CFIB wants small business tax rate to be made available to SMEs regardless of existing passive investments
New passive investment tax rules are unfairly punishing small business owners and discouraging growth, said the national association of small and medium businesses, and it wants provincial and territorial leaders to not follow the same path.
New rules in the 2018 federal budget will keep small businesses from accessing the small business tax rate if they have more than a certain amount of pre-existing passive investments, said a statement from the Canadian Federation of Independent Business (CFIB). The end result, the group said, sees these firms being taxed like a big business.
Similar rules implemented in provinces would mean thousands of dollars more in provincial taxes – that would be on top of higher federal taxes, the CFIB warned. This could mean layoffs, downsizing or closures as businesses seek cost-cutting measures.
“CFIB has confirmed that provinces are not obligated to follow the federal lead,” said Dan Kelly, CFIB’s president and chief executive officer.
Ontario and Prince Edward Island have indicated that they will follow the lead of the federal government on the rules. With a newly-elected government, the CFIB is hoping Ontario changes course. The changes are to go into effect in 2019.
The CFIB is also looking for additional measures:
“We’re hearing from small business owners everywhere that they’re frustrated with mounting taxes and regulations, especially as the reverse is true in the U.S. We are asking finance ministers to listen to their concerns and act now,” Kelly said.
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