Extend consultation for proposed changes to private corporation taxation - 7/18/17
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Canadian small business is vital, so is comprehensive consultation - July 18, 2017 proposed changes to private corporation taxation
A request to the Honourable Minister of Finance, Bill Morneau:
Extend the 75-day consultation period, and commit to a more complete review of the proposed changes to private corporation taxation released on July 18, 2017.
Small business is vital to Canada and these proposals may significantly affect it.
The undersigned ask for this extension in the name of producing efficient and strong legislation that encourages rather than hinders business, in a fair manner.
On July 18, 2017 the Canadian Department of Finance launched a consultation regarding major changes proposed to the taxation of private corporations. These changes focus on the concepts of income sprinkling, use of the lifetime capital gains exemption, earning investment income in a corporation, and removing value from a corporation by means of capital gains taxed at lower rates.
The purpose of this petition is not to support, critique or challenge the proposals. Many experts are already reviewing the proposals to this purpose. Rather, this petition urges that the consultation be given the diligence and respect its complexity, in combination with its wide and significant impact on Canadian business, merits. Industry Canada reported that 10.5 million Canadians were employed by small and medium enterprises in 2015. Specifically, we ask that:
- The consultation submission period be significantly extended beyond its scheduled 75 days.
- The provisions be effective, at the earliest, after being passed into law.
- A robust document identifying each of the significant concerns raised in the consultation be prepared along with alternatives for amendments to the legislation or detailed explanation as to why none is merited.
Most Canadian private corporations, and future corporations, will be affected by these changes to some, if not a significant, degree. The proposals impact the core of Canadian corporate compliance and tax planning as it has been practiced since 1972. The path from the Carter Commission report to the implementation of the 1972 Income Tax Act took six years - both the economic environment and the existing tax law have become more complex in the 45 years that followed.
These proposed changes are very serious. They would complicate an already complex Income Tax Act and increase uncertainty in tax filings. They could remove essential corporate capital, increase tax rates to improper levels (93% in one case analyzed), and lead to an overall chill in the economy and investment. In addition, these changes are proposed in the name of improving fairness, however, a larger, more robust discussion must be completed on whether the definition of fair as implied in the consultation is accurate.
Given the importance of small business and entrepreneurial spirit to the Canadian economy, and Canada as a whole, a more in-depth and significant process is needed to ensure:
- that there are very limited unintended consequences;
- that compliance and enforcement is efficient;
- that all applicable implications are identified and quantified;
- that the objective is achieved and worth the cost;
- that Canadians have sufficient opportunity to consider, discuss and debate what "fairness" truly entails;
- and that the changes are considered in the spirit of not only improving fairness but simplifying tax obligations as a whole.
Thank you for your consideration.
Link to consultation: http://www.fin.gc.ca/n17/17-066-eng.asp
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