Prime Minister Justin Trudeau
House of Commons
Ottawa, Ontario
Canada
K1A 0A6
Finance Minister Bill Morneau
House of Commons
Ottawa, Ontario
Canada
K1A 0A6
Hello,
I am writing to express my complete disappointment with regards to the government’s proposed tax reforms regarding private company tax planning that was released on July 18. I believe the government does not fully understand the impact this will have to my family and I, and ultimately to the Canadian economy.
The government is not closing tax loopholes. We were following the existing rules, in effect for many years. Changing them like this will have a profound impact on my planning, and my fellow business owners’ planning, planning for children’s education, supporting our families, supporting our employees, donating to charities,helping our communities, and ultimately preparing for retirement. Having the rug pulled out from under us is grossly unfair.
The government seems invested in the idea of tax fairness, as represented in the paper discussing the proposed reforms, but shows that it does not understand the reality that business owners face. The government provides examples of employees with T4 income, and compares them to the taxes paid by business owners using the tax planning strategies they are attacking. They use these examples to “prove” that the business owner is receiving an unfair advantage. But business owners face a myriad of issues that employees with T4 income simply do not:
- Business owners often take on a level of risk (including borrowing on personal assets) that an employee does not.
- Business owners do not have the same access to corporate pension plans. The use of their corporations to hold investments is often their equivalent to a pension plan. And, in many cases they are supplying a pension plan to their employees as well.
- Business owners are the employers that pay CPP and EI premiums for employees. Business owners themselves do not have access to EI if their business fails, and significant restrictions exist if they want to take parental leave.
- Small businesses are family businesses which at times involve all family members (many times unpaid) as crucial support for the business.
- It appears to me that having one spouse spend considerable time with the business while the other is spending more time raising the family, then telling the spouse raising the family that their value to the business is essentially zilch, despite the family house being on the line and likely guaranteeing various business and personal borrowings, is grotesquely unfair.
- The government is concerned with dividend sprinkling for children between 18 and 24. It is obvious that these dividends are being used by business owners to help fund their children’s education. This allows them to build the future of the country by funding post-secondary education for their children. In many family businesses, these children will usually provide succession to the parents to allow the business to carry on to the next generation or take on new business ventures. Failing to support education has far greater long-term economic concerns for the country.
I know I took a risk in starting my business, and I accept that risk, as has my family. But, no safety net exists for me or my family. If the business fails, unlike an employee, I, and my fellow business owners, can lose our homes and our life savings, and put our children’s education, and retirementin jeopardy. I fail to understand why the government is attacking business in such a way and why they believe they can directly compare business owners with employees.
Finally, the proposals as put forth by the government are complex, costly for small business, and will definitely involve more red tape. I fear decreasing profits will ultimately result in fewer businesses, less competition, and fewer Canadian jobs.
This legislation is going to seriously harm our business community and their families. These proposals limit the incentive of entrepreneurs, stifle the growth of private corporations and ultimately burden the Canadian economy.
I respectfully ask that these proposals be immediately withdrawn by the government.
I look forward to your reply.
Sincerely,