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Home 2017-09-23T17:53:51+00:00

What Do We Mean by Small Business?

The rules would apply to all incorporated businesses in Canada, most of whom are restaurants, retailers, farmers and consultants—to punish them for saving and investing. Two thirds of small business owners earn less than $73,000 per year and half of those earn less than $33,000. And a majority of small businesses in Canada employ family members.

Saving and Investing for Growth

In every advanced economy in the world, businesses accumulate and invest after-tax retained earnings so they have money to get them through an economic downturn or to make big capital investments.

One owner told us, “I keep most of the earnings in the company because we’re trying to grow and because in construction, we go through tough cycles when business dries up.”

The government wants to impose a punitive 73% tax on “passive” (invested) income. As a result, business owners won’t have any incentive to keep surplus assets in the business. Most will be better off taking money out of the business.

That means less investment, less jobs, and less of a cushion to make it through a downturn.

Encouraging Risk

Canadian small businesses represent almost 97% of all businesses in the country and employ nearly 70% of all Canadians working in the private sector. Encouraging the growth of small business is critical to creating jobs and supporting the economy.

The Government says it’s all about “fairness,” but there are good reasons why owners are taxed differently than employees. Because unlike an employee, a business owner doesn’t get a pension or health benefits or vacation pay. She invested her own money to get the business started. Or, she pledged her personal assets (house, car) as collateral for a loan. She has employees who depend on her. And, if nobody wants her goods or services next month, she does not earn a penny.

Entrepreneurs take on a lot of risk – 30% of small businesses won’t survive longer than two years, and only half make it to five years.  (PDF Report)

Business owners shouldn’t be punished for taking risk. We need to reward them for creating growth and jobs in our economy.

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