Minister Morneau Brings Listening Tour to Toronto
"We have a tax system that encourages the wealthy to incorporate to get tax advantages over the middle class. We don't think that's fair. Levelling the playing field will help all Canadians, and ensure the hard work of small business owners is rewarded and that Canada's tax system continues to help businesses small and large to expand and create jobs. In meetings like the ones today we will listen to Canadians to ensure we get it right as we take the next step in our plan to grow the economy in a way that works for the middle class."
- Bill Morneau, Minister of Finance
"I look forward to engaging with Canadians, including small business owners, professionals and experts, on how to make sure our tax system doesn't continue to advantage the wealthy over the middle class. As we make our changes, we will support family businesses, we will ensure that existing savings remain untouched, and we will protect an owner's ability to invest in their business and save for downturns. Middle class small business owners are not the focus of these measures. We are committed to making Canada's tax system fairer for the middle class, and we are working with small business owners to make sure there are no unintended consequences."
- Bardish Chagger, Leader of the Government in the House of Commons, and Minister of Small Business and Tourism
An increasing number of Canadians—often high-income individuals—are using private corporations in ways that allow them to inappropriately reduce their personal taxes. In some cases, someone earning $300,000 with a spouse and two adult children can use a private corporation to get tax savings that amount to roughly what the average Canadian earns in a year.
The Government of Canada is consulting Canadians on proposals to ensure equity in Canada's tax system while maintaining Canada's low and competitive business tax rates. According to the Coalition for Small Business Tax Fairness, two thirds of businesses in Canada earn less than $73,000 a year. These hard-working middle class small businesses are not our focus.
Canada has a combined general corporate tax rate that is 12 percentage points lower than our largest trading partner, the United States.
Small businesses in Canada benefit from support that includes a reduced federal income tax rate of 10.5 per cent on their first $500,000 of active business income.
The combined federal-provincial-territorial average tax rate for small business is 14.4 per cent, the lowest in the G7 and fourth lowest among Organisation for Economic Co-operation and Development countries. Small businesses can retain more of their earnings to reinvest, supporting growth and job creation.
In addition to generous tax support, small businesses also benefit from direct program support for scaling up, including access to financing and foreign markets, support for innovation, and services to build entrepreneurial and management capacity through programs such as the Industrial Research Assistance Program and the Canada Small Business Financing Program. A number of federal entities provide support for small and medium-sized enterprises including Innovation, Science and Economic Development Canada, Global Affairs Canada's Trade Commissioner Service, Export Development Canada, and the regional development agencies. Most notably, the Business Development Bank of Canada serves 49,000 Canadian small and medium-sized enterprises and has reached a total of over $29 billion committed to small and medium-sized businesses.
Media may contact:
Office of the Minister of Finance
613-369-5699 / 613-462-5469
Department of Finance Canada
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