Liberals unveil tweaks to tax-reform proposals
OTTAWA — The federal government released more details Wednesday on changes to its controversial tax proposals in hopes of further addressing deep concerns over reforms that have angered the small-business community.
The Liberals unveiled tweaks to a proposal that, as of Jan. 1, would tighten existing rules enabling small-business owners to lower their tax burden by sharing some of their earnings with family members — a practice known as income sprinkling.
The changes are designed to make it more difficult for owners to share their income with relatives who do not make significant contributions to their companies.
“For those that are passing income to family members that aren’t involved in the business, it’s clear that that’s no longer going to be considered appropriate,” said federal Finance Minister Bill Morneau, who insisted the changes would create new hurdles for about 45,000 business owners, less than three per cent of Canada’s total.
The government contends those owners have been using incorporation of their small businesses to gain an unfair tax advantage.
“More than 97 per cent of businesses will have absolutely no change in their situation,” Morneau said.
The reform was among several adjustments the government made to a tax-reform package that, following its release last summer, triggered an onslaught of complaints from doctors, lawyers, accountants, tax experts, farmers, premiers and even some Liberal backbenchers.
Vocal opponents have spent months criticizing the proposals, contending they would hurt the very middle class the Trudeau government claimed to be trying to help.
Earlier Wednesday, the Senate finance committee urged the government to abandon its controversial tax proposals.
The committee — five Conservatives, five independents and two Independent Liberals — made the demand after studying the potential impacts of the entire package of proposals. Two senators on the committee, both of whom were appointed by Prime Minister Justin Trudeau, declined to support the call for the whole tax plan to be withdrawn.