Canadian Small Business Tax Changes

Canadian Small Business Tax Fairness

Canadian small business needs to speak up and make sure someone is actually listening. The implication from Mr. Trudeau and Mr. Morneau is that most owners of small corporations in Canada are somehow ripping off the system and that is treating the rest of Canadians unfairly. There are several insinuations here and even in the 2 articles linked here that are simply false statements. Mr. Trudeau goes so far as to say that an employed individual (ironically probably working for the small corporation business owner) earning $ 50,000 somehow pays less tax than the business owner’s earning $ 250,000. The fact is most don’t income split fully as many spouses have other jobs and are paying tax already. The logistics of starting a small business are difficult and many spouses and families require multiple incomes during this period just to survive.

However, let’s give Mr. Trudeau the benefit of the doubt and assume the spouse doesn’t work at all however unlikely that may be. Ironically again, if the spouse doesn’t work they are more than likely legitimately helping with their spouses business and entitled to a salary anyway. Let’s assume a perfect split of the $ 250k to both spouse so they are each paying tax on $ 125k. The $50,000 employee pays $ 10,625 and the business owner doing a full split with their spouse of their $ 250,000 is still paying $ 76,460 in income taxes about $ 20,000 less than they would if all taxed on one income. Given that they employ Canadians, pay other forms of taxation such as employer portions of employer health tax, CPP, EI, workers comp and so on this hardly seems advantageous.

More so, since Mr. Morneau and Trudeau have increased taxation on dividends and want to now increase tax on money grown in corporations then how will a corporation be able to re-use its profits and grow, they will simply have less available. It will only remain possible for the elite and exceptional small business, not the majority of what is the reality of small business in Canada including many farmers.

This continued misinformation from these two who both come from an elite tax bracket and trusts and tax structures that most Canadians will never see or understand is the epitome of hypocrisy. This veiled attempt at fairness and attack of small business to try and hide a huge fiscal deficit from mismanagement of funds is unfair and unacceptable and Canadians who are employed by small business and small businesses themselves need to speak up. There is no pension plan for these people, yet their taxes are funding most government programs. Killing small business future will only amplify future deficits when less people see any attractive reason to start their own businesses.

This doesn’t even get into the whole health professionals discussion and the loss of talent we will face now and down the road if they do this. Canada used to be a place of dreams and provide the ability to make anything of yourself. Those dreams are quickly evaporating.

Tax fairness? The Liberal small biz tax changes are the total opposite
– Lorn Gunter, Edmonton Sun

Won’t back down on tax changes: PM
– Canadian Press – Joan Bryden

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