The Oakville Chamber of Commerce will host its annual RBC Economic Outlook Breakfast on Tuesday, January 9th at the Oakville Conference Centre. The event will feature two keynote speakers: Craig Wright, Senior Vice-President and Chief Economist, RBC and Sean Simpson, Vice President, Ipsos Public Affairs. Craig Wright will provide a look at the provincial, national, and global economy going into 2018, while Sean Simpson will provide the social insights
The event provides an ideal opportunity for business owners and professionals to understand how economic and social factors may impact their business throughout 2018. Attendees will have the opportunity to submit questions during a moderated Question and Answer Forum following the keynote presentations.
“The RBC Economic Outlook Breakfast is one of the Chamber’s most popular annual events as businesses plan for the year ahead” stated Ken Nevar, Chair of the Board, Oakville Chamber of Commerce. “We thank our partners RBC, Ipsos Public Affairs and Henderson Partners LLP for their support in making this event possible.”
Date: Tuesday, January 9, 2018
Time: 7:30am – 9:30am
Location: Oakville Conference Centre (2515 Wyecroft Road)
Tickets: Members $35; Non-members $55. Register online through the events calendar, or by contacting the Chamber directly at 905-845-6613, or email@example.com
The federal government should scrap or at least delay plans to amend the Income Tax Act as the proposals risk harming the Canadians these changes are meant to help, the Senate Committee on National Finance said in a report released Wednesday.
The committee’s report is the product of extensive study and cross-Canada consultations with the people who have the most to lose under the proposed changes. This work took place with the endorsement of the federal finance minister.
The majority of senators on the committee believe cancellation is the most prudent course of action. However, committee Deputy Chair Senator André Pratte and Senator Éric Forest disagreed.
As an alternative to cancellation, delaying fiscal reform implementation would also give the government more time to consult with businesses and tax specialists on the details of the changes, once these have been released.
Witnesses described in concrete terms the extent to which some changes would be harmful to them. Proposed restrictions on passive investments, for instance, would discourage business owners from saving for capital investments, economic downturns or even parental leave and retirement.
There is another reason for the government to withdraw or delay its proposals.
Over the past decades, various governments have made incremental changes to the tax system, which has become bloated, complex and cumbersome. The last comprehensive review of the tax system took place in the 1960s; the committee believes it is long past time for the government to take a close look at our existing system.
If the government truly wishes to make meaningful, lasting changes toward a fairer tax system — and maintain Canada’s competitiveness with other countries that have simplified their own tax codes — the committee believes the government must embark on a full review of the tax system.
It would be an ambitious, time-consuming and difficult project. But, done well and with input from Canadians, it would leave a lasting legacy of stability and profitability.
The committee urges the government to embrace this challenge.
Read the report, Fair, Simple and Competitive Taxation: The way forward for Canada
New draft legislation on income sprinkling still raises concerns, says business coalition opposing tax changes
The legislation on income sprinkling released by Finance Minister Bill Morneau, while a step towards clarity, still represents an administrative and financial burden for a number of small businesses and the families that own them.
The Coalition for Small Business Tax Fairness, a unified voice of over 74 organizations representing hundreds of thousands of business owners across the country, remains concerned that the new rules will cause business owners to have to cut through burdensome interpretative red tape in their efforts to prove that they or family members belong in one of the categories that would exempt them from the new sprinking rules. The coalition continues to urge government to create a blanket exemption for spouses.
“The measures announced by Min. Morneau leave many small business owners scratching their heads, especially if they will have to deal with the Canada Revenue Agency interpretation of reasonableness,” said the Hon. Perrin Beatty, President and CEO of the Canadian Chamber of Commerce. “Although there has been some improvement, these are not measures to be rushed. This situation highlights the need for an in-depth overhaul of our tax system, in order to make it more competitive.”
“The measures announced are slated to come into force in two weeks. That’s far from enough time for businesses to adapt,” said Dan Kelly, President of the Canadian Federation of Independent Business. “We continue to urge the government to slow down, and to listen to the recommendations from the Senate Committee on National Finance.”
The Senate Standing Committee on National Finance issued a report that recommends the government withdraw the proposed changes to the taxation of private corporations in Canada, or barring that, to push back their application to 2019. The Senate Committee is also issuing a recommendation to proceed with an in-depth review of the country’s tax system.
Given the complexity of these proposals, more time is needed to ensure that these changes can be implemented and do not harm small businesses, the backbone of the Canadian economy. The coalition stands ready to work with the government to find solutions that won’t adversely affect small business’ ability to grow, innovate and create jobs.
The Coalition for Small Business Tax Fairness is encouraging business owners and other concerned Canadians to contact their Members of Parliament and use the hashtags #unfairtaxchanges #taxesinéquitables on social media. For the full list of Coalition members, please visit smallbiztaxfairness.ca.
On November 28th, the Government of Ontario released the province’s Long-Term Infrastructure Plan (LTIP) entitled Building Better Lives: Ontario’s Long-Term Infrastructure Plan 2017. The plan sets forth a vision for Ontario infrastructure planning and investment and is a key interim step in meeting the requirements of the Infrastructure for Jobs and Prosperity Act, 2015 (IJPA).
The LTIP outlines a vision for how Ontario’s infrastructure must be evidence-based and should be resilient to the impacts of a changing climate and disruptive technologies, seamlessly interconnected and supportive of economic growth for the whole province. While the plan is a welcomed announcement in ensuring Ontario’s infrastructure meets the needs of its rapidly changing economy, the Ontario Chamber Network encourages the government to continually update and monitor the plan to identify what is—and is not—working well.
Below is a high-level synopsis of the plan, including the Chamber’s analysis and comparison to the Ontario Chamber Network’s Long-Term Infrastructure Plan Submission, Building Better.
The Government of Ontario will:
- Implement a broadband strategy outlining a vision for broadband connectivity across the province;
- Integrate climate change considerations into infrastructure planning to ensure environmental sustainability;
- Evaluate AFP projects against an evaluation framework to track the success of the delivery model; and
- Commit to ensure evidence-based decision making as it works on best practices in infrastructure planning and prioritization.
Key initiatives identified in Building Better Lives: Ontario’s Long-Term Infrastructure Plan 2017
Strengthening Evidence-Based Decision Making
The government is undertaking extensive research to understand best practices in infrastructure planning and prioritization, and will apply these findings through ongoing work to improve consistency in business cases. This is to ensure the clear identification to decision-makers of the critical investments that are necessary to address health and safety; deliver critical services; address vulnerabilities to climate impacts; or to deliver on government mandate commitments or time-limited opportunities.
As government practices continue to improve, there will be clear prioritization criteria to assess the economic, social and environmental impacts of these investments. There will also be business case improvements to ensure that decision-makers have the evidence they need to make informed decisions. This evidence will include the current provincial infrastructure capacity, the gaps between what Ontario has and what Ontario needs, and a clear strategy on how the government will meet those needs.
In Building Better, the Ontario Chamber Network encouraged the Government of Ontario to ensure that future infrastructure planning and spending commitments are planned methodically, fully, and in a transparent fashion. Infrastructure investments should be targeted based on sound criteria, including return on investments and evidence that the investments will reduce or eliminate existing barriers to service. The Chamber is pleased to see that evidence-based decision making will be a key pillar of the LTIP.
Climate Change Adaptation
Ontario-led efforts to increase resilience will be achieved in a variety of ways, including through climate change-related policies in infrastructure asset plans, investment directives and decisions, and land–use planning direction such as the Provincial Policy Statement (2014) and the Growth Plan for the Greater Golden Horseshoe (2017).
The Province is also establishing a new organization that will provide municipalities, Indigenous communities, and businesses with up-to-date and critical information and data, as well as practical services to build resilience and help keep Ontarians safe. This information will assist government in making evidence-based investment decisions to build resilient infrastructure across Ontario.
In Building Better, the Ontario Chamber Network recommended the LTIP focus on building infrastructure that is resilient and adaptable to climate change. We noted that as part of this climate change should be incorporated into asset management planning. Additionally, we recommended resiliency and adaptability be considered within procurement criteria. This could include having specific sections of a tender devoted to how a proponent is addressing the impacts of climate change on the asset being built, closely aligning with the LTIP’s outlined resilient infrastructure components.
Supporting Modern Service Delivery – Broadband in Ontario
The Chamber has consistently advocated for trade-enabling infrastructure, including both traditional and digital infrastructure such as high-speed broadband internet. As part of this, the OCC has continually supported recommendations for the development of a robust investment strategy in the province, which identifies broadband as an infrastructure investment and does not dissuade private sector investment. A broadband strategy will help the Government achieve an evidence-based approach to broadband infrastructure development.
The Ontario Chamber Network has also encouraged the building of partnerships across all levels of government to better leverage funding and respond to local needs. The private sector has long driven investment in broadband infrastructure and the Chamber has recommended the Province commits to an intergovernmental funding model that will incentivize and leverage investments in a way that expedites the closing of the digital divide. The Ontario Chamber Network would be welcomed to participate in ongoing dialogue with the Government of Ontario as it develops the provincial broadband strategy.
Improved AFP Evaluation and Analysis
(a) deliver projects on-budget, on-time and on-specification;
(b) ensure proper risk transfer to the private sector was achieved at final completion; and
(c) ensure timely procurement.
The government will start by evaluating a selection of completed AFPs and traditionally delivered projects of a similar size to assess the performance of each model against these criteria. Over time, this framework will provide a stronger evidence base for the AFP delivery model which will help decision-makers choose the right delivery model for future projects.
Additionally, as part of its AFP work, the Government of Ontario is committing to support municipalities to successfully deliver key infrastructure projects. For example, it is exploring how it can encourage and support municipalities in leveraging the AFP delivery model more frequently to achieve their infrastructure priorities, and what support and advice Infrastructure Ontario can potentially provide to municipalities.
In Building Better, the Ontario Chamber Network recommended the Government of Ontario should work to develop comprehensive principles and elements from successfully procured projects that were delivered using alternative financing and procurement methods which can then be applied as best practices to smaller scale projects.
The Ontario Chamber Network’s Position:
The Ontario Chamber Network has been advocating for building infrastructure that sets Ontario’s foundation for long-term, sustainable economic growth and prosperity, cumulating in their Building Better report. We are encouraged to see that the 2017 LTIP delivers broad alignment with the Chamber’s recommendations.
The Network was pleased to see a strong emphasis on evidence-based decision making as well as a focus on building resilient and adaptable infrastructure. We also applaud the government’s commitment to expanding broadband infrastructure and improving connectivity in communities across the province by working towards a broadband strategy.
The Ontario Chamber Network will continue to work collaboratively with the Government of Ontario as it works to execute its vision outlined in the LTIP.
The key provisions contained in his announcement and the Canadian Chamber’s messaging with regard to each are summarized below.
In addition to responding to the government’s new proposed tax changes, the Canadian Chamber Network has called on the government to undertake a comprehensive review of
the tax system recommending that it establish a Royal Commission to do so. In light of mounting regulatory compliance costs imposed by all levels of government, proposed carbon taxes, and the prospect of US tax reform, the Chamber will launch its own competitiveness assessment of Canada’s business tax system in 2018. The findings of our review will help to shape the priorities for tax
Dates to look out for:
- December 15 – The Senate Finance Committee will release its report on the Small Business Tax changes based on the cross-country consultations it undertook during the fall in which many Chambers took an active role.
- Sometime before Christmas (our bet is just before Christmas) – The government’s new rules on income sprinkling need to be tabled if the government is to meet its January 1 date for implementation.
- March – Budget 2018 will most likely contain draft legislation on passive investment.
Key Messages to MPs1. Chambers are still very concerned about the potential negative impacts the government’s small business tax changes are likely to have on small business investment and growth.
2. Tax changes should be postponed until their full economic impacts can be taken into account.
3. The government must urgently address the broader issue of the competitiveness of Canada’s tax system.
4. The government should establish a Royal Commission to undertake a comprehensive review of the tax system.
Changes announced by Finance Minister Morneau
1. The Small Business Corporate Tax Rate will be reducedThe government will reduce the federal small business tax rate from its current level of 10.5% to 10% as of January 1, 2018 and 9% as of January 1, 2019. This measure reinstates the gradual rate reduction to 9% announced by the previous government but halted in Budget 2016. The tax rate reduction was included in a Notice of Ways and Means Motion tabled as part of the government’s Economic Update on October 24. This reduction will save companies earning $500,000 in income eligible for the small business deduction $2,500 in 2018 and $7,500 annually from 2019 on.
The Canadian Chamber Network has welcomed this move.
2. Higher taxes on Ordinary DividendsIn conjunction with the small business rate reduction, the personal tax rate applied to ordinary (non-eligible) dividends will increase. The purpose is to maintain the integrative nature of the personal and corporate tax systems, ensuring that the aggregate level of tax paid on dividends will remain the same regardless of whether income is earned as an individual or through a corporation. However, this change could result in an overall tax increase for some small business owners, which for some might exceed the savings associated with a reduction in the small business tax rate. Personal tax rates will increase on dividend distributions from earnings that were taxed at a higher rate (like distributions of earnings taxed at a higher small business or manufacturing and processing rate or future distributions of passive investment income). There will be no grandfathering of lower personal dividend tax rates on distributions of these accumulated retained earnings.
The Chamber Network has proposed that a grandfathering mechanism be introduced.
3. Rules related to “Income Sprinkling” will be simplifiedWidespread and serious concerns were raised during the consultation period with respect to the complex rules the government was proposing to introduce aimed at restricting the payment of income to adult family members unless the amounts were determined to be reasonable. The government also proposed that it would treat some capital gains as ordinary dividends. The government received thousands of submissions detailing concerns about how these proposed rules could result in nearly doubling the tax rate on inter-generational family business transitions or other legitimate business transfers to related parties. The complexity and uncertainty of the proposed changes was also an issue of common concern, as was the likelihood of the proposed measures unleashing an army of CRA tax auditors working on different interpretations of what reasonableness actually means.
In response to the consultations, the government confirmed that the measures related to income sprinkling would be simplified in order to provide greater certainty for family members who contribute to a family business. No further details have been provided
since October 16.
There are still many uncertainties about these proposals. What does simplification and clarification mean? What does a reasonable contribution to a business mean? Will the conversion of capital gains to ordinary dividends remain in the simplified legislation? And, when will the simplified draft legislation be released? (The previous version was to come into effect January 1, 2018. The government will need to table its simplified version before then if the effective date is to remain unchanged – Look out for the rule changes to be announced just before Christmas.)
The Chamber Network remains concerned that the changes when they are announced will not take into consideration all of the ways that family members contribute to a small business and that the reasonableness test that will be applied by CRA will still be intrusive and complex.
We have called for the government to:
- Announce its simplified rules as soon as possible and allow ample time for input from business;
- Consider at a minimum an exemption from the rules for spouses; and,
- Postpone the implementation of the changes until January 1, 2019 at the very least.
4. Access to the Lifetime Capital Gains Exemption will not be changedThe Finance Minister announced that the government will not proceed with its proposal to restrict access for certain shareholders to the Lifetime Capital Gains Exemption (LCGE). The Chamber Network welcomes this change.
5. Rules governing the Conversion of Capital Gains into Dividends will not be changedThe Finance Minister also announced that the government will not proceed with draft legislation tabled last July that would convert capital gains into taxable dividends. The Chamber Network welcomes this change.
6. The government will work to make it easier and less costly to transfer business to the next generation.The Chamber welcomes the government’s willingness to improve the tax treatment of intergenerational transfers and looks forward to working with the government to this end.
The government intends to proceed with proposals to increase tax on corporate passive investments funded from after-tax business earnings, effectively double taxing the eventual distribution of passive investment earnings. However, the government now proposes that the new tax increases will only apply to passive income in excess of an annual threshold of $50,000 and will be applied only on a go-forward basis. It is expected that the draft legislation will be tabled along with the federal 2018 budget.
7. Proposals for the tax treatment of Passive Income will be revised.
There are many concerns and uncertainties that still surround this proposal. Such as: Will the threshold apply to individual companies or to groups of companies? What is being grandfathered? Investment assets or retained earnings? Current working capital or future liquid assets from the disposal of other assets? How long will the grandfathering be permitted? Are investments in other companies considered passive investments? The threshold will be insufficient for many small businesses saving to make future investments. There are also serious concerns that the taxation of passive investments will be a disincentive to venture or angel capital.
The Chamber’s position with respect to the government’s new proposals to tax passive income is that:
- The $50,000 threshold is inadequate for small businesses that are saving in order to make larger investments in innovations or business growth;
- The threshold is too small to provide business owners with long-term earnings security;
- The government should not proceed with its passive income rules until a full economic impact assessment has been carried out and an approach has been developed that can ensure there will be no unintended negative consequences to business investment.
Yesterday, the Government of Ontario released its 2017 Fall Economic Statement, which provides an update on the government’s finances and progress on key commitments since the release of the 2017 Budget. The government is continuing to project a balanced budget in 2017–18 and ongoing balance in 2018–19 and 2019–20, unchanged from the 2017 Budget forecast. The province also boasts a steadily declining unemployment rate which reached 5.9 percent in October 2017, and has been below the national average for 31 consecutive months.
The fall statement forecasts real GDP growth of 2.8 percent in 2017, up from 2.3 percent in the 2017 Budget. Ontario’s net debt-to-GDP peaked in 2014–15 at 39.3 percent, however it is projected to be 37.3 percent in 2017–18, lower than the 37.5 percent forecast in the 2017 Budget.
The government also made announcements related to Strengthening Ontario’s Small Businesses, Encouraging Youth Employment and Modernizing Apprenticeships for Small Businesses.
What does this mean for business?
Strengthening Ontario’s Small Businesses
The Province is announcing more than $500 million in new initiatives, over three years, for small business. Most notably the province is proposing a 1 percent cut in the small business Corporate Income Tax (CIT) rate from 4.5 percent to 3.5 percent. The Fall Economic Statement also includes enhanced financial support for small and medium‐sized fruit and vegetable farming businesses and investments to enhance the vibrancy of communities and main streets.
Our Response: As part of the Ontario Chamber Network’s Bill 148 advocacy work, the Oakville Chamber of Commerce has consistently urged the government to provide a comprehensive package of offsets, which includes a reduction in the small business tax rate. These measures will help to provide small businesses compensation for their limited access to capital financing, and the pressures placed on their revenue streams from Bill 148’s increased labour costs.
Encouraging Youth Employment
Ontario will provide $124 million over three years in supports for youth ages 15 to 29 years, working with Employment Service and Youth Job Connection to support employer hiring and retention beginning January 1, 2018. Through Ontario’s Employment Service program, a small employer with fewer than 100 employees would receive a $1,000 incentive for hiring a young worker and a $1,000 for retaining that worker for six months. Additionally, if workers are hired through Youth Job Connection, a separate program that recruits youth facing employment barriers, employers would receive retention payments of $1,000 after three months, with a further $1,000 payable after six months for each worker.
Our Response: In partnership with Canadian Centre for Economic Analysis (CANCEA) the Ontario Chamber Network conducted an independent economic analysis modelling the impacts of Bill 148,. Evidence suggests that a 10% increase in the Ontario minimum wage could decrease youth employment by 2% to 6 % over time. Considering this challenge, funding for small business to link youth with the labour market is a step in the right direction.
Modernizing Apprenticeships for Small Businesses
The Province is proposing adding five service‐sector trades to the eligibility list for the new Graduated Apprenticeship Grant for Employers: Hairstylist, Cook, Horticultural Technician, Baker/Patissier, and Appliance Service Technician. Additionally, the government is proposing supporting multiple employers to pool together and form consortia to hire, register and train their apprentices for skilled trades.
Our Response: In our report Talent-in-Transition, the Oakville Chamber of Commerce recommended that the government collaborate with business and education stakeholders to increase employers’ awareness of the consortium model. By allowing for multiple employers to join and form hiring consortium, apprentices will see an enhanced system flexibility while improving support for the development of a workforce that is responsive to Ontario’s local labour market needs.
These resolutions will be brought to the attention of appropriate federal government officials and other bodies to whom the recommendations are directed. The method of presentation of each item will be determined by a number of factors, including subsequent events and legislation which may affect the subject matter, additional information that may become available, the timing of a presentation, etc.
Throughout the year, members will be updated and advised of the action(s) taken on each of these positions by way of summaries and reports in Canadian Chamber publications.
The Oakville Chamber of Commerce, in partnership with the Professional Engineers of Ontario (PEO) – Oakville Chapter, will host the Honourable Steven Del Duca, Ontario’s Minister of Transportation for Lunch on Friday, November 17th. The event, which begins at 11:30 a.m. at the Oakville Conference Centre, will include lunch, a keynote address by the Honourable Steven Del Duca, and a moderated Question and Answer Forum.
“The Professional Engineers of Ontario – Oakville Chapter is proud to partner with the Oakville Chamber of Commerce and present both our members and the Oakville community at large with the opportunity to hear directly from Ontario’s Minister of Transportation” stated Len D’Elia, Chair of the Professional Engineers of Ontario – Oakville Chapter.
“We are pleased to be hosting Ontario’s Minister of Transportation” stated Ken Nevar, Chair of the Board, Oakville Chamber of Commerce. “Transportation is top of mind for our members and the Oakville business community. In our latest Business Advocacy Survey, 64% of respondents believed that traffic congestion was a significant obstacle for business. Moreover, our members’ top three infrastructure priorities for Oakville were all transportation related; being local roads and bridges, public parking, and transit. I’m sure our members are keen to hear Mr. Del Duca’s plans for transportation throughout the Province, and in our community.”
Date: Friday, November 17, 2017
11:30am – 12:00pm: Registration, networking and lunch
12:00pm – 1:30pm: Formal Event
Location: Oakville Conference Centre (2515 Wyecroft Road)
Tickets: $35 for Members, $55 for Non-Members. Tables of 8 available.