For Immediate Release
Ottawa, September 11, 2017 – On July 18, Finance Minister Bill Morneau announced a series of proposals for major changes to the Canadian private corporation tax system. The National Capital Business Association (RGA) has done a detailed analysis to understand the impacts on its members and the Canadian economy as a whole.
From the outset, the Department of Finance and the federal government have made it clear that what is at the heart of these proposals is a balance between the tax burden for an employee and the tax burden applies to an entrepreneur working in a corporate structure.
According to the Chairman of the board of directors of the RGA, Mr. Yves Ducharme, “it is difficult to understand what motivates the government to aim for a common taxation between these two fundamentally different realities. While in most cases the employee benefits from a certain level of job security, benefits, vacation and sick leave, the Employment Insurance (EI) system, the entrepreneur, however, evolves in a context of uncertainty, risk taking and no social benefit, including a pension plan. That is why, in my view, the Canadian tax system has, for several decades, allowed some corporate tax planning mechanisms that differ from those that apply to employees. ”
In fact, it is within the framework of this system of taxing Canadian private corporations that SMEs employ 70.5% of the private workforce in Canada. It is in this sector that they invest 27% of all their research and development expenditures and account for 25% of all their exports abroad. In addition, SMEs contribute 30% of Canada’s total GDP. It should also be borne in mind that Canadian corporations are largely responsible for Canada’s enviable position on the global economic indicators.
The RGA strongly supports a fair tax system that does not penalize and does not favor anyone.
It is important to know that one of the biggest challenges of an SME or a family business is to identify a succession and to carry out a transfer of ownership of the company. The optimal scenario is often the transfer of the company to a family member or to a key employee. The current tax system includes provisions that facilitate this exercise in the best interests of founders, succession and business. Proposals for reform will severely complicate this approach and impose fiscal barriers affecting the effective intergenerational transfers of our precious family businesses.
The RGA finds that these new proposals go unnecessarily beyond what was in the Liberal platform during the campaign two years ago. The RGA urges the federal government to cancel these reform proposals immediately and urges it to initiate a national dialogue. It appears to us that these changes will have a negative impact on economic growth, which reached 4.5% in the second quarter of 2017, on job creation as we approach full employment, and finally on the spirit essential to continue to stand out.
As the federal government accepts feedback on this issue until October 2, 2017, the Regroupment encourages you to submit your ideas and to communicate with your federal MP to raise awareness.
In the meantime, RGA will be presenting a breakfast on September 28 with a panel of tax experts to provide a detailed perspective on these new measures. Enjoy it, register to email@example.com
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Source : Infolettre du RGA