The federal government has proposed a number of changes to the small business tax, and local business owners have something to say about it.
On Tuesday, Sept. 26, the Cold Lake Regional Chamber of Commerce hosted an information session about the changes announced in July by Canadian Finance Minister Bill Monreau, and what they could mean to local small businesses. But most of all, the chamber encouraged business owners to write their member of parliament.
“The new bill that the federal government is proposing is going to have a huge impact on our small businesses, entrepreneurs, professionals, doctors, lawyers, accountants, and so forth. We thought that they should be advised and aware of these changes and the impacts that they will have on them,” said executive director of the Cold Lake Regional Chamber of Commerce Sherri Bohme.
Fort McMurray-Cold Lake MP David Yurdiga and Bonnyville-Cold Lake MLA Scott Cyr both emphasized on the importance of having a voice, expressing concerns, and letting the government know how this tax impacts your business, farm, and family.
“My concern, is that people have lost their voice,” Cyr told the 65 in attendance.
But sending a form letter isn't enough. Cyr wants residents to include their personal story and the consequences they could face should the changes go forward in July 2018.
“Put something personal. How is it affecting you, your business, or your farm? This stuff is what's important, this is what the government needs to hear,” he added.
Yurdiga's concern was how, if implemented, these changes could mean there is less incentive for doctors to move to the area, or for people in communities to start small businesses.
“There are so many variables moving forward, that it's going to be a challenge just to wrap your head around the concept,” Yurdiga said. “This is going to make it a challenge for our community moving forward. What happens when we can't recruit doctors… how is that going to affect our community?”
The changes are claimed to be targeting tax evasion, while closing a few loopholes spotted within the small business tax system.
This includes eliminating income sprinkling, which is when a business splits their income among family members, whether they're involved in the business or not. The income is diverted to lower-earning family members by way of salaries, wages or dividends. This reduces the family's overall tax burden.
In response, the government wants to put an end to the 50,000 or so Canadians using this method by applying a reasonable test. The test would determine whether a family member is actively engaged in the business or not, and whether their salary is reasonable for the services they provide to the business.
The changes are also targeting how businesses convert income into dividends and capital gains, and limiting passive business income taxation.
The proposed amendments are to address businesses with an annual revenue over $150,000. Most local businesses are concerned, because even though they may go above and beyond that business revenue, much of that money is being redirected back into their business. This is how they grow.
“Small business owners aren't entitled to employment insurance, vacation days, stat-holiday pay, publicly-funded benefits, or health insurance. They have to self-fund all of that stuff. It makes sense that there would be some tax advantages at play,” explained chartered accountant Greg Sylvestre, who explained the changes at the event.
Randy McDonald owns several small businesses in the area. He said although he knew about the changes to the tax, he didn't understand it completely.
“I think it's really important that everyone here gets the idea that they have to stand up and say something,” he expressed.
