June 1, 2018
Changing the rules on small business taxes?
Bad for Canada
In all my years as a small businessman, I have never seen our livelihoods attacked as they have been recently. Last fall, proposed changes to federal income tax rules threatened small family businesses across the country.
I am a very proud Canadian and had just finished my career running a landscaping company. Over the years, the company grew and reinvested, both inside and outside the company. As you can well imagine, this took a lot of sweat and a lot of risk. In the meantime, we proudly provided a living for many families.
My wife and I received a wage, just as other Canadians, and we contributed to CPP and our RRSPs. We also invested outside of the landscaping company, namely in real estate. By doing this we added value to Canada’s economy.
We happily retired five years ago and planned to live off proceeds from the sale of the landscaping company, and after that our RRSPs and dividend income from the proceeds of real estate investments. With the dividend income as our safety net, we were able to retire at 60, proud to let a new generation take over, bring the company to a new level and provide income to many families for many years to come.
However, we were suddenly faced last fall with a proposed tax rate increase on dividend income; with the new rate, our retirement plans would not work. If we had known dividend tax rates would increase, we would have continued running the company until age 65 — stalling its growth.
Last September, I wrote about my concerns to federal Finance Minister Bill Morneau; I received only a form letter in acknowledgment. The government eventually backed down on some of the proposed rules. However, more restrictive rules affecting income splitting and passive income were put in place, and specifically threaten small companies. If you want to know more about this, an excellent source is the Canadian Federation of Independent Business.
I have a theory on why this is happening; I believe huge companies and their lobbyists are trying to force small businesses out of the market. They want to eliminate competition. New regs demand compliance, and compliance is much more difficult for small operators. A certain number go under each time we have a new rule.
I see tax rules and new regulations taking away opportunities for young people to start companies. Ever-increasing tax rates kill enterprise. I am all for fair taxes, but fair is fair, and I say a fair tax is to leave things the way they are. I ran my company in good faith, and I don’t agree with changing important rules in mid-stream.
Writing to your MP or a federal cabinet minister takes thought and time, and I know family businesspeople are so pressed for time, they cannot even plan properly for their own futures. But I believe we must be more proactive and make our voices heard.
Small business makes this country. Small business owners take the risks that create wealth, and wealth creates jobs. I believe restricting opportunity will result in lots of unrest in Canada. If there is no small business, there is no country.
Hank Gelderman is retired from Gelderman Landscape Services of Waterdown, Ont., and an Honourary Life Member of Landscape Ontario.