New CALU Board Chair intends to fight for federal tax fairness

Roger Sinclair is the first Nova Scotian to chair the CALU Board. The Halifax-based advisor succeeded Marty McConnell for a one-year term. Elected at the annual general meeting, Sinclair spoke to Insurance Journal on the sidelines of the conference Inspired to perform, held from May 5-8 at the AGM in Ottawa. He discussed the key issues that he would address during his 2019-2020 term.

CALU has 650 members, including insurance and financial advisors and professionals in accounting, taxation, law and actuarial services. Through events, training and proposals to the federal and provincial governments, CALU regularly tackles financial planning and advanced taxation issues.

Sinclair says he will focus on improving the competitiveness of the Canadian tax system for private businesses, along with addressing unfair taxation of the transfer of family businesses to family members. He will stress the lack of tax options that would enable Canadians to finance their health care at retirement, and will propose solutions in this area. He will also emphasize the value of advice.

Remaining competitive vis-à-vis the United States 

Sinclair adds that the complexity of the Canadian tax system is hindering CALU members and their clients alike. “We work with small business owners and we are small business owners ourselves. We are concerned about the complexity of the whole tax system, from a number of perspectives,” he says.

The hurdles involved in creating an operating business and a management company are just a few examples, he adds. “The tax planning around this has become increasingly complex in the last couple of years. We’re concerned about the competitiveness of our tax system, compared to that of the United States. It’s getting to a point where the Canadian system is increasingly onerous for small businesses.”

Family transfers

Sinclair is also disappointed that the 2019 federal budget did not ease the transition of a family business to family members. He will continue to stress the importance of correcting this gap, which could stunt the Canadian economy, largely powered by small private businesses, many family owned.

“If I transfer my business to my daughter, I won’t get as good results as if I had sold to a third party, because I’ll be taxed on dividends instead of being taxed on capital gains. The difference is pretty substantial, depending on the size of the business. We don’t think that the government should be discouraging the transfer of business to family members,” Sinclair says.

Delaying the withdrawal age 

CALU will continue engaging with the federal government to find solutions to the impact of the aging population on healthcare costs. The main problem: mobilizing the population to prepare financially for the health and long-term care they may need during their retirement years.

Provincial governments will not be able to cover these costs, he says.  “We haven’t seen the big wave hit yet, and it is coming very quickly. Let’s have a conversation with the government on how do we deal with this wave of aging people so we don’t handcuff the next generation to bankruptcy,” Sinclair says.

CALU has participated in two pre-budget consultations where it proposed solutions, Sinclair adds. The government must consider ways to let people defer the regulatory age for withdrawing retirement income to 85, as opposed to the current age of 71.   CALU is also advocating to let Canadians access the savings in their retirement plan to cover healthcare costs.

Favouring the long-term health care market

Tax deductions, on the purchase of long-term care insurance, for example, could encourage Canadians to save for long-term care, he adds. Such measures would stimulate the admittedly anemic market, he believes. “The only way to have more carriers in the business of long-term care insurance is with some federal support. Create a market and more players will go back to it,” he explains.

Value of advice 

To defend the interests of its members and the 13,000 advisors it serves through its relationship with Advocis, CALU aims to emphasize the value of advice, he says.

“Advisors play a critical role: they make a critical difference at critical times. Some TV ads proclaim that investing online costs less than with an advisor. But the advisor’s role is more than just investments. The advisor monitors people’s situation, and encourages them to take steps they may not have taken themselves. We encourage people to take action, instead of defer and delay. We need to illustrate that value better,” Sinclair underlines. This topic was featured in a session at the CALU conference. Other sessions covered each of the group’s priorities.