called on Finance Minister Bill Morneau to take action on proposed tax changes which the coalition says continue to unfairly target small business.
In a statement issued March 28, the coalition, which includes 73 organizations, says “that while budget measures addressed some of the concerns related to the complexity of earlier proposals on passive investments, the approach outlined in the 2018 budget will create an entirely new group of losers.”
Penalizes those who have saved for downturns
"These new proposals unfairly penalize small business owners who have spent years saving to weather downturns and make future investments in their employees and their business. Unfortunately, the new approach means many firms with existing passive investments will lose access to the lower small business tax rate on future business income," said Dan Kelly, president of the Canadian Federation of Independent Business (CFIB). "While we welcome some of the progress made in the recent Federal Budget, we are hearing from small business owners who are being unfairly stripped of their access to the small business tax rate and are now facing tens of thousands in higher corporate income taxes every year."
Kelly added that the government is missing an opportunity to provide small businesses with tax clarity as they head into tax season," said Kelly. "With more uncertainty about competitiveness facing Canadian business owners, we urge the government to commit to find common sense solutions to help businesses grow and prosper."
Conduct an economic impact assessment
In a letter to Morneau dated March 26, the Coalition asked the government to “immediately conduct an economic impact assessment of the proposed package and delay implementing any tax changes until the assessment is complete.”
The letter also asks the government not to proceed with its proposed passive investment rules. If it does proceed, the coalition is asking the government to “ensure past passive investments are excluded when determining eligibility for the small business deduction going forward.”
Postpone income splitting rule changes
The coalition also called on the government to postpone its changes to income splitting rules until Jan. 1, 2019 at the earliest and to “consider, at minimum, a full exemption for spousal income and dividends from the new income splitting rules.”
To learn more, read the coalition’s letter to Bill Morneau here.