The Eastern P.E.I. Chamber of Commerce has teamed up with the tax specialists at Grant Thornton to ensure those affected by proposed federal tax changes have a clear understanding of the measures and how they will impact local businesses.
Time is quickly running out for stakeholders to engage in a consultation process regarding the tax changes proposed by the federal government.
The deadline for written submissions from the business community, provincial governments, taxes advisers and the public is Oct. 2.
But Dorothy Keating, chairwoman of the St. John’s Board of Trade, says there was nowhere near enough time allotted to begin with and she’s hesitant to even call it a consultation.
“You cannot have an intelligent discussion in 75 days on this. It is far too complex,” Keating stressed following a special meeting with a large group of board of trade members Thursday morning at the Fluvarium in St. John’s.
“The last time that Canada had tax change of this magnitude the consultation period was 60 months, so 75 days is insulting. It’s a platitude and it really is not a consultation.”
Federal Finance Minister Bill Morneau outlined the proposed changes, all of which aim to close what Ottawa considers loopholes in the federal tax system that benefit wealthy Canadians, in a white paper released on July 18.
Boiled down to the bare bones, the changes focus on three areas; income sprinkling, whereby a business owner uses a private corporation to spread income among family members to create tax savings; holding passive investments inside a private corporation, which is essentially using the company itself instead of a regular savings account, thereby allowing the private owner to benefit from lower tax rates; and converting income into capital gains, which also grant a lower tax rate.
In the federal Liberal platform that got them elected in 2015, one of the key components to benefitting middle-class Canadians was simplifying the tax system, something Keating wholly supports.
But the changes unveiled this year, she says, do the opposite.
“But the changes they have actually proposed have tax professionals with their head spinning about the complexity, the uncertainty and the vagueness with which they have put forward this legislation,” Keating says.
“If anything, they have made it much more complex, much more subjective in terms of what is reasonable and some of the terminology that they’re using.”
Toby Barnes, owner of Ignite Ad Technology, believes Ottawa is complicating the rules on purpose.
“The way the (legislation) ends up being written, who can actually read this stuff other than the bureaucrats or the professionals out there who have to try to interpret this and understand what they’re trying to mean with it?”
While the federal government has been spinning this as a move to make it harder for Canada’s wealthiest individuals to skirt the system and avoid paying their fair share of taxes, Keating says they have to consider the implications it will have on the small business community, which employs 70.5 per cent of working Canadians.
Moreover, she suggests the tone of the proposed legislation “shows absolutely no respect or appreciation for that economic engine in the country.”
“To have the federal government characterize them as tax-cheating, wealthy, uncaring individuals, that could not be so farther from the truth of what I know of the members of the St. John’s Board of Trade and clients in my own practice.
“Any business owner that I speak to, think and concern themselves with their employees every single day.”
Barnes counts himself among them. He considers his employees members of his extended family and, like many other small business owners, even during hard times puts money back into the company to keep his team working and food on their tables.
Ottawa, he says, doesn’t seem to understand that and doesn’t seem genuinely interested in hearing from people like him.
“How many of these people who work in the federal government have really had that experience or run a small business, as opposed to a large hedge fund?” he asks.
“They don’t have a real understanding of small businesses or talking to small business owners about what they end up having to go through and what they end up doing.”
The board has had a website active since early August where members and non-members can complete an online form expressing concerns with the proposed changes. It has also established, for the first time in the board’s history, a tax committee that Keating says will “help us in terms of articulating our submission to the federal government.”
In the meantime, Keating says the board has asked for a meeting with Prime Minister Justin Trudeau, Morneau, the federal cabinet and the Newfoundland and Labrador members of Parliament when they meet in St. John’s next week.