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Understanding the proposed changes to Small Business Taxation

How will this affect you?
  • Potential Consequences of Proposed Changes

    Max and I wanted to make sure that you were all aware of the Federal Government's plans to severely reduce the tax planning options available to small businesses in Canada. Most of our clients will end up paying more tax if these changes are made. Please fill out the attached letter and send it to your MP. I've copied information from the Canadian Chamber of Commerce below to help illustrate the issue. It's important to note that this is our opportunity to try to stop these changes before they take effect. Please contact me if you have any questions.

    CALL TO ACTION from Canadian Chamber of Commerce and all community chambers: This is an issue where the power of the network can affect change if we all work together and use our voice of business.

    Are you a business owner?

    If your business is incorporated, then you could be facing a larger tax bill and big compliance costs from the government's new proposals to change the way corporations are taxed.

    Here are three things you need to know about the tax changes proposed by the federal government: 1. Do you employ family members? The government wants to scrutinize their compensation to apply a much higher tax rate on income they consider "unreasonable". 2. Do you invest the profits from your business? The federal government is proposing to tax that income at an effective rate of 70%. 3. Do you want to pass your business on to your children? Tough new rules make it difficult for younger kids to get the capital gains exemption. They could be double-taxed.

    Small and medium-sized businesses (SMEs) are the engine of the Canadian economy - estimates range from 85 to 90% of all businesses in Canada are SMEs.

    The chamber network across Canada is using its collective voice on this issue; your voice as a business person needs to be heard as part of this initiative.

    We have attached a template letter to send to your MP today. Government needs to know that this tax reform will harm businesses of all sizes.

    The Liberal and Conservative caucuses meet immediately after Labour Day and we are aiming to have MPs go to the meetings with businesses' comments in hand.

    We have checked with MP Blake Richards and this is the best way to send your letter to him -

    Mail:
    Blake Richards, Member of Parliament for Banff-Airdrie
    House of Commons
    Ottawa, Ontario
    K1A 0A6
    Email: Blake.Richards@parl.gc.ca
    Fax: 1-613-941-4601
    Not in the Banff-Airdrie constituency? Look up MP's address using your postal code at: https://lop.parl.ca/ParlInfo/compilations/houseofcommons/memberbypostalcode.aspx?Menu=HOC

Understanding how these changes will impact Business Investors
  • A Comment on Capital Formation for New Ventures Under the Proposed Small Business Tax Changes

    In 2013, the Hunter Family Foundation contributed the funds to create the Hunter Center for Entrepreneurship and Innovation at the Haskayne School of Business. As a result, more than 2000 students at the University of Calgary have been exposed to the mindset of Entrepreneurial Thinking. The program has been so successful that in May 2017 the Foundation announced the largest philanthropic gift in Canadian history in support of entrepreneurship. The new Hunter Hub for Entrepreneurial Thinking will bring the curriculum to over 30,000 students across the entire campus.

    Having spent large sums of money and countless hours to encourage bright young people to consider entrepreneurship as a career path, it is heartbreaking to witness the full-frontal assault recently launched by the Liberal government of Justin Trudeau. It is not hyperbole to state that the proposed legislation regarding small business taxation, if enacted, will devastate capital formation for early stage ventures. Canada will be much poorer as a result.

    Just about everything that you use in your daily life, from the car you drive to the iPhone in your pocket, is the result of some entrepreneur identifying an opportunity, taking initiative and bringing it to market. Entrepreneurship is what leads to a positive rate of growth for an economy and a better quality of life for everyone. In the brave new world envisioned by the Liberals, entrepreneurship is to be discouraged.

    There is a lot of misunderstanding in discussions around the tax changes, since it has largely been presented in inflammatory rhetoric targeting matters of "fairness". Tax is arcane and complicated and most people don't spend much time thinking about it. I want to focus on one element of the proposal - capital formation for new ventures - and explain simply what the obvious outcomes will be. In this regard, there should be no need for debate or misunderstanding, regardless of your political leaning, as the outcomes are utterly foreseeable. Indeed, you could reasonably consider these to be the intended consequences of this government's actions.

    Start-up companies typically go through three stages of financing which we can characterize as "friends and family", "Angel" and "Series A". As companies grow, they pass through these stages as their capital requirements become larger. Each will be badly impaired under the new tax treatments.

    Perhaps if there was a glut of investment capital for Canadian new ventures there could be some excuse for this unprecedented attack on the most vital part of our economy but in fact, Canada lags well behind the United States when it comes to our ability to finance new ventures. We lose many of our best and brightest every year due to the attraction of better capital availability and business density over the border. How many more will we lose when our tax system becomes insanely uncompetitive.

    So, my new advice to young Canadians that are considering a career in an entrepreneurial endeavor is two-fold; first, think very hard about the implications of that path; it's not for the faint-hearted. There are serious risks and challenges involved that you will never have to face if you get a job in the public sector. If you do succeed, the government intends to treat you just like any other employee. In short, you get to keep all the downside, but the upside will be capped.

    Second, if you still think this is the life for you, then avail yourself of the excellent educational opportunities available in this country at institutions such as the University of Calgary but consider whether this is the country for you to get started in. The time to take your skill-set and enthusiasm to a jurisdiction that recognizes your value is before you have built something substantial that holds you back and acts as a magnet for future tax assaults in the name of "fairness".

    By their actions, this government has demonstrated repeatedly that it is no friend of entrepreneurs. If you believe, as I do that support for entrepreneurship in Canada will be critical to our future prosperity and standard of living, then speak out. Register your displeasure with your MP. Sign the various petitions making the rounds. Demand changes to this outrageous legislation.

    Let us all hope that common sense prevails.


    Derrick Hunter

    Derrick Hunter is the President of Bluesky Equities Ltd., Trustee for the Hunter Family Foundation, Fellow at Creative Destruction Lab (Rockies) and director of Futurpreneur Canada.

How to contact the minister in charge of small business and make your voice heard!
  • As you know, the Trudeau government is considering a number of tax changes that could hurt small businesses across the country.

    But throughout weeks of controversy, we heard almost nothing from Bardish Chagger, the government's Minister for Small Business.

    You would think that for an issue that has small businesses across the country up in arms, she might have something to say.

    Last week, she finally found her voice on social media - bragging about a high-tax coalition of big unions supporting her government's proposals!

    Maybe the Minister simply forgot that in her role, she's supposed to be working for small businesses, rather than against them.

    So perhaps you can help remind her.

    Would you take a few minutes today to call her constituency office in Waterloo, Ontario, and tell the Minister and her staff that she should be standing up for small business, rather than supporting an attack on them, and tell her government to back off on their harmful proposals?

    Her office number is 1.519.746.1573. And if her phone lines get jammed (as you can bet they will!) you can also email her office at bardish.chagger@parl.gc.ca.

    The Trudeau government thinks small businesses are just going to give up the fight and stop pushing back. Help us show them they're dead wrong!

    Thanks for all you do,

    Scott, Aaron, Shannon and the entire CTF team

    View original article here: Original

CRA blocks more than half of calls to meet service targets, regularly provides wrong information to taxpayers: Auditor General
  • Troubling news from the Auditor General

    View original article here: Article

Personal

  • Northern Residence Deduction: Amounts increased to $11 per day effective January 1, 2016
  • Teacher & Early Childhood Educator School Supply Tax Credit: Effective January 1, 2016 Refundable Tax Credit on amounts spent on school supplies up to a maximum of $1,000
  • Federal Home Accessibility Tax Credit (HATC):
    - Effective for repairs done from January 1, 2016 and onwards
    - Qualifying Expenses to a maximum of $10,000 per year
    - Non-refundable tax credit
    - Must be 65 years of age or older
    - Or be eligible to claim Disability Tax Credit (DTC)
  • Moving Expense Deductions: Did you move this year? Was it to attend school, for a new job or to start a business? Let us know as you may be eligible to claim your moving expenses!
  • Family Tax Cut: Income splitting for families has been removed for the 2016 Personal Tax Return filing year
  • Child Arts Tax Credit: Registration or memberships in prescribed programs enhancing the artistic, cultural, recreational or developmental activity can allow you to claim up to $250!
    Non-refundable Tax Credit
    Eliminated for the 2017 tax year
  • Child Fitness Tax Credit: You can claim up to $500 in registration and membership fees!
    Refundable Tax Credit
    Eliminated for the 2017 tax year
  • Canada Child Benefit (CCB): New Program that replaces the Universal Child Care Benefit (UCCB) and Canada Child Tax Benefit (CCTB) started July 20, 2016
    A non-taxable benefit based on the number of children, the ages of the children, and the Family Net Income
    You will still receive tax slips for UCCB from January-July 2016 for the 2016 Tax Filing
  • Remember to save ALL your receipts!

Corporate

  • SCAMS
    There have been several scams claiming to be CRA coming as
    • - Phone calls
    • - Emails
    • - Text Messages
    CRA usually uses written correspondence to communicate with you
    If the CRA calls you, tell them to contact your representative on file (Fiander Marr Professional Corporation)
    Do Not Give Any Personal Or Financial Information!
  • If the CRA calls... Give them our number. It's easier to have us communicate with the agents to obtain a full understanding of what they are looking for
  • Contact us for your customized tax optimization strategy and be sure to notify us of any business and life changes. We are here to help!
  • Remember to save ALL your receipts!

Investments

  • DID YOU SELL YOUR HOME IN 2016? If so. . .We need to know! Starting with the 2016 tax year, CRA is requiring all individuals who sell their principal residence to report the sale on their tax return. To avoid penalties, please talk to us.
  • New Home Owners? Look into the First-Time Home Buyer's Tax Credit. Eligible individuals may receive a non-refundable tax credit of $750!
  • Tax Free Savings Account:
    BENEFITS
    Not just a savings account. It can be used to accumulate any money expected to be gained through mutual funds or any other investments.
    There is no cost to take out funds.
    Taking out funds increases contribution room for the following year!
    Please talk to your financial advisor for details!
    Annual TFSA dollar limit for 2016 is $5,500.