News

Urgent action required to lobby against government and proposed federal tax changes

As many of you would no doubt have heard by now, a series of tax proposals has been issued by the federal government to radically change the way Canada taxes private corporations. Government has provided until October 2, 2017, a very short period of time for effected parties to provide their views on these proposals. Unfortunately, this is not a realistic time frame for proposals with such widespread implications.

What does this mean for PEI business?

While the public rhetoric has been that these proposals target the “wealthy” the reality is these proposals will have significant ramifications for ALL incorporated private businesses in Canada. As an example, our firm has prepared tax estimates for a typical business on Prince Edward Island: A business earning $100,000 per year and splitting the income with a spouse would see an increase in overall annual income tax paid of up to approximately $7,700 or about a 34% tax increase. This equates to almost $650 per month in additional income taxes! For a business on PEI making $50,000 per year and splitting the income with a spouse, the changes could result in an increase in overall annual income tax paid of up to approximately $2,700 or about a 27% tax increase. This equates to almost $225 per month in additional income taxes!

The effect of the proposed changes for a PEI corporation and its shareholders for passive income could reach an effective 74.55% tax rate. This is clearly unacceptable. We are hopeful the government would not have intended this tax result.

In addition, these changes are especially concerning for the farming and fishing sectors in particular. These industries are the backbone of the PEI economy and must be protected.

Our firm has issued a series of articles on how this may impact your business. If you have missed these please contact our offices. In addition, as a member firm of DFK Canada, MRSB has been actively analyzing the proposed legislation and working with industry groups and our fellow DFK member firms across Canada in an effort to lobby the federal government to amend or abandon these proposals.

What should you do now?

We realize that most private business owners are extremely busy trying to run their business operations and are not generally experienced or active lobbying government. However, this time is different and we strongly encourage you to speak up and make your voice heard. We have included a link to a proposed letter that you can sign and we propose you email to the following parties:

Standing Committee of Finance – public consultations                                                      

Right Hon. Prime Minister Justin Trudeau                                                                              

Hon. Bill Morneau, PC, MP Minister of Finance                                                                    

Hon. Lawrence MacAulay, PC, MP  Minister of Agriculture and Agri-Food                

Hon. Sean Casey, MP                                                                                                                       

Hon. Robert Morrissey, MP                

Hon. Wayne Easter, MP                                                                                        

Hon. Wade MacLaughlan, Premier of Prince Edward Island                                             

 

Thanks, any questions call or drop an email.

Terry G. Soloman, CPA, CA, TEP

Partner Tax Services

MRSB Group

Direct line: (902) 629-1987

Fax: (902) 566-5633

Email: terry.soloman@mrsbgroup.com

Federal Tax Update 2017 - Public Comments Welcome

MRSB Tax Update

On July 18, 2017 the Federal Liberal government announced proposed legislative changes that will have a far reaching tax impact on private companies and their shareholders.  The draft legislation would mean significant policy changes to the taxation of:

 

  1. Payments to shareholders of private companies

  2. Capital gains realized on the sale of certain private company shares

  3. Income from passive investments inside a private corporation

  4. The conversion of a private corporation’s income into capital gains

 

As a member of DFK Canada we have compiled four papers that discuss the proposed changes and the potential impact on the taxation of small businesses and their owners.  For a copy of each detailed paper, please click on the above links to access our website.

We encourage your feedback and welcome your input by sending along direct comments to taxchanges@mrsbgroup.com or by phone at 902-368-2643. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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