Following up on a promise made during last fall’s election campaign, Prime Minister Justin Trudeau has instructed Small Business Minister Bardish Chagger and Finance Minister Bill Morneau to work together “as the small business tax rate reduction is implemented to ensure that it is used to support small businesses, rather than used to reduce personal income tax obligations for high-income earners.”
The government hasn’t said yet what changes to the rate are in store. CBA President Janet Fuhrer has written to Morneau and Chagger encouraging them not to throw the baby out with the bathwater when it comes to a preferential tax rate for small businesses.
“The small business rate is a longstanding feature of the Canadian tax system that assists small and emerging businesses, including many small and sole practitioners in the legal profession,” Fuhrer wrote. “Many rely on the small business rate to sustain the viability of their practices.”
In 2013, small and sole practitioners called to the bar in 2010 reported a median income of $60,000, with the bottom 25 per cent earning less than $35,000.
“Changes to the small business rate could affect the cost of, and access to, justice for millions of Canadians who are served by members of our profession,” she wrote. “The CBA thus encourages your government to engage in a broad consultative process with all stakeholders, including members of our profession, and various groups of Canadians who are served by our members, before any legislative changes are proposed.”
By asking for in-depth consultations, the CBA encourages the government to consider the full impact of any targeted changes, including unintended consequences.