Please find Squamish Chief coverage of my response to questions on the proposed tax changes below.
MP acknowledges rollout of proposed changes was not handled well
JENNIFER THUNCHER / SQUAMISH CHIEF
OCTOBER 5, 2017 10:00 AM
Sea to Sky MP Pamela Goldsmith-Jones says it is the issue over which she has fielded an unprecedented number of complaints.
Proposed federal tax changes that the Liberal government claims will make the business tax structure fairer have led to more than 900 messages from concerned small business constituents, Goldsmith-Jones told The Chief
“I have never seen anything like it,” she said.
She added the response in her West Vancouver–Sunshine Coast–Sea to Sky Country region has been “above average” compared with ridings in the rest of Canada.
“We have had exceptionally constructive, sometimes angry input,” she said.
“It is not easy, but it is really valuable.”
The proposed changes came as a shock and not enough time was given for explanation and consultation, Goldsmith-Jones acknowledged, adding the way the changes were introduced seemed to make business owners feel scolded and confused.
“We absolutely have to be more concrete, more clear, take our time and frankly apologize for the way in which people have been treated as if they were doing something wrong, which nothing could be further from the truth,” she said.
This summer, Finance Minister Bill Morneau announced a plan to eliminate a few ways in which business owners are currently able to pay lower taxes.
Firstly, changes are proposed to tighten up rules around so-called “income sprinkling,” in which business owners are allowed to divvy up their income among family members, even if they don’t actually work for the business.
“Income sprinkling arrangements effectively allow high-income individuals, in particular, the principals of private businesses, to ‘opt out’ of all or part the progressivity of the personal income tax system to their own advantage. This is fundamentally unfair and erodes the tax base and the integrity of the tax system,” reads the Department of Finance explanation of this proposed change on its website.
A second proposed change seeks to limit passive business investing.
Individuals unfairly benefit from passive investments held within their companies because passive investments are taxed at a lower, corporate rate.
“Holding a passive investment inside a private corporation is a strategy available to those earning enough business income to hold savings within a corporate entity,” the federal government website states. This is not an option for businesses that are turning less of a profit and investing in upgrades and paying other expenses. It is an unfair loophole for those making the most, in other words, according to the government.
Goldsmith-Jones said a “huge concern” she heard from constituents is around long-term retirement planning and passive investing.
The proposed changes would not be retroactive, Goldsmith-Jones said, adding the money small business owners have accrued due to passive investments is not going anywhere.
“But the question is, going forward, what is that going to look like and that is what has gotten a lot of business people, under [age] 60, particularly upset,” she said. “They have been proceeding according to established rules and assumptions… and now they won’t have the same opportunities as perhaps the generation before them.”
This proposed change “has introduced more questions than it has answered,” she said. “We have had such a short time frame and it has been over the summer.”
Another proposed change would be to the allowable ways of converting income into dividends and capital gains.
This change basically means restricting how some businesses take advantage of the lower tax rates on capital gains.
Typically not quick to be vocal in its political opposition, the Squamish Chamber of Commerce has voiced its concerns about these proposed changes.
“Small to medium-sized businesses are the engine of the Canadian economy. The proposed changes to business tax could have a significant impact on many businesses within the Squamish community,” Louise Walker, executive director of the chamber told The Chief. A fact sheet distributed by the chamber is more explicit in its opposition to the proposed changes.
“If your business is incorporated, then you could be facing a larger tax bill and big compliance costs from the government’s new proposals,” reads the fact sheet available on the chamber website.
The Squamish chamber surveyed local businesses to generate data, which could be used in conveying specific Squamish concerns to the federal government, Walker said.
The federal government gathered feedback on the proposed changes until Oct. 2.
The feedback collected will be considered in preparing the final changes slated for the 2018 federal budget process, Goldsmith-Jones said.
The chamber is hosting a business lunch with Goldsmith-Jones at the Squamish Valley Golf Club on Wednesday, Oct. 11 from 11:30 a.m. to 2 p.m.
For more information go to www.squamishchamber.com/.
Original article: bit.ly