Published On: Wednesday, 10 January 2018
Business 2018 Wish List for Taxation Reform
By Dan Rogers, Executive Director of the Kelowna Chamber of Commerce
The holiday season brings many joys and pleasures, not the least of which is a short break from the issues of the office, in exchange for friends, family and hearth. It’s for that happ) reason that I am crystal-ball-gazing, trying to guess what Finance Minister Morneau and the government will do.
The Kelowna Chamber of Commerce was one of many chambers across the country calling for a hold on any changes to “income sprinkling” until January 1, 2019 but of course the Finance Minister announced the changes in mid-December.
The direction outlined sounds reasonable at this stage but we need to see what the true impact will be. It is also important to note that at this stage, many small business owners are still reeling from the way these proposed changes were communicated. Many of them were left feeling like their government was accusing them all of doing something wrong.
It is understandable why we, along with many of our colleagues, want to see the details of all the proposed changes before giving them a passing grade or not.
The federal government received over 21,000 submissions reacting to its proposed changes to the tax treatment of small business. The decision by the federal government to tone down some of the proposals or shelve them altogether has reduced the gale force winds but small business owners continue to be concerned about the future.
We all will be watching the Federal Budget in March very closely for signals that the Feds aren’t planning any further tax changes without engaging those who will be impacted.
We – along with our fellow Chambers across Canada – have four key messages for our MPs:
- Chambers are still very concerned about the potential negative impacts the government’s small business tax changes are likely to have on small business investment and growth;
- Tax changes should be postponed until their full economic impacts can be taken into account;
- The government must urgently address the broader issue of the competitiveness of Canada’s tax system; and
- The government should establish a Royal Commission to undertake a comprehensive review of the tax system.
Beyond that, there are some “good” and “less good” changes on the horizon. Here’s a brief summary.
- The Small Business Corporate Tax Rate will be reduced which is good news, as is the news that access to the Lifetime Capital Gains Exemption will not be changed.
- The Chamber also welcomes the news that rules governing the conversion of Capital Gains into Dividends will not be altered. On the other side of the coin, the jury is still out on whether higher taxes on ordinary dividends are going to have a major impact.
- We will also need to see the result of the government’s announcement that it will work to make it easier and less costly to transfer businesses to the next generation.
- The government’s release in December on their proposals for the tax treatment of Passive Income will be revised. The Chamber’s position with respect to the government’s new proposals to tax passive income is that the $50,000 threshold is inadequate for small businesses that are saving in order to make larger investments in innovations or business growth; and the threshold is too small to provide business owners with long-term earnings security.
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In other news, and on a much more positive note, the Kelowna Chamber continued to grow, even as the days grew shorter around the winter solstice. Our board and our staff are delighted to welcome the following new members who have committed to becoming part of our Chamber, one of Canada’s most vibrant and active:
City Furniture & Appliances Canada
Finally, the Kelowna Chamber is excited about 2018. It will be another busy year with a provincial by-election in Kelowna in February and of course local government elections next fall. Throw that in with the legalization of marijuana and potential provincial electoral reform and it is going to be a fun ride! All the best in 2018!