I was quite pleased to read that Andrew Scheer, leader of the Conservative Party, announced that they would UNDO Justin Trudeau’s small business tax changes from 2018. When Trudeau and his finance minister announced that he was going after small business – specifically, their ability to earn passive income inside their corporations and dividend out profit to passive investors – I was in an uproar. They were targeting small business generally and professionals (like dentists and doctors) specifically. Why? To get more tax revenues in order to fund a never-ending hole of government spending. Remember that the books were supposed to be balanced this year; guess what – they’re not.
And small business paid the price. Income splitting with family members up to $50k (particularly those who stay at home and look after the kids and house) – gone. Being able to dividend out income to passive family members income from the corporation – virtually impossible unless they’re working at the business or contributing risk / capital to the business. Earning passive income at lower tax rates – also restricted passed the first $50k. Why the punishment? Why the stigma of being a ‘tax cheat’?
Because Trudeau needed money to fund special interest groups (not a huge fan of this) and infrastructure (big fan of this) and what other place to get it than the small businesses that employ 80% of Canada’s workforce? Why not try to convince wealthy individuals and groups to repatriate the BILLIONS of dollars sitting in offshore accounts in tax havens and tax that? Nope. Why? Because apparently it’s too close to home (I read an article in the past that said Trudeau’s political supporters would be implicated).
So I for one would like to see a return to a time when dentists and doctors can use their professional corporations to earn passive income and dividend it out to passive family member shareholders (without massive tax penalties or the stigma of being called a ‘tax cheat’).
The election is coming up and, while I don’t speak for the rest of DMC on this, I for one will be voting Conservative in the hope that they undo the terrible tax law changes that set off a war with small businesses (Canada’s growth engine).