Policy Alert: Finance Canada Is Considering Major Changes to How Corporations Are Taxed

The Department of Finance Canada is considering major changes to how corporations are taxed. The proposed rules could have a significant impact on many Canadian businesses: potentially raising taxes, increasing the administrative burden on SMEs and heightening the impact on family-run businesses.

On July 18, Finance Canada launched a consultation on how “tax-planning strategies involving corporations are being used to gain unfair tax advantages.” The document contains proposed policies to close these “loopholes.” There are four key changes that will affect business:

  1. Sprinkling income using private corporations: The government wants to tighten rules to prevent a business owner from unfairly transferring income to family members who are subject to lower personal tax rates. In certain circumstances, owners would have to demonstrate that wages and dividend payments are “reasonable.”
  2. Multiplying the Capital Gains Exemption: When an individual sells a small business, the first $850,000 of capital gain is exempt from taxes. The government wants to prevent tax planning structures that enable multiple family members to use their exemptions.
  3. Reducing the tax deferral advantage on portfolio investment inside a corporation: Currently, an owner can accumulate portfolio earnings inside a corporation and pay corporate income tax rates (which are generally much lower than personal rates). The owner defers paying personal income or dividend taxes until the money is taken out of the business. The government is considering alternatives that would reduce this tax advantage.
  4. Converting a private corporation’s regular income into capital gains:Income is normally paid out of a private corporation in the form of salary or dividends that are taxed at the owner’s personal income tax rate. In contrast, when a business is sold, it is taxed as a capital gain, where only one-half of capital gains are included in income, resulting in a significantly lower tax rate on income that is converted from dividends to capital gains. The government wants to tighten the rules to prevent certain tax planning structures, but it is open to more favourable treatment for genuine family business transfers.

The Chamber is preparing to write to Finance Canada. Should you wish to provide input, please email us at speakup@slchamber.ca.  In particular, we are looking for detailed examples and cases of how a specific small business will be affected by the changes. We feel concrete examples will be most effective in making our case for easing the changes.

Click here to view the consultation documents released by Finance Canada.

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Media release

July 27, 2017 – The local business community says the City is barking up the wrong tree on one proposed by-law and creating a uncompetitive disadvantage to farmers and businesses with another.

Shirley de Silva, the Chamber’s president and CEO, said the proposed Tree By-law is flawed in many respects.  In particular, the Chamber is concerned with private property rights, increasing costs and added red tape. “This is a potentially costly measure that needs to be rethought,” said de Silva. “There are just too many problems and circumstances that haven’t been factored into the drafting and those need to be corrected.”

The second by-law with which the Chamber objects is one that would require property owners in areas without bus service to pay a transit levy.  It would add extra costs for businesses and farmers who will not have access to transit service. “We think there should be a thorough cost analysis of how cost savings would actually measure up against the actual burden that residents and business owners will face under this by-law,” said de Silva.

The letters from the Chamber are available online—HERE for the Tree By-law and HERE for the Transit Levy By-law.

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Town Hall explored pros and cons of Bill 148

On Tuesday, July 25 the Chamber hosted a town hall meeting on Bill 148, Fair Workplaces, Better Jobs Act, new legislation that proposes sweeping changes to labour and employment regulations. It also proposes a 32% increase of the minimum wage rate by 2019.

Approximately 80 people attended the event, including Chamber members, the general public, a senior policy advisor for the Minister Responsible for Small Business, MPP Bob Bailey and Brooke-Alvinston Mayor Don McGugan. The event started with a presentation of Bill 148 by labour lawyer Susan Houston, followed by comments by the Ontario Chamber of Commerce’s VP of Policy and Government Relations, Karl Baldauf and the President of the Sarnia and District Labour Council, Jason McMichael. A question and answer period followed.

Bill 148 presentation by Susan Houston, Matthew, Dinsdale and Clark LLP  (link to be posted soon)

Keep Ontario Working presentation by Karl Baldauf, Ontario Chamber of Commerce

For more information check out Your Guide to Bill 48 and keepontarioworking.ca 

From left to right: Susan Houston, Karl Baldauf, Jason McMichael

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Ontario’s labour and employment laws are changing. The Ontario Chamber of Commerce has taken a leadership position among Ontario’s industry and sector associations to bring together a broad coalition called the Keep Ontario Working (KOW) group.

They want to know how Bill 148 will affect you. Share your story with them and contact your MPP directly.

The KOW group will be releasing a full economic impact analysis of Bill 148 and report later this summer. Learn more about how you can Keep Ontario Working and ensure that government is improving legislation to support workers’ rights, create jobs and grow the economy.

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Last year, at the Canadian Chamber of Commerce’s AGM in Regina, chambers from across the country voted to pass a resolution submitted by Sarnia-Lambton that called on the federal government to support the development of a High Frequency Rail (HFR) project by VIA Rail. The resolution has been slowly gaining traction.

VIA Rail’s proposal, which is gaining support from Chambers and municipalities, is based on improving service in Canada’s busiest transportation corridor (Southwestern Ontario to Quebec) by running more traditional trains that can run up to 160 km/hr, more frequently. It would better serve smaller communities like Sarnia-Lambton by adding more comfortable and more frequent connections throughout the region.

The mayors of two Quebec municipalities—Drummondville and Trois-Rivieres—along with their respective Chambers, have announced their joint support for the HFR. Following that the Eastern Ontario Wardens Caucus, which represents 13 counties that cover an area from Cobourg to the Quebec border, advocating for 750,000 residents in Eastern Ontario, has also come out in favour of the HFR proposal. Since then, municipal councils in Eastern Ontario like Peterborough and Leeds and Grenville have endorsed the idea.

“This news is encouraging for the future of transportation infrastructure in Canada,” said Shirley de Silva, President and CEO of the Sarnia Lambton Chamber of Commerce. “But it’s also an example of how issues of local importance to the business community can be successfully leveraged through our membership in the greater Chamber community. That’s exactly what happened through our proposal last September and it’s one that is gaining support throughout the region, of which we are a part.”

The Sarnia Lambton Chamber of Commerce developed the resolution in support of local efforts by RAIL—Rail Advocacy in Lambton.

 

 

 

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As a business person and Chamber member, you have probably benefited from meeting clients at a Business After Five or learned from other members about changes to government regulations. You may have saved money on merchant services and office supplies or had lunch with the Premier of Ontario. Now you also have the opportunity to learn from the chamber network about how to grow your business and increase sales beyond the Canada/U.S. border.

The Global Business Opportunities Community (GBOC) is a network of Sarnia Lambton Chamber members and partners who are experts in global exporting. Their experience includes mentoring businesses, developing an export plan, understanding government funding opportunities, marketing your company, participating in trade missions and much more.

GBOC is inviting interested companies to contact them if they have are considering exporting as part of their business plan for the first time, or if they are wondering how to increase their sales abroad. They can do so by emailing gboc@slchamber.ca.

By reaching out to GBOC, Chamber members will receive free support from this network of chamber members with real-world experience in exporting as well as senior government bodies (Global Affairs Canada -Trade Commissioner’s Office, Export Development Canada, Ministry of Economic Development and Growth), business accelerators (TechAlliance, Sarnia Lambton Research Park and Sarnia Lambton Economic Partnership) and local partners the City of Sarnia, County of Lambton and Lambton College.

GBOC is in a unique position to facilitate conversations that can set the stage for future business beyond the borders. Shirley de Silva, President and CEO of the Chamber, said the initiative is one that speaks to the overall development of the business community and membership in GBOC reflects that mission. “We have resources in our membership that are ready to help prospective exporters and we’ve already identified a few prospects with whom we’re talking about how we can help in that regard,” said de Silva.

John Wood, GBOC’s Chair for close to two years, echoes de Silva’s assessment. “Exporting may seem like a daunting task, but we believe there are a significant number of companies here, many of them very entrepreneurial, who would find this business building activity to take them to an entirely new level, all with a little extra help when it comes to identifying the steps required to succeed,” he said.

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The Government of Canada is preparing a new Food Policy for Canada that addresses issues related to the production, processing, distribution, and consumption of food.

Business owners and members of the public are being encouraged to help shape the policy by responding to a national survey that focuses on the following themes:

—Increasing access to affordable food;
—Improving health and food safety;
—Conserving our soil, water and air; and
—Growing more high-quality food.

The online survey, which can be accessed HERE, will be available until Thursday, August 31.

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The Sarnia Lambton Chamber of Commerce is preparing to respond to two City of Sarnia proposals, a proposed Tree By-law and the Transit Levy, although businesses still have time to give input themselves.

The responses come after an invitation from the City to weigh-in and will highlight the concerns raised by businesses during discussions with the Chamber and via the email speakup@slchamber.ca. The Chamber’s comments are likely to be made public within the coming week, although opportunities remain for businesses to add their voice to the Chamber’s response document.

Members can find out more about both issues by reading the Your Guide to Sarnia’s Tree By-Law and Your Guide to Sarnia’s Transit Levy By-Law. Comments can be sent directly to the City via these email addresses: trees@sarnia.ca and transittax@sarnia.ca

The Chamber continues to review proposed legislation and regulations at every level of government, including the municipalities in Sarnia and Lambton County, as well as at the provincial and federal levels of government.

Through its membership in the Ontario Chamber of Commerce and the Canadian Chamber of Commerce, the local Chamber has further opportunities available to incorporate ideas and data on how businesses around the province and the country are impacted by proposed legislation.

“It’s these important linkages that further add value to our local members,” said Shirley de Silva, CEO and president of the Sarnia Lambton Chamber of Commerce. “While there are certainly local issues that are key to us, through our growing relationships with the OCC and the CCC, we become even stronger.”

 

 

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The Ontario Chamber of Commerce, in affiliation with the Sarnia Lambton Chamber of Commerce, has released a toolkit—Working Towards Mental Wellness—that is designed to help employers develop their own mentally healthy workplace.

The Sarnia Lambton Chamber of Commerce is a member of the Ontario Chamber Network.

Some 1 in 5 Canadians of working age living with a mental health problem or illness and the lack of appropriate support at their place of employment has created what the Chamber says is a “mental health action gap.”

A recent survey of Ontario Chamber of Commerce members found that 81 per cent of employers believe spending on employees’ health and well-being is a good investment. At the same time, only 40 per cent of businesses have a formal mental health strategy in place.

The Sarnia Lambton Chamber of Commerce encourages employers to follow the new toolkit in developing their own mentally healthy workplace.

“This is an initiative that can be one of the most impactful, in a positive way, that employers can take,” said Shirley de Silva, CEO and president of the local Chamber. “The toolkit offered as part of our affiliation with the Ontario Chamber of Commerce is a great place to start, with clearly stated benefits from a healthy workplace, definitions of what a healthy workplace looks like, and the steps businesses should take to take meaningful action in addressing mental health in the workplace.”

De Silva said leadership, strategy and resources are all part of what is required to build a mentally healthy workplace.

“Fundamentally, however, organizations need to foster a culture at all levels in their organization that supports the goal of a mentally healthy workplace,” added de Silva.

The Chamber toolkit lays out three initial steps for employers to start taking action on mental health in the workplace:

Setting expectations. Identify your organization’s unique needs and solicit employee buy-in for change. Ask yourself what you are doing each day to model mental wellness at work.

Creating a supportive environment. Make sure all employees feel welcome and able to talk about their mental and physical challenges without fear of judgment or reprisal, by encouraging culture change at all levels of the organization.

Maintaining the conversation. Regularly measure the health of your organization to ensure that mental wellness strategies are not left on the shelf, and link action taken to results.

More resources to help employers build their own mental health strategies can be found on the Ontario Chamber of Commerce website.

 

 

 

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