Federal Tax reform

[kratz]

I'm surprised to hear so little about how this affects us.
Near the end of most long careers, many of us are well positioned to start new careers, small businesses, employment ect...
Ottawa's proposed tax changes will adversely affect enterprising individuals who have earned their success.

Instead of encouraging self-sufficient Canadians, it appears, Ottawa wants to dole out taxpayer's money to supplicants.

CBC.ca
Trudeau hitting middle class with proposed tax changes, Scheer says

Conservative Leader Andrew Scheer rallied his MPs Thursday by taking aim at the Liberals' planned tax changes, saying Prime Minister Justin Trudeau cares more about billionaires than middle-class Canadians.

In public remarks before a meeting of his caucus in Winnipeg, Scheer said of Trudeau that people "believed he was going to be the great defender of the middle class — a message he sold so well — and yet he's hurting the very people he claimed to help."

The Conservative caucus retreat is designed as both a rallying session for MPs before Parliament resumes later this month and a chance for Scheer and his party to emphasize what makes them different from the governing Liberals.

It's also a chance for Scheer to catch up with his MPs following the summer break, which came not long after he became leader in May...

 

[MilEME09]

It's more about getting more tax revenue then anything else in my opinion, I make less then 40k a year as a professional cook, I loose a third of my cheque to taxes, that hasn't changed since the liberals came to power, and a doubt it will ever change.

 

[George Wallace]

Well, well, well!

Reproduced under the Fair Dealings provisions of the Copyright Act. (evaluate the source as you wish)

MONEYBAGS MORNEAU: Finance Minister Used Offshore Tax Haven In The Bahamas
SpencerFernando
September 11, 2017

While Justin Trudeau targets Canadian family farms and small businesses, his government refuses to crack down on the use of offshore tax havens by the top 1% – like elitist Finance Minister Bill “Moneybags” Morneau.

The Trudeau government has said their “tax changes” targeting Canadian small businesses (including family farms), are meant to increase “fairness.”

And yet, it seems Canada’s Finance Minister thought it was fair to use an offshore tax haven in the Bahamas.

To start with, it’s important to point out that Morneau did not break any laws. That said, the fact that it’s so easy for many of the top 1% to conduct offshore banking just goes to show how rigged the system is in the first place.

As reported by BetterDwelling.com, the International Consortium of Investigative Journalists notes that “Francis Morneau William” (Bill Morneau), was listed as the Director of Morneau Shepell (Bahamas) Ltd.

The report notes that Morneau resigned from Morneau-Shepell “and all of its subsidiaries”, going on to say that “Morneau is one of the people that actually do have legitimate businesses there. Morneau-Shepell set up the Bahamas subsidiary in 2014 to consolidate the pension consulting they do in the Caribbean. It’s just a happy coincidence that the Canadian firm gets to reduce taxes by setting up a Bahamas branch.”

So, Morneau did not do anything illegal, but he did take actions to reduce the amount of taxes he pays in Canada. The irony here is immense. Morneau is pushing tax changes because he and Trudeau claim Canadian small businesses aren’t paying enough. Yet, those business are still paying taxes in Canada.

But Morneau and others using offshore tax havens seem to want to avoid paying Canadian taxes, and the government is refusing to take action.

Canada’s elites have been rigging the economy in their favour, and against middle and working-class Canadians for some time. As noted in the BetterDwelling report, “For the past 40 years, we’ve been turning Canada into a country to ease offshore banking. People that use these measures are legally moving the tax burden from themselves, to middle class Canadians. It does suck however to have the watchdog for our financial industry engaging in offshore business. If we can’t convince a member of Parliament that he shouldn’t be sending funds offshore, who can we convince?”

Morneau should share tax return with Canadians

It’s outrageous for Morneau to be going after Canadian small businesses for not paying enough after he used an offshore tax haven. And while there’s no reason to believe he still does, he should share his tax return with Canadians to make that perfectly clear. Canadians must be able to have at least some confidence in our public officials, particularly the finance minister.

Protect Canadian small businesses, crack down on offshore tax havens and offshore banking

Instead of going after Canadian small businesses, the government should target the use of offshore tax and banking havens. That’s where the real money will be found, and that’s where many of the true 1% are avoiding the taxes the rest of us Canadians are paying.

The government should make it far tougher to set up offshore, and impose retroactive taxes on those who have done so just to avoid paying the same taxes as their fellow citizens.

Of course, the Trudeau government won’t do that, since they serve the elites at the expense of the rest of us. The fact that they would rather extract money from farmers and small business people instead of those banking offshore is a total disgrace, and confirms their disloyalty to the true Canadians who build our nation.

Spencer Fernando

More on LINK.

Spencer Fernando may have hit on some valid points as to the hypocrisy of the Liberal Government proposals, if they are actually still true.  The elites will still find ways to hide or protect their money.  Why wouldn't they?

 

[George Wallace]

To follow up (from the National Post) -- from 2015, two years ago:

Reproduced under the Fair Dealings provisions of the Copyright Act.

Trudeau is one of the wealthy Canadians he says benefit from small-business tax deductions
The Liberal leader could draw on personal experience when he claimed a 'large percentage' of small businesses are used by wealthy people to shield income from taxation

THE CANADIAN PRESS/Jonathan Hayward
Postmedia News
September 9, 2015
2:31 PM EDT

Liberal leader Justin Trudeau could draw on personal experience when he claimed that a “large percentage” of small businesses are used by wealthy people to shield income from taxation.

Trudeau was asked about his plans for changes to taxation on small businesses during an interview with CBC, broadcast Tuesday night.

“A large percentage of small businesses are actually just ways for wealthier Canadians to save on their taxes,” he said. “We want to reward the people who are actually creating jobs, and contributing in concrete ways. So there’s a little tweaking to do around that.”

Trudeau himself was involved in at least three small business that were federally incorporated, one of which he used to receive income for paid speaking events he did between 2006 and 2011.

He was the owner and sole director of JPJT Canada Inc., the corporate face of a speaking business that earned him about $1.3 million over a six-year period.

The speaking fees became an issue of controversy in 2013 when the Citizen reported that he charged as much as $20,000 per speaking event, even after he was elected as an MP for the first time in 2008. He discontinued the speaking business when he decided to run for his party’s leadership.

At the time, Trudeau was also listed as a director of two other corporations:

– 90562 Canada Inc., the federal corporation that held a portfolio of securities that were part of Trudeau’s inheritance from his father, Pierre Trudeau, that he shared with his brother, Alexandre. The securities were managed by Montreal investment firm Jarislowsky Fraser. The corporation was dissolved in December 2013.

– 7664699 Canada Inc., Trudeau’s personal holding company, which was used when the inheritance was split up. In 2013, the company listed $958,000 in short-term investments and $255,000 in cash.

Because he had incorporated, Trudeau could have lowered his personal tax burden by having any speaking-related expenses paid through JPJT Canada Inc.

He reported receiving income from the company in his MP ethics disclosure – money that would then be taxed at his marginal personal income tax rate.

SEE ALSO:
Ethics commissioner approved Justin Trudeau ’s speaking engagements that earned him $277K after he became an MP

It is not known what was deducted as expenses from the revenue JPJT Canada generated or how much money, if any, the use of the corporation to manage the business saved him in personal income taxes.

When Trudeau disclosed this financial information to the Citizen during the 2013 leadership race, he said he didn’t keep close track of the holdings in the other companies and promised he would place his assets in a blind trust were he to win his party’s top job.  In July 2012, he turned over his holdings to BMO Harris Private Banking in Montreal. Joël Carrier, vice-president of the company, is now the sole director of 7664699 Canada Inc.

In his CBC interview, Trudeau appeared to be alluding to research, including that of University of Calgary economist Jack Mintz, that suggested lowering the corporate tax rate would not stimulate growth.

Mintz’s study, co-written with Duanjie Chen, concluded that further reductions in small business tax rates could “encourage individuals to create small corporations in order to reduce their personal tax liabilities rather than grow companies.”

On Wednesday, Conservative leader Stephen Harper jumped on Trudeau’s remark about the use of small businesses as tax dodges for wealthy Canadians.

Harper said that both he and his wife had personally run small businesses themselves. Before she moved to Ottawa, Laureen Harper was self-employed as a graphic designer and had her own company.

It is unclear exactly which small business Harper claimed to have run. He has worked most of his career in federal politics, first as an aide to Progressive Conservative and Reform Party MPs, then as an MP himself.

He may have meant his time as head of the National Citizens Coalition, a conservative lobby group first set up in the 1960s to oppose medicare.

The NCC is a not-for-profit federal corporation and, technically, could be considered a small business, though the majority of its income was from non-tax-deductible donations from supporters.

More on LINK.

 

[a_majoor]

An elderly retired couple I know is shutting down a small business they have had on the side to provide for their retirement income. I was astonished when they told me their calculations indicate they would be taxed at up to 73% of the income they were making. At that rate I would not be setting up any small business either.....

While I have not seen their numbers, when you consider the Federal business tax rate for Canada is 15%, any significant amount over that would certainly harm small business and damage a large portion of the economy. That would be an interesting election campaign issue: are we taxing the rich or destroying the engine of economic growth and employment?

 

[QV]

The plans:

USA - lower income and business taxes, no carbon tax

Canada - raise small business tax, create a carbon tax

I guess we will see which one pans out.

 

[Brad Sallows]

All levels of government in Canada are desperate to increase revenue, but taxpayers are not divided into levels of government.  The first administrations to raise taxes will take the least heat; those which delay are going to find it politically harder to do later.

 

[Colin Parkinson]

The CPC must be very happy with this political gift that will just keep giving.

 

[Oldgateboatdriver]

An elderly retired couple I know is shutting down a small business they have had on the side to provide for their retirement income. I was astonished when they told me their calculations indicate they would be taxed at up to 73% of the income they were making. At that rate I would not be setting up any small business either.....

While I have not seen their numbers, when you consider the Federal business tax rate for Canada is 15%, any significant amount over that would certainly harm small business and damage a large portion of the economy. That would be an interesting election campaign issue: are we taxing the rich or destroying the engine of economic growth and employment?

I would be astonished too, and strongly suspect they are selling you a bill of goods.

The highest combined Federal-Provincial marginal rate (Quebec, of course) is 54% and the lowest (Alberta, of course, again) is 48%. In Quebec 's cases you get to that level with revenues in excess of about $200,000, in Alberta, with revenues in excess of about $300,000. Marginal rate means that once you get to the revenue level indicated as threshold, your next dollar is taxed at that percentage, every dollar earned before that level is taxed at a lower level.

Now, income from small corporations are paid to their shareholders (they are not "owners" and the longer people talk about corporations, even with single shareholders, as "owned" the longer they confuse the legality) who happen to work for the corporation too in two forms: They can be paid a salary, which is then taxed like any other salary, or they can be paid a dividend, which is then taxed at only 50 % (i.e. if I pay myself a $10,000 dividend of "my" corporation, I have to declare $5,000 of personnel revenue. Any combination of the two (salary and dividend) is also possible. The 50% declaration of revenue for dividend is specifically meant to cover the alleged "double taxation" from the fact the corporation paid income taxes on profits already.

So, for your couple, and assuming that they are from Quebec (worse situation) and are only paying themselves through dividends , the absolute highest percentage they would have to pay is the business tax rate (combined fed-proc of 22%) plus maximum marginal of Quebec at 54%, totalling 76% as a marginal rate only on their last dollar. This would happen only once they pay each one (it is a couple) a dividend of $400,000. This means, their "small business on the side" to provide for their retirement would be making profits of approximately $800,000 a year after tax - or $976,000 before tax, to get there.  And because it is a marginal rate that kicks in at that level, we must look at the average: The average combined tax rate on $200,000 of revenue in Quebec (remember: because dividend is taxed as 50% of revenue) is 40%.

So in our example of reaching maximum marginal rate, your couple here would pay (1) the 22% combined tax on corporation income of $976,000, which is $176,000 and each one would pay $80,000 on their $400,000 dividend. Combined, they basically would clear $646,000 after taxes (an actual overall average tax rate of 34%).

If they think they must stop their business and retire because of that - they are A**holes.