CANADA – Tax fairness for small businesses and the need for greater clarity around a suite of proposed tax changes are top of mind for business owners across the country heading into the 2018 budget, writes the Coalition for Small Business Tax Fairness in a new letter to Finance Minister Bill Morneau.
“While the small business community recognizes that government made some improvements to its tax proposals last fall, the confusion and worry remain very high,” said Dan Kelly, president of the Canadian Federation of Independent Business (CFIB).
“Virtually no business owner understands the new income sprinkling rules that are now in place and, at the same time, the business community is bracing for passive investment changes expected in the upcoming budget.”
The Coalition is deeply concerned that changes to tax rules for passive investments may severely limit small businesses’ ability to save for large investments, creating a significant barrier to innovation and growth.
“The government has shown an openness to listen to small business owners. However, much more needs to be done to restore business owners’ confidence and make Canada more competitive,” said Perrin Beatty, President and CEO of the Canadian Chamber of Commerce.
“If we really want small businesses – which are at the very core of our economy – to grow and prosper, we need a comprehensive review of our tax system. The upcoming federal budget presents a perfect opportunity for government to make that commitment to business owners.”
With time running out, the Coalition is recommending that the federal government:
- Immediately undertake an economic impact assessment of the package of proposed changes and delay implementing any changes until the assessment is complete;
- Postpone the application of income-splitting changes until at least January 1, 2019, and exempt spousal income and dividends from the new rules;
- Drop the proposed tax hike on income from passive investments; and
- Undertake a comprehensive review of Canada’s income tax system.
To read the Coalition’s letter to Minister Morneau, click here.
