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Gaslight District

In this edition ofthis weeks V-Blog Greg discusses why it will not only keep the heritage aspect intact but also put a new spin on the area for our futures. Not only our futures though. It will benefit our grandchildren's future as well. This will be a district unlike any in Ontario. So check out this video and support the Gaslight District.

 

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What to Expect When You’re Expecting (a Federal Budget!)

Can you feel the excitement in the air? A brand new federal budget is about to be delivered into the world. A precious bundle of joy, full of hopes, expectations and the future of the Canadian economy will come screaming into the House of Commons in a couple of weeks. So what should we expect?

 

Three big things are keeping us on the edge of our seats. This baby will have larger deficits than last year amid economic uncertainty. She’ll be full of exciting details around previous announcements—the innovation agenda, the infrastructure bank, the FDI hub. Finally, we’ll see some nasty surprises coming from the review of tax credits. Wahhh!

 

The budget is unusually late this year. We’re now expecting it on March 21, after a number of delays. Pity the poor Finance Department. Last year’s budget was hit by a sharp decline in oil prices and an economy that was weaker than expected. This year’s budget is upended by Hurricane Trump—normal expectations around trade and business investment are out the window.

 

There is now more uncertainty than we’ve seen in decades, and the federal government has run out of fiscal room. The deficit will reach $26 billion this year, and that’s before the additional costs for new health deals with the provinces. For years, we’ve advocated balanced budgets, or at least a solid plan to return to balance. The Finance Department’s current forecasts show this will not happen before 2050. (This baby will be middle-aged by then.)

 

Growing deficits make it unlikely that we’ll see any large new programs. Instead, this budget is likely to fill in details around previous announcements. Remember, Budget 2016 left many of the tough questions to be filled in after consultations. The government had said Phase 2 of the infrastructure plan, with the “fast, efficient trade corridors” would be announced in the next year. The Innovation Agenda, a “bold new plan” to redesign how Canada supports innovation, was coming later. Health spending would be determined. A review of tax expenditures was coming soon.

 

We’re excited about the innovation program, but it’s that last promise that has us most worried. The government announced an internal review of all federal tax credits, with a view to eliminating poorly targeted and inefficient ones. A panel of external experts is in place, but there has been no consultation.

 

We certainly support simplifying the tax system, but some of these tax credits are very important to business and Canadians. For several months, we campaigned vigorously to oppose a plan to tax employer-sponsored health and dental plans. The plan would have cost workers thousands of dollars and was only abandoned by the government after tens of thousands of emails and negative media.

 

The government is looking for revenue so we’ll likely see a few unpleasant surprises in the budget. It would be odd if the government reviewed 150 tax credits and decided to keep all of them. So, we just don’t know if the capital gains inclusion rate, the federal dividend tax credit or flow-through shares might be on the chopping block. We’ll be watching the budget closely to determine the positive (innovation agenda, infrastructure) and negative impacts (tax credits and deficits) on business. I’m worried this baby could be adorable and smiling on the surface but with some smelly surprises hidden away.

 

For more information, please contact:

Hendrik Brakel

Senior Director, Economic, Financial & Tax Policy

Canadian Chamber of Commerce

613.238.4000 (284) | hbrakel@chamber.ca

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5 Minutes for Business: Are We Ready for the Next Generation of Small Business Owners?

Canadian business is about to go through an era of unprecedented upheaval. Is it an economic crisis? A climate calamity? A Trump presidency? It’s much worse: a mass-retirement of business owners!

 

A staggering 75% of small business owners will retire over the next decade, and $1 trillion in business assets will change hands. Are we ready?

 

The answer is a resounding no. Less than half of small business owners have succession plans and only 9% have a formal written plan. We often hear that owners don’t like talking about retirement. They’ve been leading their business for decades and it’s part of their identity. Many just assume that they will be able to sell the business or pass it along to kids when the time comes. And because it’s years away, the awkward discussion can always be put off to another day.

 

There are huge implications. For starters, inadequate planning will lead to a big tax hit. Many family businesses have concerns that they are treated unfairly. If an individual sells a business to an unrelated person, it’s considered a capital gain and subject to a significant exemption. However, when an individual sells a business to a family member, the disposal is taxed as a dividend at the top marginal rate. That’s because the Crown sees the cash remaining within the family unit and wants to avoid creating a costly loophole. It’s a tough issue—there is an issue of discrimination against family business. In fact, NDP Deputy Finance Critic Guy Caron has prepared the private member’s bill C-274 to address the “unfair treatment” of family transfers.

 

But financial planners tell us that Canada’s tax code is actually quite generous. If you set up a family trust, an estate freeze or other tax strategies, it’s possible to minimize your tax bill substantially. The problem is that this must be done years in advance.

 

The second big challenge is financing the succession. It can take years to find the right buyer with deep pockets to buy-out the retiring owner. Again, a lack of planning can force owners into a fire sale situation, and potential buyers need time to raise funds.

 

The Canadian Chamber recently passed a resolution asking that government small business financing programs be expanded so that potential buyers can access the funds to buy-out a retiring owner. It’s a great idea.

 

We sometimes focus exclusively on supporting startups, but it’s just as important to ensure the continued success of existing businesses. Consider the perspective of an entrepreneur: you could create a new idea from scratch, seek out customers who have never heard of you and hope against the odds to turn a profit. Or, you could take over a company that has been in business for decades, with a loyal customer base and a track record of profitability.

 

The point is that it takes years to plan, finance and implement a successful exit strategy—on top of the training and mentoring to prepare the business itself for transition.

 

That is why chambers and business associations must do more to encourage members to start early and create robust succession plans. Financial institutions and government agencies also must help fund the next generation of managers and owners. But it’s a big challenge for business and for the Canadian Chamber. If you have views on succession planning and/or on bill C-274, please email or give me a call.

 

Hendrik Brakel Senior Director,

Economic, Financial & Tax Policy

Canadian Chamber of Commerce

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Billion with a B

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Your Best Year Ever 2016

Are you living in the moment? Make 2016 your best year ever, no regrets!

 

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Year End Greeting from "The Chamber"

Have a wonderful Pancha Ganapati, a Happy Hanukkah and a very Merry Christmas and Happy New Year from all of us at the Chamber

 

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Auditor Generals Report 2015

Bonnie Lysyk the Auditor General for the Province of Ontario released her report last week. The most scathing report in the history of the Province, suggesting that programs are riddled with incompetence and mismanagement.

 

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Small Business Too Small to Ignore

Small businesses across Canada need to voice their concerns to show decision-makers that they are “too big to ignore”. Show your support, watch the video and share.
 

 

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Opinions Matter

Ladies and Gentlemen we have a decade of huge demographic changes coming, and everyone's opinions should be considered, but more importantly, ALWAYS everyone's should be respected.

 

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Rail or Pipe

Lots of controversy over pipelines to carry oil these days. Is it safe, if we don't do pipe, what will happen? Are there better alternatives? You decide.

 

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