Olds and area businessespeople or farmers whose businesses are incorporated and who are concerned about the implications of proposed federal tax changes should let the federal government know what they think ñ now.
Because if they don’t, those changes will more than likely occur; because the federal government wants them to go ahead in order to garner more money for its coffers and because it has the majority in Parliament to make that happen.
The time to do so is now, because the window to provide that input is very short ñ until Oct. 2, and Parliament doesn’t even reconvene until mid September, so the Opposition won’t be able to raise the matter in the House until that time.
On Aug. 23, Red Deer-Mountain View MP Earl Dreeshen convened a roundtable about the proposed changes in the Olds Legion. About 30 people attended.
According to Dreeshen and accountants and lawyers, the federal government wants to eliminate or drastically change the following:
Income sprinkling, whereby a business owner pays family members a salary or dividend in order to cut the business’s total tax burden.
Passive investment retention, under which a business owner invests income for reasons other than immediate reinvestment into the business. According to those attending the Aug. 23 meeting that can include taking income from the business as a source of retirement income.
Income conversion to capital gains, which, according to critics, is essentially declaring income in a way that creates a lower tax burden.
Finance Minister Bill Morneau says the purpose of the proposed changes is to close “loopholes” that he says enable wealthy Canadians to pay taxes at lower rates than they otherwise would have.
That includes people who incorporate themselves, then draw income from their businesses or farms by paying lower rates of tax that are allowed under incorporation.
As many people attending that roundtable said, surely the goal is to spur the economy by encouraging small businesses to grow, thereby proving more employment ñ and more tax dollars for the government.
If so, then these changes do the opposite. They have people with great entrepreneurial spirit wondering why they should bother growing their businesses further or passing them down to their children.
The tax system should provide revenue to the government, certainly, but not at the expense of jobs and the livelihood of law-abiding, entrepreneurial residents.