Earlier this month, we covered the Liberal Party of Canada’s new tax plan and outlined how the proposed changes could affect entrepreneurs and Ontario business lawyers. We also noted that Finance Minister Bill Morneau seemed open to revising the plan amid an uproar from business owners who feared their tax burdens would increase.
In the weeks following that post, the Liberals stayed true to Morneau’s word and developed several revisions to the plan. Here’s what you need to know:
Small business tax cut
On Monday, October 16, Trudeau and Morneau appeared at a news conference in Stouffville, Ontario to announce revisions aimed at appeasing doctors, farmers, business associations and other concerned stakeholders. The highlight of the event was a promise to lower the small business tax rate to 10% at the beginning of 2017 and 9% by year 2019. The new rates will apply to businesses with up to $500,000.00 in annual revenue.
“This tax cut will support Canada’s small businesses so that they can keep more of their hard-earned money, money that they can invest back into their businesses, their employees and their communities,” Trudeau said.
The government also announced that it will eliminate proposals targeting businesses’ ability to convert earnings to capital gains, and will simplify regulations on income sprinkling.
Business owners and MPs who had criticized the initial plan seemed generally appeased by this new announcement, with which most Ontario business lawyers are also likely to agree.
“I feel very, very positive,” said New Brunswick MP Wayne Long to the Financial Post. “For the first time in a couple months, I’ve got a bit of a smile on my face. There wasn’t a lot of specifics today, but I’m very, very confident – by certainly the tone and messaging of the minister – that a lot of these concerns … will be addressed.”
The hundreds of millions of dollars that small businesses are expected to save “can be better used by business owners to create jobs, expand their operations, or perhaps just reduce some of the pressure on them than it would if left in the hands of the government,” added Dan Kelly, president of the Canadian Federation of Independent Business.
If you own a business and have questions or concerns about Ottawa’s proposed tax reforms, contact the Ontario business lawyers at Nanda & Associates today. Our experienced team can help you better understand how the government’s tax plan might affect you and your business.