A Saskatoon accounting firm is urging its 1,200 small business clients to write letters to the federal government protesting a series of proposed tax reforms it believes will have “profound” consequences for private corporations.
“I think they’re using a boulder where a pebble would have sufficed,” said Michael Gorniak, a partner in Thomson Jaspar and Associates, which is providing its clients with industry-specific letters to send to the Department of Finance.
While the firm wouldn’t mind being regarded as a crusader for small businesses, its opposition to the proposed changes is ultimately about protecting those companies from paying thousands, or tens of thousands, of dollars in additional taxes, he said.
The proposed changes will restrict incorporated businesses from reducing their tax burden by “sprinkling” their income among family members, as well as limit investment in stocks and bonds within a corporation and the ability to convert income into capital gains.
The federal government says the changes are necessary because private corporations, the number of which has risen dramatically in recent years, provide tax advantages to some high earners that are unavailable to others.
Gorniak said the government has painted with too broad a brush, and that the changes could lead to businesses — many of which have been struggling in the recent economic downturn — paying between $7,000 and $22,000 more in taxes each year.
By encompassing more business owners using private corporations than intended, the proposed changes could lead to cutbacks, layoffs, slowing investment and, ultimately, fewer people willing to take the risk of becoming a business owner, he said.
The proposed changes have been the subject of heated debate since they were unveiled on July 18. Finance Minister Bill Morneau and Prime Minister Justin Trudeau have both defended the changes, arguing for a single “class” of Canadians.
Gorniak takes a different view. He said the changes are likely the most dramatic since the 1966 Royal Commission on Taxation, and significant enough that Thomson Jaspar took the unprecedented step of asking its clients to write letters.
Asked if anything will persuade the government to shelve its proposals, or alter them significantly, Gorniak said he hopes a united front of small business owners will make a difference.
“It’s kind of like David and Goliath: If David never picks up the three stones, you’re never going to know.”