Tax­ing is­sue

Busi­nesses in Char­lot­te­town raise con­cerns about pro­posed fed­eral bud­get changes

Journal Pioneer - - BUSINESS - BY TERRENCE MCEACHERN

One rea­son Roddy Willis and his wife Kim Green de­cided to go into busi­ness was to have some­thing to pass on to their chil­dren and “cre­ate a legacy” af­ter re­tire­ment.

But Willis is con­cerned how the pro­posed fed­eral tax changes will im­pact the trans­ac­tion of sell­ing the busi­ness to his chil­dren.

“It would al­most be dou­ble the tax for us to do that,” said Willis, who owns Kays Whole­sale Inc. and Island Chem­i­cals in Char­lot­te­town with Green. The pro­posed changes for the 2018 fed­eral bud­get were re­leased in a con­sul­ta­tion pa­per this sum­mer.

Some of the rec­om­men­da­tions in­volve in­come shift­ing to fam­ily mem­bers in a busi­ness sub­ject to a lower tax rate, lim­it­ing pas­sive in­vest­ments and the rules around con­vert­ing busi­ness in­come (salary or dividends) into cap­i­tal gains. The con­cern with the last pro­posal is it could in­crease taxes when a busi­ness is sold. Cameron Beach, owner of Canadian Tire in Char­lot­te­town, calls the pro­pos­als “tax­ing wealth rather than en­cour­ag­ing wealth.” In par­tic­u­lar, Beach said he is trou­bled by Fi­nance Min­is­ter Bill Morneau’s com­ments that busi­ness own­ers mak­ing less than $73,000 will not be im­pacted by the changes and the mes­sage be­ing sent to in­de­pen­dent busi­ness own­ers about the in­cen­tive to grow their busi­ness and their in­come.

“Once you start mak­ing over $73,000, we’re go­ing to tax you some more. You know, what in­cen­tive is that for some­one to work 80 hours a week, seven days a week, give up all those ben­e­fits?” he said.

“I like to work hard, but I want to make sure that I have in­de­pen­dence – that I can give my staff a healthy profit-shar­ing plan and ben­e­fits. I want to go back and give to the com­mu­nity in hun­dreds of ways. But, I can only do that by putting more dol­lars in the till and hav­ing a healthy bot­tom line and be­ing en­cour­aged to give back to the com­mu­nity.” Willis said an­other pro­posed change, in­volv­ing the use of pas­sive in­vest­ments, is not an im­me­di­ate con­cern since the com­pany is cur­rently rein­vest­ing its profit into ex­pand­ing Kays Whole­sale.

But in gen­eral, Willis said higher taxes could im­pact his abil­ity to hire new em­ploy­ees as well as do­nate to char­i­ties. Also, as a busi­ness owner, Willis noted a lot of sac­ri­fices and sleep­less nights were in­volved when he and his wife left their jobs to go into busi­ness. And, the re­al­ity of be­ing a busi­ness owner is he isn’t able to ac­cess em­ploy­ment in­sur­ance ben­e­fits due to loss of work or have ac­cess to a ben­e­fit plan or paid sick days. “There has to be some in­cen­tive in the tax rules that al­lows a busi­ness owner to save for those things. I have to re­tire some­day too, right,” he said.

“If peo­ple are not go­ing to have any abil­ity to save out­side of their busi­ness, I’m not sure how many peo­ple are go­ing to risk get­ting into busi­ness.”

TERRENCE MCEACHERN/THE GUARDIAN

Roddy Willis and his wife Kim Green are con­cerned about pro­posed fed­eral tax changes that could see them taxed higher when they de­cide to sell off their busi­nesses and re­tire.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.