{"id":8581,"date":"2018-05-08T16:48:07","date_gmt":"2018-05-08T20:48:07","guid":{"rendered":"http:\/\/business.financialpost.com\/?p=1587649"},"modified":"2018-05-08T16:48:07","modified_gmt":"2018-05-08T20:48:07","slug":"senators-mull-deferral-of-income-sprinkling-for-small-businesses-amid-severe-uncertainty","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2018\/05\/08\/senators-mull-deferral-of-income-sprinkling-for-small-businesses-amid-severe-uncertainty\/","title":{"rendered":"Senators mull deferral of income sprinkling for small businesses amid \u2018severe uncertainty\u2019"},"content":{"rendered":"<p>OTTAWA \u2014 Senators are mulling several amendments to the government\u2019s sprawling budget bill, potentially reviving spats over Ottawa\u2019s tax changes on small businesses that came into effect earlier this year.<\/p>\n<p>Business representatives warned senators on Tuesday that tax changes by Ottawa to limit the \u201csprinkling\u201d of income within small businesses is causing widespread confusion for company owners, many of whom remain uncertain about how the changes will apply to their businesses, despite the policy being introduced in January. Several representatives called on the Senate national finance committee to defer the introduction of income sprinkling, as well as request new exemptions to the tax policy.<\/p>\n<p>The requests came after the Liberal Party proposed a suite of small business tax changes last summer, including limits on income sprinkling between family members, tax increases on some passive investments, and higher taxes on certain capital gains. The proposals caused intense backlash from business owners, forcing Ottawa to rein in most of the changes.<\/p>\n<p>But critics say businesses are still pushing back against a few of the remaining tax changes, and say private firms didn\u2019t have enough time to prepare for the new policy.<\/p>\n<p>\u201cThere is a degree of anger on the part of small business owners, a degree of upset that hasn\u2019t gone away yet,\u201d Dan Kelly, president and CEO of the Canadian Federation of Independent Business, told the senate finance committee Tuesday.<\/p>\n<ul class=\"related_links\">\n<li><a href=\"http:\/\/business.financialpost.com\/pmn\/commodities-business-pmn\/agriculture-commodities-business-pmn\/ottawas-plan-for-excise-tax-on-medical-marijuana-draws-ire-of-patients-producer\">Ottawa&#039;s plan for excise tax on medical marijuana draws ire of patients, producers<\/a><\/li>\n<\/ul>\n<p>\u201cThere has been very little progress\u2014virtually no progress\u2014in the simplicity respecting the income splitting rules,\u201d he said.<\/p>\n<p>One problem for businesses, Kelly said, is a lack of clarity around whether certain firms will be subject to so-called \u201cbright-line\u201d tests by the Canada Revenue Agency, which are meant to decipher whether family members are eligible for income sprinkling. Small companies often don\u2019t track the information needed to meet the thresholds\u2014like counting how many hours per week various family members work for the business, for example. Some argue that determining what constitutes &#8220;work&#8221; is also unclear.&nbsp;<\/p>\n<p>\u201cSmall firms by their very nature are much more informal than the larger firms,\u201d Kelly said. \u201cIf you go and visit these business owners, they\u2019ve got a rusty filing cabinet where they\u2019re throwing every receipt and piece of paper that they possibly can, hoping to gosh that the CRA is not going to be knocking on the door anytime soon.\u201d<\/p>\n<p>Small firms now face \u201csevere uncertainty\u201d as they look to prepare their taxes for next year, said Trevin Stratton, chief economist at the Canadian Chamber of Commerce.<\/p>\n<p>Bruce Ball of the Chartered Professional Accountants of Canada called the changes \u201ccomplex and difficult to apply in practice\u201d during committee meetings Tuesday.<\/p>\n<p>Several senators told the Financial Post Tuesday they are now considering amendments to defer the introduction of income-sprinkling provisions for one year until Jan 1., 2019, as well as an exemption from the tax for spouses of business owners. The income sprinkling policy came into effect in January, while the passive investment changes will be officially introduced in 2019.<\/p>\n<p>The senate finance committee released a report last year urging the government to delay the tax changes to 2019, which was ignored.<\/p>\n<p>Senators have also raised alarm over the so-called \u201cexcise tax\u201d on cannabis that was introduced as part of Bill C-74, Ottawa\u2019s Budget Implementation Act, and have raised questions over the&nbsp;implementation of a carbon tax that was also folded into the sweeping legislation.<\/p>\n<p>\u201cI have a feeling there\u2019s going to be some action on this,\u201d said Anne Cools, an independent senator representing Toronto Centre-York.<\/p>\n<p>Senators also stressed that the committee is in the early stages of studying the bill.&nbsp;The committee is currently doing its pre-study of the bill, and expects to receive the legislation in coming weeks.<\/p>\n<p>Criticism of Ottawa\u2019s small business tax changes died down after the government eliminated its proposal to tax capital gains at a higher rate, and introduced a $50,000 threshold on passive investments.<\/p>\n<p>But several businesses still worry that stricter limits to income sprinkling could add an additional tax burden on companies with limited cash flows.<\/p>\n<p>\u201cAll of this has huge impacts and unintended consequences,\u201d said Nadia Alam, the president of the Ontario Medical Association. \u201cIncome splitting becomes very impactful when business owners are the sole income earner.&#8221;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Several senators told the Financial Post Tuesday they are now considering amendments to defer the introduction of income-sprinkling provisions for one year<\/p>\n","protected":false},"author":578,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/8581"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/578"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=8581"}],"version-history":[{"count":1,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/8581\/revisions"}],"predecessor-version":[{"id":8582,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/8581\/revisions\/8582"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=8581"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=8581"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=8581"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}