Brokers are concerned by proposed federal tax changes
Published: October 13, 2017
Updated: July 24, 2018
Author: Luke Jones
CATEGORY: Industry News
Insurance brokers have joined a growing number of professionals with concern for the proposed changes to federal taxes on business income, according to a Saskatchewan member of parliament.
On October 6, a majority in the House of Commons voted to stop consultations on proposed tax changes first announced in July.
Among the suggested changes would mean some customers will be unable to claim the lifetime capital gains exemption that accure during a period when a trust holds a property. The federal government also proposed a tax on split income (TOSI) to adults as well as children.
“I received hundreds of phone calls, emails, and letters from my constituents, most from small business owners, expressing their deep concerns about how these changes would affect their ability to run their businesses,” Robert Kitchen, Conservative MP for Souris Moose Mountain, Sask., said in the House of Commons Oct. 6. Kitchen added that “veterinarians, insurance brokers, small oil and gas companies, doctors, store owners, and even rural municipalities” were professionals concerned by the proposals.
Kitchen was participating in a debate on the motion to extend the consultation period to Jan. 2018.
“These people are not the 1%,” Kitchen said. “Many of them are firmly middle class and are offended by the notion they conduct their business in a dishonest way.”
The lifetime capital gains exemption “provides an exemption in computing taxable income in respect of capital gains realized by individuals on the disposition of qualified small business corporation shares,” Finance Minister Bill Morneau wrote in the proposal released July 18. “An individual may shelter capital gains realized on the disposition of qualified small business shares up to a lifetime limit of $835,716 in 2017.” That limit is indexed to inflation.
The LCGE “may be claimed by several members of the business principal’s family in circumstances where those individuals may not have effectively contributed to the business in respect of which the exemption is being claimed,” Morneau added. “A particular concern is the promotion and use of (typically, discretionary) family trusts to sprinkle capital gains among family members.”