Proposed tax reforms will have a detrimental impact on small businesses



The Federal Government has proposed a series of tax reforms designed to target individuals they perceive to be avoiding their share of income taxes through private corporations. These tax reforms would have a significant detrimental impact on private businesses, particularly small businesses, across Canada (you can read more about these reforms here).

On our end, we are committed to making the federal government hear our views so that they do not negatively impact the businesses that are the backbone of our Canadian economy. But this is a challenge that we all need to contribute towards in order to overturn or change their proposed tax reforms. As such we urge you to call your local MP and also send your comments, questions, and concerns directly to the Ministry of Finance at

The deadline for making your voice heard is October 2, 2017.  Here are some non-technical comments you might want to make in your submission:

  • Income splitting with family members is not “abusive” due to the value a family “pays” for owning a family private corporation. Business owners do not earn fixed amounts from their businesses and they don’t have regular 9-5 working hours. It is difficult to measure or evaluate the effect of stress, insecurity and insufficient work-life balance that a business owner lives with so why shouldn’t a family that lives 24/7 with its business be able to split income with family members?
  • Reducing the ability to income split may mean more seniors, who depend on children that own private businesses to support their lives, may depend more on the government for assistance. If families cannot earn income at lower tax rates, they may be reluctant or not as generous with supporting those in their family with no or little income, such as senior parents. As a result, more seniors may look for government support.
  • More than 90% of the new businesses fail and business owners must take on significant risks when starting their own businesses. The current tax system provides “breaks” for those who take on this risk. Eliminating tax breaks or de-incentivizing owners of small businesses, may have a detrimental impact on startups and may mean small businesses may “trim” their work force to ensure their returns are commensurate with the risk they continuously face.
  • Many employed persons are entitled to government, company or union pension plans. For business owners, normally there are no such pension plans and when they retire the only pension they may have is CPP.  By attacking a private company’s ability to retain equity, as will some of the proposed tax changes, then society may be burdened with less dependent self-employed individuals down the road.
  • The proposed changes are being characterized by the federal Department of Finance as a crackdown on the wealthy.  Not all small business owners are wealthy so this blanket approach is intuitively unfair for small business owners.
  • The current tax rules provide mechanisms to allow for normal estate and succession planning. These rules are having a positive impact on transferring businesses to the next generation, thereby businesses are surviving longer. This stability allows for companies to hire more employees so if you take away or significantly alter the ability to use these tax rules for normal estate and succession planning purposes, then there will likely be an impact on employment levels immediately and in the future.

The Department of Finance estimates that the proposed tax changes will mean an additional $250 m in annual tax revenue earned from private enterprises.  The negative impact of the proposed tax changes on private enterprises could potentially far outweigh the additional tax revenue.


If you have any questions about how these proposed tax reforms will affect you or you want us to assist you in providing your feedback to the federal government, please do not hesitate to reach out.

905 738.5758