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PostPosted: Wed Sep 13, 2017 8:40 pm
 


BeaverFever BeaverFever:

Well then why don't you redirect your focus from me and enlighten us all about how these particular tax loopholes are essential to you.


Because it wouldn't matter.

Despite having zero experience owning a business or paying taxes as a business or business owner, you trot out highlights as if you have a clue. You don't have a clue, you're looking to champion Liberal policy.

Had you read beyond my original post, you'd see that I did post something from someone with actual experience.

And regardless what was said, it wouldn't change your mind.

BeaverFever BeaverFever:
It's a false accusation you trot out time and again whenever you're too ignorant to debate the subject. I've been pretty consistent about WHAT I believe in, even the topic has nothing to do with any political party.


The only one ignorant here on the subject of small business and taxation is you.

Your complete and utter focus on defending your so-called non-partisanship tells me all I need to know that you're desperately trying to look objective. You're as partisan, if not worse, than those on the right you like to call partisan.


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PostPosted: Wed Sep 13, 2017 10:04 pm
 


Coach85 Coach85:
Your complete and utter focus on defending your so-called non-partisanship tells me all I need to know that you're desperately trying to look objective. You're as partisan, if not worse, than those on the right you like to call partisan.



He is not the better person he thinks he is. :lol:


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PostPosted: Sat Sep 16, 2017 4:55 am
 


Coach85 Coach85:
BeaverFever BeaverFever:

Well then why don't you redirect your focus from me and enlighten us all about how these particular tax loopholes are essential to you.


Because it wouldn't matter.

Despite having zero experience owning a business or paying taxes as a business or business owner, you trot out highlights as if you have a clue. You don't have a clue, you're looking to champion Liberal policy.

Had you read beyond my original post, you'd see that I did post something from someone with actual experience.

And regardless what was said, it wouldn't change your mind.

BeaverFever BeaverFever:
It's a false accusation you trot out time and again whenever you're too ignorant to debate the subject. I've been pretty consistent about WHAT I believe in, even the topic has nothing to do with any political party.


The only one ignorant here on the subject of small business and taxation is you.

Your complete and utter focus on defending your so-called non-partisanship tells me all I need to know that you're desperately trying to look objective. You're as partisan, if not worse, than those on the right you like to call partisan.


Still only able to talk about me and can't put more than four words together about business taxes. That's what won't change.


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PostPosted: Sat Sep 16, 2017 5:01 am
 


Moving on...


$1:
We obtained the Conservatives’ internal strategy on Trudeau’s tax changes. Here’s what’s wrong with it. – VICE News

The Conservative Party is doubling down on its bombastic rhetoric around the Trudeau Liberals’ proposed tax changes, but a fact-check on their actual claims show that few of the opposition’s talking points are based in reality.

VICE News has obtained strategy documents, prepared for the Conservative caucus, detailing how Members of Parliament are to go after the government on the tax changes.

Included in the documents are slides from a powerpoint presentation prepared by finance critic Pierre Poilievre to Conservative MPs, detailing the changes and outlining the party’s tactics. The Conservative Party did not dispute the veracity of the documents.


VICE Money wrote a crash course to understanding the tax changes earlier this week.

The talking points encourage MPs to tailor their message to working-class voters, and to avoid getting bogged down in discussions about “wealthy family doctors.” But details in the powerpoint suggest that the Conservatives know these changes will primarily affect the rich, not the middle-class farmers they plan on courting.

This is at odds with leader Andrew Scheer’s outreach to farmers and working class Canadians around the tax changes.

VICE News made consistent attempts to schedule an interview with Finance Critic Pierre Poilievre or Deputy Leader Lisa Raitt throughout the week but were refused. (The party sent a media advisory entitled “Poilievre available to discuss Liberal tax hikes,” inviting journalists to reach out to his office to schedule interviews, his office failed to return emails and finally informed VICE News on Thursday that Poilievre was not, in fact, available.)

The magic 70.12% tax rate

Inside the documents is a particularly sensational claim. It takes aim at the Liberals’ attempt to limit Canadians’ ability to park investment income inside their personal corporation, thus paying the — substantially lower — small business tax before investing the money.

The powerpoint lists two reasons why these changes would likely prove the most controversial.

“1. Big money,” it reads, without further explanation.The second point is that the changes are “indefensible” given they are “double taxation.”

The claims, however, aren’t exactly accurate.

As it stands, income into small businesses faces a 15 percent tax rate. If that after-tax income stays inside the corporation and is, say, placed into mutual funds, any revenue generated from that investment faces a roughly 50 percent tax, depending on the province. If the owner of the investment withdraws it from the account, they will pay the remainder of their personal tax rate on the entire amount.

“It’s not wrong, but it’s not right.”

This is currently advantageous because, by paying the lower rate at the beginning — as opposed to the top personal marginal income tax rate of around 50 percent — they have more money to invest and therefore earn more. To fix this, Ottawa is suggesting either creating a refundable 35 percent tax on the income from the investment, returning it to the business if that money is used to purchase equipment or hire staff, or taxing the investment profit before it is paid from the company to its owner.

The takeaway is that, yes, the tax on the investment profit (not the entire investment) could face a rate upwards of 70 percent, but doing so would create equality between how that investment income is treated inside that corporation as opposed to just a personal savings account.

So it is not the case, as the powerpoint contends, that “family farmers will have a tax rate higher than anyone else.”

One economist summed up the Conservatives’ rationale behind the 73 percent figure: “It’s not wrong, but it’s not right.”

The rich farmer

The talking points about the passive income investment go on to say that: “Some won’t be able to save, others will lay off workers and many more won’t even both to start up in the first place.”

This, however, is patently false. Ottawa’s changes are specifically designed not to apply to investment income which is re-invested in the company — meaning if the revenue goes into hiring workers or buying equipment, it is either tax exempt or the tax will be refunded.

Furthermore, in direct contradiction to their insistence that these changes hurt the blue collar workers the most: The only way their 73 percent figure makes sense is if you assume the farmer in question is in the top tax bracket, and therefore making more than $200,000 per year.

The document also shows a fundamental misunderstanding of how this loophole works.


“All the money they take out is eventually taxed at the same rates as everyone else, so the government will get it in the end anyway,” it reads. “But Trudeau needs it now because he wants to spend it now.”

That’s incorrect. The loophole is effective because it is tax deferral — meaning that businesses, by virtue of having a registered corporation, can opt to pay low taxes on the initial profit but pay the remainder when they withdraw.

The corporation owner makes more money because they skip the taxes on the front-end, and the personal dividend tax on the back end does not currently account for that, meaning the corporate owner is walking away with more money only because they registered a corporation.

Wealthy family doctors

When it comes to income sprinkling — paying dividends to your family members to lower your personal tax burden — the Conservatives offer a more reasonable defence.

“The reality is that our farms and local businesses are family ventures,” the powerpoint reads. “Everyone chips in. The teenager daughter does shifts at the cash register. The son might run daily errands. The spouse might do the bookkeeping. So they all share ownership in the company’s success.”

“WARNING: Avoid getting caught up in the extreme examples about wealthy family doctors.”

That’s certainly true. However, tax law currently allows the owner of a company to pay their family members for the work being done. Even under these proposals, companies can pay dividends to family members, so long as they are actually part of the business operations. One metric touted has been to require that for a family member to earn dividends, and thus be a shareholder in the company, they must have put in a capital contribution.

Interestingly, however, the powerpoint offers caution for Conservative MPs.

“WARNING: Avoid getting caught up in the extreme examples about wealthy family doctors. This is not the issue. It is a distraction from the red tape and higher taxes that the Liberals are imposing on family farms and local businesses.”

Finance Canada expects that just 50,000 individuals in the country employ this practise of sprinkling to lower their tax bill, to the tune of about $250 million in lost tax revenue. (There are roughly 1.8 million private Canadian-controlled corporations in Canada.)

Reverse Robin Hood

There is a third section to the PowerPoint, regarding a trick that allows some corporations to convert their income into capital gains by trading shares of their company within their own family — thus slashing their tax bill by half.

But there are no talking points regarding that government proposal.

Instead, the documents go into talking points regarding Trudeau’s economic message.

While the Conservatives note that Trudeau’s tax-the-rich messaging is, according to polling data, “a powerful message,” Scheer’s party lays out how they plan on going after his credibility on the file: By beating him at his own game.

It reads that the party should focus on blue collar small business owners and farmers, and continues: “Elsewhere we must focus our message on the examples of Liberals targeting the poor and working class with higher taxes, and massive sums to wealthy elites.”

They take aim at the fact that Trudeau promised to cut Canada’s 15 percent small business rate (already the lowest in the G7) but has thus far opted not to do so, and that he has provided government bailouts to struggling manufacturer Bombardier.

A whopper

The Conservatives have publicly contended, as their website puts it, that the changes amount to “a massive new tax hike that would hurt every single local business in the country.”

This might be the largest mistruth of all.

Even if you were to assume that the changes were to impact every corporation that pays dividends to family members, every corporation that reports passive income, and that the practise of converting profit to capitals gains was widespread: That would amount to less than a one-third of Canadian-controlled businesses being affected.

As the Conservatives seem to admit in their own internal documents, these changes impact on the most profitable companies that withdraw company profits back into their own personal bank accounts.

To that end, despite their rhetoric, the Conservatives’ campaign is really more designed for the wealthy family doctor and “big money” than the blue collar farm owner.


https://news.vice.com/story/we-obtained ... ng-with-it


Polievre's powerpoint deck is viewable at the link

But let's talk about me some more.


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PostPosted: Sat Sep 16, 2017 10:55 am
 


Oh quit claiming anyone not criticizing is 'championing' Trudeau. If there's one thing that's pissed me off is listening to over 50 years of tongue-up-the-arse cheerleading by the Joe Plumbers of the country to hand every break and dodge to someone else to gain, keep or increase their wealth even though they're the one getting shafted in the end.
AFAIK the proposed changes affect no one on this board, including myself. Financial advisors over 2 decades ago said to think about incorporation when your gross self employment was over $350,000 which I never achieved. Anyone here manage it?
My concern and criticism is on behalf of doctors who do use this, incorporating clinics and share/dividend positions in shit-hole towns like here, Quesnel, Vanderhoof, 100 Mile House, Burns Lake.
They NEED those incentives to make them want to be here, and all of those places are barely serviced or under serviced as it is.
It isn't because of some dream if a Boss gets more money he'll hire me to sweep the floors or give me 10c an hour raise.


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PostPosted: Sat Sep 16, 2017 5:14 pm
 


BeaverFever BeaverFever:


Polievre's powerpoint deck is viewable at the link

But let's talk about me some more.


I find it funny that you glossed over a link I shared and only discuss links and points of view that line up with yours.

For every link you share like you did above, there are just as many, if not more, on the other side of the debate.

If you think these tax measures are going forward, you're out of your mind. Even Liberal MP's are distancing themselves from this plan.

It's dead in the water.


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PostPosted: Sat Sep 16, 2017 6:37 pm
 


I missed your post with the link but the article seems misleading. The tax scenario he describes (wealthy business owners paying high taxes on their dividends) is exactly what these loopholes allow wealthy owners to avoid.

These reforms are going through in one form or another and once again the conservatives' proclaimed apocalypse will fail to occur.


Last edited by BeaverFever on Sat Sep 16, 2017 7:51 pm, edited 1 time in total.

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PostPosted: Sat Sep 16, 2017 7:30 pm
 


Once again. Let's recap what the proposed refoms are:

1. Income Sprinkling

Current rules: if you "sprinkle" income from your business to your family members in lower tax brackets in the form of salary, it must pass a "reasonability test" so for example you can't claim to have paid your 18yr old son $40,000 an hour to stuff envelopes one afternoon. However, if you pay the same amount money to them as a dividend, there is currently no reasonability test.

Propsed change: Reasonability test will also apply to sprinkled divided payments.


Does that really sound so outrageous?

2 Passive income

Current rules: a provision meant to give tax breaks to business who reinvest their profits in their business (for example to buy new machinery or expand an office) is being used towards investments made through a business (for example a dentist office who uses their profits to buy stocks and bonds instead of investing in the dental practice).

As vice explains it:

$1:
Imagine a doctor earns $500,000, paid directly to their private corporation, Medicine Ltd. They can pay themself $300,000 in income, and leave $200,000 in the account. That amount left in the account faces the corporate rate, while the amount withdrawn faces the personal rate.

The big difference here is the tax on that initial capital. Because it is not being withdrawn from the corporation, that $200,000 they set aside to invest faces a 15 percent rate and is shaved down to just $170,000.

A self-employed, non-incorporated doctor, meanwhile, would face the personal rate on the entire $500,000. That means the $200,000 they had planned on investing would face an average tax rate of about 35 percent, whittling down their investment capital to less than $130,000....Let’s say both doctors found a fund with a high rate of return, at seven percent, and left their initial capital to sit there for a decade. Thanks to the initial tax disparity, the unincorporated doctor would earn roughly $54,000 in income, while Medicine Ltd would earn the other doctor more than $70,000. The only difference is that one is sheltering that fund inside a personal corporation, and the other is not.



Proposed change: a few different options have been floated, such as investment income at the personal tax rate if it is not invested in the business.

TBH, if the government waivers on any of the proposed changes, I bet it would be this one simply because I get the sense that there is a lot of uninvested income in corporate accounts.

3. Capital gains loophole.

Pointless to discuss because even conservatives and business groups admit this Liberal proposal is reasonable. There have always been laws preventing business owners from converting dividends into capital gains (the latter are taxable at a lower rate) but courts have asked for more clarity on applying the law to a specific complex conversion tactic of using dividends to move shares between a series of corporations that are all owned by the same family.

Proposed change: clarify that the law applies to the technicalities of this particular tactic.


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PostPosted: Sun Sep 17, 2017 11:44 am
 


BeaverFever BeaverFever:


These reforms are going through in one form or another and once again the conservatives' proclaimed apocalypse will fail to occur.


Here's my guess...

With the Federal Liberals and Provincial Liberals in Ontario being tied at the hip, this will be an issue for the LPO for the upcoming election.

Any plans to make any changes, if at all, will be deferred until after the Provincial election next June.

There's far too much political and financial pressure at the Federal and Provincial level.


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PostPosted: Sun Sep 17, 2017 12:30 pm
 


I could see some business groups trying to link this with the minimum wage increase, for example claiming they'll be dealing with a "double whammy" but generally I don't recall seeing a lot of campaigning against a federal party in a provincial election or vice versa. It's not like Wynne has to defend JT's policy decisions or vice versa, federal and provincial parties are two separate political entities, even if they are making nice with each other at the moment.


That said, people may still link these issues in their own heads rightly or wrongly but I don't imagine anyone upset by the closure of these tax loopholes was ever going to vote for Wynne anyway.


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PostPosted: Sun Sep 17, 2017 2:59 pm
 


BeaverFever BeaverFever:
It's not like Wynne has to defend JT's policy decisions or vice versa, federal and provincial parties are two separate political entities, even if they are making nice with each other at the moment.


This isn't the first time you've tried to downplay the relationship between JT and KW. When you have each of them campaigning for each other, that goes well beyond 'playing nice'.

KW will be asked to clarify her position on these proposed changes and her answers will definitely play a role in the next election.

BeaverFever BeaverFever:
That said, people may still link these issues in their own heads rightly or wrongly but I don't imagine anyone upset by the closure of these tax loopholes was ever going to vote for Wynne anyway.


When you already have Liberals distancing themselves, I think you'd be surprised that not all Liberals are like you. They all don't enjoy being taxed to death for the 'greater good'. Some like to keep more of the money they worked for.


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PostPosted: Sun Sep 17, 2017 4:37 pm
 


Don't be silly. Endorsing each other on the campaign trail in a previous election cycle doesn't mean provincial politicians become permanently responsible for answering questions about federal policy matters or vice verss. Nobody's ever asked Wynne to answer for JTs national defence or foreign affairs policies. Know why? Because everyone understands the difference between a provincial government and a federal government.

If asked about it I'm sure she'd just say it's a federal matter that doesn't involve her so it's not her place to comment. The only context in which it would even come up would be in relation to a provincial policy, for example minimum wage increases.

Anyway I think you overestimate the relationship between KW and JT. That endorsement was two years ago already and obviously an endorsement doesn't mean Wynne is a permanent member of the federal governments policy inner circle with any special insight into the day to day decisions of the federal government.

As for putting some reasonable limits on tax loopholes that are being abused by the wealthy, I doubt it'll affect the provincial ballot box. True, some wealthy business owners and incorporated professionals probably support the provincial Liberal party for one reason or another but I'm sure they of all people understand the difference between a federal government and a provincial one and so whatever reasons they normally have for supporting or not supporting Wynne will remain intact.


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PostPosted: Sun Sep 17, 2017 4:58 pm
 


BeaverFever BeaverFever:
Don't be silly. Endorsing each other on the campaign trail in a previous election cycle doesn't mean provincial politicians become permanently responsible for answering questions about federal policy matters or vice verss. Nobody's ever asked Wynne to answer for JTs national defence or foreign affairs policies. Know why? Because everyone understands the difference between a provincial government and a federal government.

If asked about it I'm sure she'd just say it's a federal matter that doesn't involve her so it's not her place to comment. The only context in which it would even come up would be in relation to a provincial policy, for example minimum wage increases.


National defence and foreign afairs don't quite equal that of taxation on small business. Small business that has been squeezed hard by increasing hydro rates, higher min wage and now tax changes that will take more money from their pockets.

I think you're being naive to think it won't come up.


BeaverFever BeaverFever:
As for putting some reasonable limits on tax loopholes that are being abused by the wealthy, I doubt it'll affect the provincial ballot box. True, some wealthy business owners and incorporated professionals probably support the provincial Liberal party for one reason or another but I'm sure they of all people understand the difference between a federal government and a provincial one and so whatever reasons they normally have for supporting or not supporting Wynne will remain intact.


These tax advantages are used by far more people than just 'wealthy' people. Do wealthy people take advantage of tax loopholes....sure they do, just the same as middle-class people take advantage of any loophole they can find too.

It's disingenuous for you and those who support these changes to imply that these changes will only affect the wealthy. That's just plain false.

Will it affect the ballot box? Probably not. You're right there. I don't think Kathleen will win anyways.


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PostPosted: Sun Sep 17, 2017 6:24 pm
 


Coach85 Coach85:

National defence and foreign afairs don't quite equal that of taxation on small business. Small business that has been squeezed hard by increasing hydro rates, higher min wage and now tax changes that will take more money from their pockets.

I think you're being naive to think it won't come up.


As I said it will come up in the context of provincial policy she won't have to address it directly. Like "are you reconsidering min wage increase given federal tax changes?" She won't need to opine on those changes.



[/quote]These tax advantages are used by far more people than just 'wealthy' people. Do wealthy people take advantage of tax loopholes....sure they do, just the same as middle-class people take advantage of any loophole they can find too.

It's disingenuous for you and those who support these changes to imply that these changes will only affect the wealthy. That's just plain false.[/quote]

No I think it's disingenuous to claim they'll affect non-wealthy. Even your link couldn't explain why having the salary reasonaility test also apply to dividends is bad. Obviously because people want to pay unreasonable amounts to people in lower tax brackets. And one of the 2 other loophole reforms isn't even being challenged.

$1:
Will it affect the ballot box? Probably not. You're right there. I don't think Kathleen will win anyways.


Yeah the Ontario Liberals have been on borrowed time for quite a while now; they haven't really won the past few elections so much as the other parties have lost them. Ontario isn't a one-party province so they're bound to lose as soon as the other parties put together an electable alternative


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