Hamilton, October 18, 2017 — The Hamilton and the Canadian Chamber of Commerce welcome the government’s plans to revise its proposed tax reforms and to reduce the small business tax rate as a result of the comments and concerns expressed through the national #ProtectGrowth campaign and in consultations.

“This series of tax proposals have created an unprecedented negative response amongst our membership and alignment amongst the Chamber of Commerce network across Canada when it comes to the Federal Government. The scale back and amendments to the Capital Gains and Family transfer components is welcomed by our businesses as a first step towards scaling back the unintended consequences for small businesses” said Keanin Loomis, President & CEO of the Hamilton Chamber of Commerce

As Canadians celebrate Small Business Week, Chamber representatives congratulate the thousands of businesspeople who joined the mobilization and made their voices heard on this important issue affecting Canadian workers and employers.

The Hamilton Chamber of Commerce also noted the Minister’s call for further input from Canadian businesses and intends to continue providing a voice to ensure the tax system is simpler and less of a burden on Canada’s competitiveness.

“It is always more productive when government and business work together. We can only hope the government will listen as we provide advice on those areas where more remains to be done, and that they will propose concrete data to back up their claims. The Canadian Chamber will be working with the Hamilton Chamber of Commerce and other chambers across the country for suggestions on reforms that can improve the competitiveness of Canada’s tax system. Lowering the small business tax rate is one such measure, but there is still much room for improvement,” Mr. Beatty said.  “We must ensure that Canada, and with it Hamilton, remain attractive places to do business. Although there is a great deal of work to be done, today’s announcement is a positive first step, but we expect more and we will be vigilant on the next steps,” he concluded.

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For more information please contact: Huzaifa Saeed | Policy & Research Analyst | Hamilton Chamber of Commerce | t: 905-522-1151 ext: 230 | e: h.saeed@hamiltonchamber.ca

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For more information on the original proposals announced in July 2017, see here.

Here’s a quick summary of the amendments to the original proposals, as presented in the week of October 16th, 2017:

1. Reduction in Small Business Tax Rate: The Federal Government is following through with it’s 2015 Election Platform promise of continuing the Small Business Tax rate reduction by 0.5% every year, taking it from 11 to 9% by 2019. Budget 2016 announced a reduction of the rate to 10.5%, however, did not indicate any future reduction schedules. This announcement will ensure that the rate is lowered to 9% by January 1st, 2019.
2. Definition of Income Splitting clarified: The government appears to resolute on it’s plan to remove this benefit in cases in which family members and adult children have not made a “reasonable” contribution to the business. The outline of a new definition states that such a contribution could include either labour, capital, taking on a financial risk such as co-signing a loan or past contributions along those lines.
3. Adding a Passive Income annual threshold: A threshold of $50,0001 per year for future, go-forward investments (equivalent to $1 million in savings based on a nominal 5 percent rate of return) is being considered to provide more flexibility for business owners to hold savings for multiple purposes, including savings that can later be used for personal benefits such as sick leave, parental leave, or retirement. There will be no tax increase on investment income below this threshold.
4. Capital Gains Exemptions: The government has withdrawn it’s previous proposals to remove the ability of family members to claim a capital gains exemption (Lifetime maximum of $835,716 per member), which was a useful incentive during the sale or transfer of a business.

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