Tisdale’s local MP hosted a public forum to update the public about the federal government’s plans to change how small business taxes are levied.
Randy Hoback was at the Tisdale Civic Centre Nov. 17 along with Lisa Steinhilber, an accountant with MNP.
“We’re getting so many farmers and small business people who are so upset and really want to have an idea what these changes mean and what they actually involve,” the Conservative MP said. “There’s a lot of questions out there, so we’re just trying to bring some answers to those questions.”
The Liberal federal government announced three major changes in July: adding a reasonableness test to make sure that when income for corporation is split among family members, the family members in question are making a contribution to that company to earn that money; ensuring that passive income – items like investments and rent – from a corporation couldn’t be taxed at a lower rate; and changing how income can be converted into capital gains, something that could harm how family farms are passed down to descendants.
In October, the government announced it was dropping changes to capital gains conversion, planning to simplify the reasonableness test, lowering small business tax by two percentage points within two years, and allowing the first $50,000 of passive income to be taxed under the current rules.
“It will allow small to moderate investments within the companies to remain under the old rules, but anything more significant for larger purchases or expansions will be impacted still,” Steinhilber said. “It’s better than it was in July, but it’s still pretty punitive. $50,000 is a start.”
Hoback said when it comes to these changes, the devil’s in the details.
“We’ve seen some press releases with supposedly some changes within, but they’ve been one sentence, so you don’t know how to interpret them until you see exactly what they’re talking about,” he said. “What’s concerning amongst a lot of people is we might not see any of that stuff until these tax changes are actually implemented.”
The Prince Albert MP said there hasn’t been much discussion about the tax changes in Ottawa despite how large and all-encompassing it is, with the Liberals limiting official debate in the House of Commons and in committees.
“To rush it in is irresponsible. Not understanding the unintended consequences is irresponsible,” he said. “The Liberals are so hungry for cash, they’re doing whatever they can to get it and that means short-stepping the appropriate legislation.”
Hoback said it would be easier for all involved if the Liberals simply increased a tax by a percentage point instead to raise more revenues.
The MP encouraged citizens to contact Liberal MP Ralph Goodale, the finance minister and other Liberal MPs about their concerns.
“Nothing’s done until it’s done, so there’s still opportunities for Canadians to be involved.”
Steinhilber encouraged people to talk to their financial advisors.
“It’s very, very important that anyone who may or may not be impacted by these rules to talk to their accountant to understand how this will impact them.”
