On December 1st, Joseph Devaney, Vice President Education and Development at Video Tax News, published an open letter to parliament, raising a range of concerns with changes in Bill C-29 that would see the corporate tax rate effectively double for many small business corporations in Canada, including many family farms.
The letter, available here, points to a number of problematic, and seemingly unintentional, consequences that arise from Bill C-29’s efforts to prevent inappropriate multiplication of the small business deduction between related businesses.
To summarize a few of the most relevant points to agricultural businesses, Mr. Devaney notes that Bill C-29 will:
- See the corporate tax rate increase from approximately 14% to 27% due to the partial/full loss of the SBD on some income earned;
- Create additional and significant administrative costs, with affected companies having to maintain two sets of accounting records;
- Cause completely unrelated businesses to be caught, unduly exposing them to a higher tax rate;
- Leaves businesses unable to comply, due to the Bill’s breadth; and
- Create significant uncertainty, creating increased consulting dependency and compliance costs.
CFA has raised this issue with key members of the House of Commons and the Senate during the Bill’s review, but encourages members to raise the issues raised in this open letter in future interactions with government.
For more information on the specific consequences for agriculture and rural communities, please contact us and ask to speak with Scott Ross.