CFIB welcomed new announcement on angel investing
Ottawa – Following a week of government announcements on small business taxation, the Canadian Federation of Independent Business (CFIB) notes significant progress but remains concerned about several proposals.
Today’s announcement on angel investing is also a positive step.
“We are pleased that the government has listened to some of the concerns of small business owners and reconsidered several of their proposals. The biggest wins for small business this week are the reinstatement of the reduction in the small business corporate tax rate to 9 per cent and the plan to drop provisions related to capital gains and income stripping,” said Dan Kelly, President of CFIB. “More analysis is needed to determine whether the net effect of the package of changes will be positive or negative for entrepreneurs. CFIB calls on government to undertake a detailed impact assessment before finalizing the proposals.”
On Monday, the government introduced clarification on its income splitting proposals including a commitment to avoid subjecting companies to additional onerous red tape. Even with the clarifications, however, the CRA will have major challenges to implement the new rules. CFIB is also concerned that the changes still may not reflect the many formal and informal ways family members participate in the business.
On passive income, the government’s revised proposal allows small businesses a $50,000 annual threshold on passive investment income. While this does provide businesses with a little more flexibility, it still may be inadequate for many businesses — particularly for those businesses saving for larger investments, innovations or retirement.
“With all of these proposals, however, the devil is in the details,” said Corinne Pohlmann, Senior-Vice President, National Affairs at CFIB. “We still need clarification on whether the passive income threshold will be indexed to inflation or what the CRA test will be for family members working in the business.”
Among other suggestions, CFIB will be proposing a full exemption for income sharing with spouses and a significant increase in the amount of the threshold for passive income.
“Given the complexity of these proposals, more analysis and consultation is needed to fully understand the effect on the small business community,” added Kelly. “We look forward to working with government to find solutions that don’t negatively affect the small business community’s ability to grow and prosper.”
CFIB is Canada’s largest association of small and medium-sized businesses, with 109,000 members across every sector and region.