In the spring of this year, the federal government proposed a series of changes to the taxation of private corporations. Canadian business owners across the country voiced their objections. At Tall Oak Private Wealth, we felt so passionately about this issue that we agreed as a practice to advocate directly on your behalf. We took a constructive approach with the goal of ensuring our client’s voices were acknowledged.
We wrote letters to our local representatives, we submitted articles to our local paper, and in August, we secured a meeting with our local MP, Peter Fragiskatos. Over the course of nearly two hours, we shared our concerns and explained why we felt the proposed changes would be damaging.
Other voices raised against the proposals include the Canadian Taxpayers Federation, (CTF), the Canadian Medical Association, (CMA), and various farmers associations coast to coast. The CTF paid for a small plane to fly over Ottawa with a banner that read, “No Small Biz Tax Hike”. The CMA has submitted petitions, and posted a list of concerns on their web site www.cma.ca. (See: ‘Let’s Talk Facts and Fairness’)
Because of this lobbying, the government has indicated a potential softening of some of the original proposals. In our opinion however, they continue to target several well-established tax-planning tools which were developed by successive governments over the years to foster small business ownership.
While we find it encouraging that the government has stepped back from its original proposals, we continue to be very concerned regarding the impact the changes will have on you, our business owner and professional clients. Virtually all of you either own or plan to establish a private corporation and we strongly believe the changes, even the ‘kinder, gentler’ version, if enacted, will prove difficult for Canada to retain and attract qualified professionals. The new tax structure will still have a significant impact on existing businesses and Canadian entrepreneurial spirit in general. We all believe in paying our fair share, it is important in any economy to financially recognize, and reward the important contributions made, and risk assumed, by business owners and their family members.
We intend to continue to speak out on this issue as it moves through the legislative process. You can read what we have had to say on IPPs and read Mehendi’s blog post, Canada and China both believe patriotism should be the highest priority for entrepreneurs?, at www.talloakprivatewealth.com.
Despite the recent clarifications, we are uncertain of what the proposed changes will be in their final configuration. That said, we think that one way or another, higher taxes are coming for owners of private corporations.
Our commitment to you is that we will remain proactive in studying the potential impact and finding ways to mitigate the outcome. With that in mind, we are assessing the effectiveness of individual pension plans (IPPs) and permanent insurance as possible strategies, dependent on what the final legislation actually is. Either of these strategies would be assessed for benefit into each individual financial plan.
We look forward to bringing forth ideas and solutions to ensure that you continue to optimize your wealth strategies.