The new tax law proposals have been generating a lot of press.  The government is spinning misinformation, and nobody is quite sure what the fuss is all about.  So we decided to have our tax consultant, Mark Lencucha, FCPA, FCA, TEP, FEA, draft a number of articles that will hopefully explain these proposals with a more relaxed style.  Some are quick. Some are tough sledding, but we hope you enjoy them and share them with your friends!

If you pay dividends, or wish to protect your capital gain exemption in particular, we recommend a sit down sooner than later.  We hope these rules are either dropped, seriously modified, or repealed when a new government takes charge.  For now, we must treat them very seriously indeed.

Pivotal LLP Chartered Professional Accountants

**The views, thoughts and opinions expressed in this article belong solely to the author and not necessarily to the Partners or staff of Pivotal LLP.**

 

 

Finance Decides To Play Favorites, And You Aren’t It!

On July18, 2017 the government decided to declare war on small business. They have learned from the guerilla wars of the past and decided on the “Stealthy” approach…under the radar. 

Although they talk about “Fairness” and “the 1%”, they should really be honest about what they are really doing.  These are the headlines the Government should have put out:

  • “Small business owners should be punished with 70% tax on their income.”
  • “Sell your small business to strangers, it’s too expensive to sell to family now.”
  • “Don’t die with shares of your small business, we can take 82%. Better to sellout before you die and pay only 25%.”
  • “Building up investments from favorable tax rates is a terrible loophole. That’s why we are closing it…but not for public companies, and not for pension funds. Just for you!”
  • “Splitting income is very odious and onerous, so we must tax your dividends as if you were one of the top 1%. Except for our defined benefit, gold plated, limited edition pensions…for some reason, it’s just fine to income split those.”
  • “We know your small businesses are inefficient and uncompetitive and cannot last. That is why we must help the Darwinian selection along…” [1]
  • We will explore several of these tax and fairness issues in detail in subsequent articles. We will focus on a few comparisons where they get a pass and we get a bullet. Where they say “fair” and we say “foul”.  We will go light on the technical and heavy on the ethics of their proposals.

    I look forward to our discussions! - Mark Lencucha

     

    [1] The author of our misfortunes seems to be a Mr. Wolfson whose research prompted these new rules. One tax firm (Moodys Gartner) in their article “Liberals want to wipe out the family farm”, has noted that in a CBC interview Mr. Wolfson indicated that family farms are likely inefficient and obsolete. The sentiment about greater efficiencies can lead one to surmise that bigger business is better. The Family Enterprise Exchange may disagree. Their assessment is that family business is more efficient, returns greater relative profit, and even many of our public companies still thrive due to the benefit of significant “family” ownership and that there is a “family-ness” advantage that can’t be reproduced.

     

    Caution to Reader:  I need to take a class in obfuscation, disinformation and weaving straw dogs. These articles are statements of opinion! Sadly, I’m not an academic or researcher, it’s just me. Blame my friend Mr. Google if there are any factual errors, or omissions.  Blame me if there are misunderstandings! - Mark Lencucha