Coalition against tax change growing

A wave of outrage and opposition is building in the fight against the federal government’s attempt to impose major tax changes on farmers and other small businesses, says an organizer of a coalition objecting to the changes.

“This coalition is really gaining momentum,” said Marilyn Braun-Pollon, who specializes in farm and agricultural issues for the Canadian Federation of Independent Business.

“We’re hoping that the government will listen…. Take the proposals off the table, and then why don’t you launch meaningful consultations with the business community to address any failings in the tax policy without unfairly targeting independent business.”

The Coalition for Small Business Tax Fairness had 35 groups as of Aug. 31, including many major agriculture organizations such as the Canadian Association of Farm Advisors, the Canadian Federation of Agriculture, the Canadian Cattlemen’s Association and the Canadian Pork Council.

However, the coalition had grown to 55 groups by Sept. 8.

Braun-Pollon said the coalition is hoping people sign an online petition, make individual appeals to politicians and ask professionals to analyze their own situation.

“Call your MP. Call your accountant,” she said.

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MPs have already been hearing lots about the proposed changes. The issue was a major item at the Liberal party’s caucus retreat in the first week of September in Kelowna, B.C., and at the Conservative party’s gathering in Winnipeg.

Finance Minister Bill Morneau and Prime Minister Justin Trudeau heard concerns from Liberal MPs about the growing outrage against the proposals, which the government has promoted as an attempt to close tax dodges but which many small business people fear could devastate their livelihoods.

Conservative MPs have eagerly embraced the issue as a key difference between their approach and the Liberal outlook on business.

Braun-Pollon said farmers are especially vulnerable to the changes because of the major role that capital gains tax treatment plays on farms, which have a huge component of their assets in land and which need to function as multi-generation businesses.

Farmers and other businesspeople are confused by how the changes could affect them, alarmed by the rushed nature of the comment period, which ends Oct. 2, and upset at the perceived insults from the government aimed at them.

“To be painted as tax cheats by the federal government, simply for accessing tax tools that have been encouraged for use for decades, it’s very offensive,” said Braun-Pollon.

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  • James Baldwin

    Here is an example of what the proposed changes from the Liberal government will do to the succession of a business, using Alberta tax rates.

    Facts:
    1) Mom and dad wish to retire and their children want to take over the business;
    2) The business has been incorporated and is operated through a corporation; and
    3) The business is worth $1,000,000 and Mom and dad will need approx. $750,000 to fund their retirement.

    Existing rules:
    Under the current regime, the farm company could be purchased by the children as follows:

    1) Children purchase mom and dad’s shares of the business for $1,000,000 and issue a promissory note to mom and dad for $1,000,000. Mom and dad will not claim their capital gains exemption of the sale.

    2) The children incorporate a holding company and sell the shares of the business to the holding company in exchange for a promissory note of $1,000,000.

    3) The business then pays a dividend to Holdco in the amount of $1,000,000.

    4) Holdco pays $1,000,000 to the children to settle the promissory note.

    5) The children pay $1,000,000 to mom and dad to settle the promissory note.

    Tax result:
    The children have used corporate money to pay for the shares of the business without incurring any personal income tax. Mom and dad will pay, at the highest rate, $240,000 on the $1,000,000 proceeds and be left with $760,000 to fund their retirement.

    Proposed rules:
    Under the proposed rules, when the children sell the shares of the business to Holdco, they will not receive a promissory note for $1,000,000 without incurring tax at dividend rates, the highest rate being approx. 41%. Therefore, in order to have $1,000,000 to pay to mom and dad, the children will have to take a dividend of just under $1,700,000. Mom and dad will still have to pay upwards of $240,000. This results in total tax paid by the family of $940,000 to transition a business worth $1,000,000.

    Someone please explain to me how this is fair? Keep in mind that if mom and dad sold the shares of the business to someone outside the family, mom and dad could use their capital gains exemption and pay no taxes at all.

    • Harold

      It is a tax grab that promotes corporate takeover. It is not about fairness. If you like many others believe that Government and corporations are in “the business of fairness”, you along with the others, are “ripe for the picking”. “The Business of fairness” is determined by the public, and – if the public do not respond in the force of a majority – the government offer (and that is all it is – an offer) is considered fair – and it is passed into law. The Government regularly betrays the public, is deceitful, is secretive, dictatorial, and overreaching; they are NOT your friend nor are they about friendship or fairness. The governments only resource is your money; period. You choose the burdens (offers) that you will allow the Government to impose upon you to achieve a “the common good”. These new rules (offers – until made law) are NOT for the common good, just as you have witnessed, and therefore no one should accept its burden, and now Government should be met by the full force of the public’s rejection. Routinely the Government betrays the public trust by not offering to the public a full disclosure whereby the public can willing choose the burdens (Acts/tax, Statutes/tax, Regulations/tax, and tax/etc) that they wish to take upon themselves.
      Stupid is – is what stupid does, and you have met the Government, and you and others are the public oversight and must act whether they like it or not.
      The new rules are the Government’s own confession of how corrupted they have become, and nothing more; the mindless (government) need the public’s help or they will remain so. A broken wheel does not fix itself, so the public’s vacation is now long past over.

      • ed

        Yes, you got that right about the fairness thing and corporations and governments. Look what the last government did in regards to the farmers owned and very price positive wheat and barley selling collective, (cartel if you will) the iconic Canadian Wheat Board. CWB…Now that being said, if there are still some anti-wheat board farmers or farm groups out there, they are probably, if not in their minds at least, making so damn much money that a little extra tax or expense here or there is of very little concern to them anyway, and we probably will not hear much from them in the way of any substantial pushback. Not going to really harm big going outfits because they have good marketing skills and computers.

        • Harold

          It is not good enough that I have it right; it is good enough when we all have it right and regardless of me. The farmer’s individual wealth is of little concern. Any wrong-doing by our government or other corporations against any group of our good citizens should be a concern to all. Are we united Canadians or not – is the decision that we make; not the government. A unified public can crash any corporation and bring it to its knees using one tool; the direction of their money. The money that we give to the government – is our power – given to the government – and this is why the government arbitrarily and relentlessly tries, or does take your/our money away from you/us – at all costs, (using taxpayer money to do so) at the blessing of the Elite who are standing right behind them. There is a reason why the corporate and government sleep together and it is not for the reasons of our prosperity. Look in your wallet and look in theirs and understand who it is that you have been listening to all along. Notice that corporate and governments are not divided and that the Canadians are divided – and notice who’s propaganda is educating us into divisions or indecisiveness.
          Moreover, no taxpayer money- no government – is the biggest picture of the public’s power. The smallest of pictures in the same realm is – no taxpayer money- no legislation. The government and the corporation’s (Elite) have no real power, they just have your money and having your money, they have taken your power and they make your choices for you. Holding your own money you make your own choices. and that is called freedom. Would the government or the corporations want you to be free of them and make the necessary steps to do so? By their very nature, they (government/corporate) are not your/our friends nor are they about fairness. A scorpion stings its prey – not because it is fair to do so, but because it HAS TO – by its very own nature – in order to survive. We should all know our difference and act accordingly.