Not All Corporations Are Big
My office has been inundated with hundreds of letters from Calgarians upset with the proposed changes for private corporations. Canada’s tax system should be fair and equitable for all. However, I am concerned that the Liberals’ proposed tax changes will make it harder for Canadians to get many critical goods and services.
Private corporations are a popular tax arrangement for business owners, such as farmers, doctors, lawyers, engineers and other independent professionals. They limit their and their family’s liability from the financial risks they undertake in their professions. They also help facilitate a savings method for those who do not have formal group pension plans. This legitimate tax structure has been in place for many decades and has proven to work well.
By incorporating, a person is able to create a separate legal entity to operate under and have their revenue, expenses and assets treated separately from their income. This makes sense as the money you pay to your dentist, for example, is not entirely their income. It is revenue that pays for staff, business expenses, insurance, rent, etc. Only after those expenses are paid does your dentist draw a salary from the corporation which is taxed the same as you and I. If they leave profit in the corporation, they do not pay tax on it now, but will pay tax on it later when they draw the income (likely in retirement).
Some are facing a three-fold increase in their tax rates and this drastic increase will drive many professionals out of their professions and many out of Canada.
It will make it harder to find a family doctor and increase wait times. It will make local meats and produce more expensive. It will discourage young Canadians from starting their own business. In short, it will make our economy noncompetitive and drive away investment. We know government spending is at an all-time high and debt is out of control, but hitting key parts of our community and our economy with dramatic tax hikes is not the answer.