CFIB urges federal government to prioritize fair treatment of family succession, lower payroll taxes, and cutting red tape
With only weeks to go before the much-anticipated federal budget, the Canadian Federation of Independent Business (CFIB) has released a list of recommended policies and measures to help small businesses.
“During the election, all the parties talked about making life more affordable for Canadians, and this theme needs to include small-business owners,” said CFIB President Dan Kelly.
Previous CFIB research has found that 72% of business owners plan to exit their business in the next 10 years, which equates to a transfer of assets potentially exceeding $1.5 trillion. With that in mind, the federation is asking the government to revisit the exclusion of family members from the Lifetime Capital Gains Exemption, saying that it’s the top tax issue among small-business owners.
“Almost all parties included something about succession or intergenerational transfers in their election platforms last fall,” Kelly said. “We think that making it easier for small business owners to sell to their kids is something that all the parties can get behind —and it would be a big win for entrepreneurs.”
Another point of focus was CPP premiums, whose continuing rise over the next four years is set to put additional pressure on employers looking to hire and retain workers. CFIB asked that the government hold off on planned CPP premium hikes and implement and EI credit, effectively lowering the rate for small businesses.
It also called for an equal share of carbon tax revenues between households and businesses “to better reflect the carbon taxes being paid by each.” Improving government customer services through digital technologies, among other means, to reduce red tape was another priority.
CFIB took aim at the latest changes to Tax on Split Income (TOSI) rules, which it said were challenging for small-business owners to comply with given unclear CRA guidelines and the administrative toll of tracking business hours contributed by each family member. It recommended that spouses of business owners, because of their “important informal and formal contributions,” be fully exempt from the TOSI rules.
And while it acknowledged that the updated rules on passive investment income are simpler than those originally proposed in 2017, CFIB noted that they unfairly punish many businesses with passive investments built up over the past 40 years; the final legislation in Budget 2018 failed to grandfather passive investments held prior to the rule update. The federation therefore urged the government to revisit that decision for passive investments held before the new rules took effect in 2019.
