Hello friends and colleagues,
I’m sure by now many of you have heard the news in some fashion about the monumental changes the Liberal’s proposed on July 18th for small business owners that will make it even harder for entrepreneurs and small businesses to survive in Alberta and across our country.
I encourage you all to send letters to the Prime Minister, Finance Minister and your MP to raise your concerns and support against these changes, at least until proper consultation has occurred . I have provided a template letter created by one of our clients to put your name on or get you started. The Liberals are taking an incredibly short-sighted and uneducated approach to cash grab from the middle class to pay for the massive debts they’ve accumulated since in power.
They are spinning these changes by suggesting all private businesses have some ‘unfair’ tax advantages not enjoyed by those that work as employees for large companies, unions or governments for that matter. However, what their complete lack of understanding fails to mention is that business owners do not have pensions, do not get EI coverage if their business fails and they take significant risks of their capital and time to make a business successful, often putting their family assets at risk, working much longer than 35-40 hours / week to try and get ahead for them and their family (all the while paying significant tax I might add and employing many along the way). And the Liberals paint these people to the rest of our country as getting an unfair advantage.
They suggest there is a tax loophole that gets these evil rich business owners completely out of tax, which simply isn’t true, they will all pay their ‘fair’ share of tax, some taxes can be deferred for a time, but NOT eliminated as they would have you believe. They suggest ‘dividend sharing’ between family members is a loophole to split income generated by the business, perhaps, but they have no problem allowing employed folks to split their pensions with lower income family members, how is that fair or any different? But do those same employees being so hurt by our tax system have to risk their spouses house to accumulate their pensions, rely on them to raise families will the other spouse works 70 hours a week so not to rely on social assistance, I think not, they just hear the government saying business owners are getting unfair advantages and raise their pitch forks, but the Liberals are failing to tell them the entire story to cover up their own mess and inexperience.
There are many more changes proposed by the Liberals to tax private business owners even further, including up to a 73% tax rate of their savings if they choose to buy property with that ‘pension’ in their businesses, is this fair? Would employees stand for a 73% tax rate on their pensions that are earned from owning REIT’s like most do? Same situation. Not to mention that these are the most broadly based changes to our tax system since the late 60’s tax reform where a 4-5 year research program was undertaken, followed by 5 more years of discussion, whereas these proposals are based on one academic’s opinion of our system and has not allowed for any meaningful consultation period with the various stakeholders, two months does not remotely do justice to the far reaching implications of these changes, and if we do nothing, it will happen. Due process is required to make sure the intended objectives are achieved, whether you are Liberal or not makes no difference to me, but the current proposals completely undermine our very democracy.
They have simply missed the boat, by a longshot, their poor attempt to tax the elite will fail, and as usual small business owners, average Canadians in the lower/middle classes and charities will be hurt.
If you would like some more in-depth information on these change please read the following links, particularly the last one walks through some numeric examples to illustrate the severity of these changes and the many people that think they are safe but really aren’t.
Thanks for bearing with me on this long email, but too many of my family, friends, clients, and staff will be significantly impacted by these changes to do or say nothing. Please feel free to forward to anyone you feel may be interested or impacted by these proposals. Protect the small businesses and farms that are the backbone of our culture and country.
Kind regards,
Tyson Schmidt, CPA, CA, Partner
