The Coalition for Small Business Tax Fairness, representing more than 70 organizations and which CFA is a member of, has written a new letter to Finance Minister Bill Morneau with professional analysis confirming that the Minister's tax proposals will affect middle-class business owners, resulting in higher tax rates than other Canadians with similar income levels.

 

The government has claimed that these proposals would not affect business owners with incomes under $150,000. Tax practitioners disagree.

 

One of the new rules introduced by the government would restrict small business owners from sharing income with family members. Tax practitioners say that this can affect business owners with incomes as modest as $50,000.

 

The government is also proposing changes that would discourage small business owners from holding certain types of investments in the incorporated company. According to tax practitioners, business owners retain business earnings in the corporation to safeguard against economic downturns, secure bank financing and invest in other start-up companies.

 

Tax practitioners have confirmed that the proposed tax changes would result in higher combined corporate and personal taxes for business owners across the board and in many cases, small business owners would incur tax rates far greater than what an employee with a similar level of income would pay. 

 

The Coalition, which has doubled in size since August 31, is asking the federal government to carefully review the analyses of tax professionals across the country, take these proposals off of the table, and launch meaningful consultations with the business community to address any shortcomings in tax policy.