The municipal election this past fall resulted in some new and familiar faces around local council tables, each prepared to represent the needs of their constituents and communities to the best of their ability during their next four years in office.

In the winter edition of our Insight magazine, to be released this month, we reached out to the municipal leaders for the City of Cambridge and Township of North Dumfries, along with Cambridge’s two regional councillors, to get a sense of what issues and concerns they believe are facing the business community and to provide potential solutions to make things even better to conduct business locally.

Each were asked the same series of questions in hopes of providing our business community with a snapshot of what approaches our municipal leaders will be taking over the next four years.

Here’s a portion of their responses to a few of the questions:

1. How do we make Cambridge/Township of North Dumfries even better places to do business?

Cambridge

Mayor Jan Liggett: “Connecting equity to transit-oriented development can mitigate traffic and pollution, generate demand for transit, catalyze the development of affordable housing, and bring new businesses and quality jobs to our community.”

Donna Reid, Ward One: “Council needs to support development because more people will generate more business and needs to consult our businesses as to their needs to ensure we will be providing the services that will assist them.”

Mike Devine, Ward Two: “Our tax base is an issue, and we must see that it’s set in a reasonable manner for businesses, especially since we have moved into more higher-tech manufacturing than we’ve previously seen in Cambridge in the first 30 years.”

Corey Kimpson, Ward Three: “We have to look at the processes we have in place and really look at having a collaborative approach between the levels of government, the community and business community.”

Ross Earnshaw, Ward Four: “For Cambridge to be perceived as an attractive place to do business, our downtowns must be seen as safe, comfortable, and truly fun, public places.”

Sheri Roberts, Ward Five: “Having the appropriate infrastructure in place such as safe roads, well planned parking, and other supports and services for employees and customers, will make it as easy as possible for companies to focus on the running of their business.”

Adam Cooper, Ward Six: “I would like to see improved road networks to get large this truck traffic out of our downtown areas and major roads such as Hespeler Road and King Street.”

Scott Hamilton, Ward Seven: “It’s important that we increase density in our cores to support businesses and large-scale infrastructural projects such as the LRT.”

Nicholas Ermeta, Ward Eight: “We need to constantly review and improve customer service levels at City Hall. We need to always strive to provide timely service and assistance when needed.”

Township of North Dumfries

Mayor Sue Foxton: “We must link quality of life attributes of the community and countryside with the business opportunities of the area and continue with the current program underway to facilitate the installation of fibre to the address across North Dumfries.”

Rod Rolleman, Ward One: “We need to market North Dumfries as the rural escape for city residents to the north and east of us.”

Derrick Ostner, Ward Two: “We can make North Dumfries a better place to do business by being more engaging with prospective businesses.”

Alida Wilms, Ward Three: “I love being part of a rural community and think there are incredible business opportunities here for any aspiring entrepreneur.”

Scott Tilley, Ward Four: “By encouraging and supporting businesses to set up in North Dumfries it will be a win/win for both the residents and business, as they will both support each other.”

Region of Waterloo

Doug Craig, Regional Councillor: “Rapid transit options must proceed, safety in our downtowns must be safeguarded and everything from recreational facilities to health services must continue to be improved.”

Pam Wolf, Regional Councillor: “To attract business to Cambridge we need to make it attractive to their employees. They want good schools, safe neighbourhoods, recreation facilities and arts and culture.”

2. What do you think are the biggest concerns facing businesses in Cambridge/North Dumfries and how will you address them?

Cambridge

Mayor Jan Liggett: “Labour shortage is a North American problem. We have universities, colleges and training facilities close by which graduate high quality staffing for companies. I will continue to work with them to encourage the growth of these educational facilities.”

Donna Reid, Ward One: “Our core areas struggle with the homeless, addicted and those with mental health issues. Our council needs to provide more services to address the needs of these vulnerable people.”

Mike Devine, Ward Two: “The tax base is clearly an issue for businesses and the cost of city services, such as snow plowing, are also an issue.”

Corey Kimpson, Ward Three: “Having things ready to move as quickly as possible is paramount, because when a business is ready to do something, they’re ready to go and can’t be waiting, especially in this economy. Is there a way we can fast track and expedite things?”

Ross Earnshaw, Ward Four: “Business owners do not feel like their voices are being heard by municipal leaders. It is important that we give local businesses a voice at City Hall.”

Sheri Roberts, Ward Five: “The cost of doing business goes up every year.  One way that municipalities can help with this is by streamlining the processes around opening a new business.”

Adam Cooper, Ward Six: “We need to lobby the provincial government for long-term detox and rehab facilities while also reconsidering the services offered downtown to prevent our core from becoming the dangerous playground for untreated addiction that it has become.”

Scott Hamilton, Ward Seven: “We all need to work to ensure that we have a skilled workforce, that conditions are ripe for quickly and efficiently importing supplies and materials as well as exporting our products to market.”

Nicholas Ermeta, Ward Eight: “Affordability or lack thereof are big concerns for businesses. I want to minimize future tax increases by reviewing the budget to find greater efficiencies and to find new funding models that rely less on property taxes.”

Township of North Dumfries

Mayor Sue Foxton: “Concerns include the cost attributed to the purchase of land for employment purposes, the timelines and cost for “approvals” to bring a development proposal forward to the marketplace, plus the ability to attract and retain employees for new or growing businesses and access transit to facilitate this. Council in June 2022 adopted a position to streamline the review and approvals process associated with site plan approvals. This measure should witness a reduction in the timelines to secure a decision.”

Rod Rolleman, Ward One: “The three biggest concerns facing businesses in North Dumfries are labour shortages, poor quality internet, and lack of commercially zoned properties. The Township needs to partner with the private sector and bring high-speed internet to our business parks.”

Derrick Ostner, Ward Two: “Biggest concerns are having the available land, and proper internet.”

Alida Wilms, Ward Three: “As more people move into the area, there’s greater pressure on our rural and natural areas because of the increased housing needs.

Scott Tilley, Ward Four: “Planning for future parking and dealing with current parking issues by working with the community residents and businesses to get their feedback, I will assist in making it easier for businesses to be accessed by listening to the people who are in the area regularly.”

Region of Waterloo

Doug Craig, Regional Councillor: “Safety in our community on the streets, in our parks and in our downtowns must be improved to have a safe, liveable community.”

Pam Wolf, Regional Councillor: “One of the biggest challenges to business is attracting and retaining staff. To help with this we need to build more housing including affordable housing to house staff.”

While COVID-19 has created a uniquely difficult situation for Ontario’s municipalities, it has also exposed areas to improve municipal fiscal governance.

Local governments do not have the fiscal autonomy they need to make them competitive and maintaining the status quo could be devastating for communities in a post-COVID economic recovery. The impact of the virus and the resultant public health measures have meant that most municipalities are seeing a decline in revenue and increase in expenditures.

In response, as all levels of government look to balance debt and deficits while protecting the well-being of our communities, the Ontario Chamber of Commerce (OCC) released its latest report, Better Budgets: Bolstering the Fiscal Resilience of Ontario’s Municipalities, which identifies 14 recommendations for both the Province and municipalities which can bring immediate and long-term relief to communities across Ontario.

“Municipalities in Ontario are facing a triple threat this year: an ongoing pandemic that has been devastating to local economies, reduced revenue from closed or limited services, and increased spending on public health and human services. The Financial Accountability Office estimates the pandemic will collectively cost municipalities $2.7 billion in 2021, on top of the expected $4.1 billion impact of 2020,” said Cambridge Chamber of Commerce President & CEO Greg Durocher. “In Budget 2021, the Government of Ontario committed to a long‐term economic growth plan. It is imperative public policymakers do everything they can do to ensure communities like ours do not get left behind in recovery.”

During the June 28 edition of our Chamber Chat, Cambridge City Manager David Calder and CFO Sheryl Ayres took a closer at the report and provided some great insight on the merits and viability of some of these recommendations, while identifying misconceptions relating to others.

“I commend the Ontario Chamber of Commerce on their work on Better Budgets,” said David, adding the report contained some ‘old chestnuts’ municipalities having been trying to change for many years when it comes managing finances. “It’s a good variety. Some we can support and some that might not be as supportable.”

Greg said for many years there has been ongoing discussion centred on the ‘restrictiveness’ of municipalities’ ability to raise revenue, noting changes are clearly needed, especially when it comes to Ontario’s property tax system.

“We have to undue to the system so to speak and make sure taxes are applied appropriately,” he said.

Sheryl agreed the current property tax system, which has been in place since the 1990s, is need of a full review.

“In doing that, they also need to look at other revenue tools that municipalities can use in addition to property taxes,” she said, noting that 91% of tax dollars go to the Provincial and Federal governments, leaving the remainder for municipalities. “Yet, we’ve got the greatest portion of expenses related to the assets that we own, and we are closer to the people in terms of the local services we provide. I believe we need a comprehensive review of the whole tax system and how it’s allocated across three levels of government, ensuring there is transparency and equity in how the funds are raised from the residents of Canada.”

David said the downloading of services to municipalities is an important issue that needs to be addressed.

“We need to review who should be providing what services and whether there are ways to be more cost efficient in the supply of those services,” he said. “It’s a very complex conversation but one that needs to take place.”

David said municipalities have been looking for ways to be more autonomous for many years in effort to make better decisions at the local level.

“We’ve got to figure out where do we want to be in that spectrum,” he said. “There needs to be discussion around trying to make sure we control our delivery a little bit where appropriate.”

The OCC report agrees and states the Ontario’s post-pandemic recovery and long-term success will depend heavily on unleashing the economic potential of its municipalities.

“Given that local governments in Ontario cannot run budget deficits, their current options for fiscal sustainability are limited to tax increases, service cuts, and the use of reserves,” said Claudia Dessanti, Senior Manager, Policy of the OCC. “Now is the time for municipalities and the province to explore alternative means of achieving fiscal sustainability.”

Key recommendations outlined in the report include:

Undertake a comprehensive and forward-looking review of Ontario’s property tax system to ensure the system is more equitable, efficient, and predictable for businesses.

Adhere to the ‘pay-for-say principle’ to ensure that all responsibilities are accompanied by adequate funding.

Enhance and incentivize regional collaboration across municipalities.  

The OCC report was created in partnership with KPMG Canada. Read the report.

The Cambridge Chamber of Commerce and Ontario Chamber Welcome Focus on Tourism, Small Business, Women, Training, and Local Communities

The Cambridge Chamber of Commerce released the following response to the Government of Ontario’s 2021 Budget, Ontario’s Action Plan: Protecting People’s Health and Our Economy.

“Ontario’s 2021 Budget means supports for the hardest-hit sectors and communities including right here in Waterloo Region, much needed aid for women who have been deeply impacted by the pandemic, and initiatives that will create a strong economic rebound related to tourism, training, and vital infrastructure such as broadband,” said Cambridge Chamber of Commerce President and CEO Greg Durocher.

Leading up to Budget 2021, the Ontario Chamber Network was calling for policies that mitigate the immediate impacts of the crisis and lay the groundwork for a robust and inclusive economic recovery. Resources need to be focused on those hit hardest by the pandemic, where they will have the greatest impact.

“Ontario’s business community welcomes the 2021 Budget, which gives businesses much-needed supports to confront the current health crisis while laying the foundation for a strong and inclusive economic recovery,” added Rocco Rossi, President and CEO of the OCC.

Some of the things called for in the Ontario Chamber Network pre-Budget Submission included:

• Targeted support for the hardest-hit sectors and communities;
• Demand-driven skills programming;
• Enhanced access to capital for small businesses and entrepreneurs;
• Bold action on interprovincial trade;
• Strengthening of municipalities’ fiscal capacity; and
• A sensible path to getting Ontario’s finances on track post-pandemic.

“Women’s fulsome participation in the labour market is a precondition to our economic recovery and future prosperity. We greatly appreciate the new supports for women, as they have been among those disproportionately impacted by the crisis,” said the report’s author Claudia Dessanti, Senior Policy Analyst of the Ontario Chamber of Commerce. “A taskforce for inclusive economic growth, further supports for child care, a job training tax credit, relief for the tourism industry, and support for survivors of domestic violence are all welcome initiatives that will help turn the tides on the impacts that were so severe and immediate for women in Ontario. Budget 2021 addresses many of the supports we called for in our recent report, The She-Covery Project: Confronting the Gendered Economic Impacts of COVID-19 in Ontario.”

Some of the measures welcomed by the Ontario Chamber Network in the 2021 Budget are:

Support for inclusive growth:

• A taskforce for inclusive economic growth. The COVID-19 crisis has disproportionately affected women, racialized individuals, Indigenous people, people with disabilities, and other communities in the province. The new taskforce will examine how to increase women’s participation in the workforce, which will support economic recovery.
• Temporary Job Training Tax Credit. Studies suggest about half a million jobs are not expected to return in Canada after the pandemic, the majority of which are occupied by women. Financial support for underemployed individuals to access training and reskilling will be particularly important for lower-income workers, new immigrants, and Ontarians living in Indigenous, rural, remote, and northern communities.
• Child care support. Access to affordable child care is a long-standing issue that has been exacerbated by the pandemic. Enhancing the CARE tax credit for 2021, extending financial support for virtual learning costs, and investing in new child care spots will help ease the burden for Ontario families and allow more women to re-enter the workforce.
• Supports for women fleeing domestic violence. The increase in domestic violence incidences during the pandemic has forced many women to leave their homes and communities, jeopardizing their safety and livelihood. Support for women in transitional housing and underserved areas will help provide safety for women in vulnerable situations.

Supports for business:

• Doubling of the Ontario Small Business Support Grant. The grant has helped many organizations survive the crisis thus far and making this an automatic top-up instead of asking businesses to re-apply will reduce the administrative burden on both businesses and government.
• Additional resources for the Digital Main Street Grant. Many small businesses, particularly in rural and remote regions, have benefited from the supports of this grant to get their business online. Expanding the program will help more businesses digitize and prepare for the economy of tomorrow.
• Invest Ontario Fund. Additional funding in Invest Ontario over the next four years will be important to create jobs and investment across the province.

Support for tourism:

• Tourism and Hospitality Small Business Support Grant. The OCC recently wrote to the Ontario government about how the tourism industry is not eligible for the Ontario Small Business Support Grant. This new grant is welcome news for hotels, travel agencies, hunting and fishing camps, and other organizations that did not qualify for the original grant.
• Local Tourism Tax Credit and Tourism Recovery Program. Many of the chambers of commerce and boards of trade are active in the tourism industries within their local communities. These additional supports will be critical to support a revival of tourism after the pandemic.
• Support for alcohol producers & local distilleries. Ontario’s vineyards, cideries, and small distillers have been greatly impacted by the pandemic as tourism stalled this year.

Support for communities and municipalities:

• Broadband investments. The pandemic has put the spotlight on the digital divide for people and businesses, particularly in remote and rural communities. Additional funding to connect all Ontarians, including businesses, to reliable broadband by 2025 is welcome news. 
• Regional Opportunities Tax Credit. Additional resources towards this program will allow rural and remote communities to invest in projects that create local jobs and economic growth.
• Property reassessment for municipalities. Pausing the property tax reassessment gives municipalities and businesses more capacity and time to adjust to the economic uncertainty and challenges caused by the pandemic.
• Expansion of the Ontario Together Fund. The Ontario Together Fund has successfully leveraged Ontario’s business community to address pandemic-related challenges and support relief efforts.
• Access to vaccination appointments. The Ontario Chamber Network welcomes support to help seniors and people with disabilities get to their vaccination appointments. The faster the population is inoculated, the sooner we can focus on recovery.
• Strategic Priorities and Infrastructure Fund. Renovations to local buildings and sports facilities will also be integral to local economic growth and recovery initiatives.

Read the Ontario Chamber of Commerce full pre-Budget submission here.

I am a small business owner based in Cambridge, Ontario.  Along with my partners, we operate two manufacturing operations employing a total of about 25 people.

I am proud of all of the response of our political leaders to this crisis on all levels – local, provincial and federal.  They have taken a sober and analytical approach to the immediate needs of the citizens of this country.

Their willingness to commit funds, resources and support to our front line workers, small businesses and all in need will get Canada through this ordeal.

As a business owner, my top priority is always looking ahead to determine how I can not only succeed; but avoid unexpected disruption to my team; and minimize our potential for risk of any kind.

This is where I think the business community needs more support from our leaders.

The question of when we should re-open for business is open for debate.  The leaders in Canada, USA and abroad have differing opinions on this matter. 

There is only one question on my mind – what is required for me to do business in a way that will be safe for my team, clients and supply chain?  This is the question that must be answered prior to our return to regular business.

There is no doubt in my mind that the scientists of the world will determine when it should happen; using the tools and expertise available to them.  It brings me comfort to know that our Canadian politicians are being guided by science in their decision making process on these issues.  

However, there is another component to this decision that I think we are neglecting.  Whenever we return to work, it will be to a new business landscape.  There are new risks, new considerations and a higher expectation from the community for business owners to provide a safe working environment.  As a community, we need to determine what will be required to have in place prior to a return to “regular” business. Until we have a vaccine / “herd immunity”, do workers require masks to be safe?  Do we need to require hand sanitizer at entry points to work areas and require all team members to use?  In Taiwan, there are some common practise expectations for citizens that have allowed them to maintain a very low infection level of COVID without restriction on children being at school, or businesses operating normally.  What can we learn from their example that can help us to prepare to resume our work?

If Toyota, Honda, or even my business or a local hair salon re-opened in two or four weeks without making any adaptations to how the risk of COVID transmission is controlled; how will we have made progress against this disease?

The saying “time heals all wounds” has never resonated with me.  Time doesn’t heal all wounds; but time does offer us the opportunity to prepare for what is coming at  us next.  We know that the economy will have to resume prior to COVID being completely eradicated.  The question is – what will we as a community do to mitigate the risk of another peak of infection as we make that return to the new normal?

There is no question that children will have to return to school; I am less concerned about when that happens than I am about what the plan is to keep them safe and healthy once they are there.  We have the example of how Taiwan has made this work; kids wearing masks and having plastic cubicle style dividers between desks during meals.  Will we use this time to learn from their example and adapt our own action plan for what is required to be in place prior to resuming their in class education?  My hope is that we do. 

The Cambridge Chamber of Commerce is starting to gather experts and business owners to start this discussion.  I am proud to be a part of this discussion; I look forward to learning and planning together with others to determine how we as a business community can plan to get back to business.  This is new territory for everyone – consumers, business owners, employees, politicians, government, youth and seniors.  If we can agree on the supports that are needed to re-open in a safe manner, the time spent until that happens can be spent planning and making the required changes to how we do business to accommodate the new reality we live in.  If as a community we neglect this opportunity to plan and adapt, we are destined to repeat this cycle of the pandemic again in the not so distant future.

This is work that our Chambers of Commerce, professional associations, industry associations, regulatory bodies or governing standard registrars, perhaps the labour unions and school boards are well poised to do.  They have connections to business in their sector, a communication channel with a broad range of companies in a vertical market, and the support of their members.  If we all pressure these organizations in our own industries to get to work on our behalf, we can start planning for the future.

It’s time to change the question from “when can we re-open” to “what is required for a safe and healthy re-opening in my workplace to get through this crisis”?

Let’s get to work.

Kristen Danson

Managing Partner

MitoGraphics Inc. / Swift Components Corp

519 240-4205 Direct

Leading tax practitioners say that business owners with income as low as $50K will be affected

Ottawa, September 27, 2017 – The Coalition for Small Business Tax Fairness, a unified voice of more than 70 organizations representing hundreds of thousands of business owners across the country, has written a new letter to Finance Minister Bill Morneau with professional analysis confirming that Ottawa’s tax proposals will affect middle-class business owners, resulting in higher tax rates than other Canadians with similar income levels.  

“We are alarmed by the huge gap between the government’s statements about the impact of their proposals and the detailed analysis by Canada’s tax professionals,” said Dan Kelly, President of the Canadian Federation of Independent Business (CFIB) and member of the Coalition. “Tax practitioners are united in the view that these changes have the potential to affect all small business taxpayers, no matter their income.”

"It is the farmers, mom and pop shops, and entrepreneurs, who invested everything into their businesses, that will be most affected by these changes, instead of targeting the real problem. The government needs to go back to the drawing board, hold a real consultation and listen to what tax professionals, provincial governments and the business owners who fuel the growth of our communities are saying," added Perrin Beatty, President and CEO of the Canadian Chamber of Commerce.

The government has claimed that these proposals would not affect business owners with incomes under $150,000. Tax practitioners disagree.

One of the new rules introduced by the government would restrict small business owners from sharing income with family members. Tax practitioners say that this can affect business owners with incomes as modest as $50,000. Also, as two-thirds of Canadian incorporated businesses are majority owned by men, the restrictions on sharing income with a spouse are likely to remove a disproportionately higher number of women from benefiting from their family’s business.

The government is also proposing changes that would discourage small business owners from holding certain types of investments in the incorporated company. According to tax practitioners, business owners retain business earnings in the corporation to safeguard against economic downturns, secure bank financing and invest in other start-up companies.

Tax practitioners have confirmed that the proposed tax changes would result in higher combined corporate and personal taxes for business owners across the board and in many cases, small business owners would incur tax rates far greater than what an employee with a similar level of income would pay. 

The Coalition, which has doubled in size since August 31, is asking the federal government to review carefully the analyses of tax professionals across the country, take these proposals off of the table, and launch meaningful consultations with the business community to address any shortcomings in tax policy.

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.  

For media enquiries or interviews, please contact:

Andy Radia
Media Relations Specialist
647-464-2814

What some are saying:

“The agriculture equipment manufacturing sector represents 12,000 Canadians and their families predominantly in rural areas; as entrepreneurs who have put their lives on the line to invest in and grow their family business, the sector consistently exports more than $1.8 billion of farm equipment to over 150 countries. The scope and complexity of the proposed tax changes puts a lot of this at stake, and we must fight to ensure that fairness prevails for our members.” — Leah Olson, President, Agricultural Manufacturers of Canada

“Franchisees are the backbone of the communities they serve, by employing people of all backgrounds, supporting local initiatives, and helping grow the economy. As business owners, they assume significant risk, but have been able to achieve success through hard work and support from family members. Simply stated, CFA believes the changes being proposed by the Minister will hurt Canadian franchisees.” — Ryan J. Eickmeier, Vice President, Government Relations & Public Policy, Canadian Franchise Association

“The residential construction and renovation industry has always largely consisted of family-run businesses that help build the communities they operate and live in, many over several generations. These are hard-working Canadians trying to earn a middle-class living, hire local workers, and create a future for their families. The government’s proposed tax changes threaten the very existence of these businesses, posing a threat to small local companies in every community and the jobs they create.” —Kevin Lee, CEO, Canadian Home Builders’ Association

“We look forward to working with the Minister of Finance to ensure that any changes help secure the future of agriculture and not hinder it.” — Mark Wales, Chair of the Canadian Horticultural Council’s Business Risk Management Committee

“We are fully supportive of the government’s pledge to advance evidence-based policy-making. Our members are concerned that the government’s proposed changes to small business taxes are not sufficiently informed by the level of research, analysis and consultation required to ensure a full appreciation of the impacts this will have on Canadians - not just entrepreneurs and small business owners but also on the overall health of the Canadian economy and competitiveness in the short and long term.” — Leigh Harris, Vice Chair (Interim) National Board of Directors, CMC-Canada

“Canadian business families are scared, confused, and demoralized. Years of planning for business succession will potentially go up in smoke! And we’re being called tax cheats along the way. Canada can do better, we must do better—our economy depends on it.”— Allen S. Taylor, Chair, Family Enterprise Xchange

“These egregious proposed tax changes would negatively impact the family farm in ways that are both profound and complex. The federal government needs to reverse course on their ill-advised tax hike attack on our middle-class family farms. — Levi Wood, President of the Western Canadian Wheat Growers Association, grain farmer

If your business is incorporated, you could be facing a larger tax bill and big compliance costs from the government’s new proposals to change the way corporations are taxed. Here are three things you need to know about the tax changes proposed by the federal government:

• Do you employ family members? The government wants to scrutinize their compensation to apply a much higher tax rate on income they consider “unreasonable.”

• Do you invest the profits from your business? The federal government is proposing to tax that income at an effective rate of 70%. 

• Do you want to pass your business on to your children? Tough new rules make it difficult for younger kids to get the capital gains exemption. They could be double-taxed.

Small and medium-sized businesses (SMEs) are the engine of the Canadian economy – estimates range from 85 to 90% of all businesses in Canada are SMEs.

The chamber network across Canada is using its collective voice on this issue; your voice as a business person needs to be heard as part of this initiative. Send a message to your MP today. Government needs to know that this tax reform will harm businesses of all sizes.

Don’t know where to send the message to your Member of Parliament? Look up their address using your postal code.

Thirty-five business groups, including the Canadian Chamber—on behalf of the hundreds of thousands of members they represent—have presented a letter to Finance Minister Bill Morneau asking the government to take these proposals off the table and instead meet with the business community to address any shortcomings in tax policy affecting private corporations.

First you have the Provincial Government with Bill 148 and then you add what our Federal Government wants to do regarding taxes and in reality it just adds up to a nightmare for small businesses. Greg explains in this weeks' 'The City'.

Finance Canada Is Considering Major Changes to How Corporations Are Taxed

The Department of Finance Canada is considering major changes to how corporations are taxed. The proposed rules could have a significant impact on many Canadian businesses: potentially raising taxes, increasing the administrative burden on SMEs and heightening the impact on family-run businesses.

On July 18, Finance Canada launched a consultation on how “tax-planning strategies involving corporations are being used to gain unfair tax advantages.” The document contains proposed policies to close these “loopholes.” There are four key changes that will affect business:

• Sprinkling income using private corporations: The government wants to tighten rules to prevent a business owner from unfairly transferring income to family members who are subject to lower personal tax rates. In certain circumstances, owners would have to demonstrate that wages and dividend payments are “reasonable.”
• Multiplying the Capital Gains Exemption: When an individual sells a small business, the first $850,000 of capital gain is exempt from taxes. The government wants to prevent tax planning structures that enable multiple family members to use their exemptions.
• Reducing the tax deferral advantage on portfolio investment inside a corporation: Currently, an owner can accumulate portfolio earnings inside a corporation and pay corporate income tax rates (which are generally much lower than personal rates). The owner defers paying personal income or dividend taxes until the money is taken out of the business. The government is considering alternatives that would reduce this tax advantage.
• Converting a private corporation’s regular income into capital gains: Income is normally paid out of a private corporation in the form of salary or dividends that are taxed at the owner’s personal income tax rate. In contrast, when a business is sold, it is taxed as a capital gain, where only one-half of capital gains are included in income, resulting in a significantly lower tax rate on income that is converted from dividends to capital gains. The government wants to tighten the rules to prevent certain tax planning structures, but it is open to more favourable treatment for genuine family business transfers.

The Canadian Chamber of Commerce and its Taxation Committee are currently studying how the proposed changes will affect members in different industries, in family businesses and those with different ownership structures. They will be submitting recommendations to Finance Canada.

Should you wish to participate or provide input, please email the Cambridge Chamber at [email protected].  In particular, we are looking for detailed examples and cases of how a specific small business will be affected by the changes. We feel concrete examples will be most effective in making our case for easing the changes. We would ask that you send them to us by August 18.

Click here to view the consultation documents released by Finance Canada.

The increasing frequency of cyber attacks is costing Canada billions of dollars a year and hindering our ability to compete in the global economy, says a new report from the Canadian Chamber of Commerce. Cyber Security in Canada: Practical Solutions to a Growing Problem finds that cybercrime is an increasing concern for businesses and proposes cooperation between government and the business community to improve security.

“A study from the Center for Strategic and International Studies found that Canadian businesses are losing over $3 billion a year to cybercrime,” said the Hon. Perrin Beatty, President and CEO of the Canadian Chamber of Commerce. “It’s not technology-savvy security experts committing these attacks. Anyone with a computer and an internet connection can now disrupt services or hold data for ransom. What costs a criminal $100 may end up costing a business millions in lost money, time and reputation.”

Small businesses are particularly susceptible to cyber attacks because they often lack the financial resources and technical expertise needed to protect themselves. “SMEs comprise 98% of the Canadian economy. Nearly half have been the victim of a cyber attack,” said Mr. Beatty. “Their focus is on recovery instead of prevention. Unfortunately, recovery is often not possible. The average cost of a data breach in Canada is $6 million. Most small businesses would not be able to survive losing a tiny percentage of that figure.”

The report’s release comes after the federal government’s 2017 budget included $1.37 million for the fiscal year to continue programs already in place for risk assessment of critical infrastructure but made no direct mention of cyber security. “Government can’t do everything but they need to play a leadership role in securing Canada’s digital landscape for everyone,” said Mr. Beatty. “We need a public-private approach to address this urgent challenge.”

The report, released at the Lockheed Martin Canada IMPACT Centre in Ottawa, lays out a path for closer collaboration between government and business on cyber security, including providing incentives for security innovations and developing programs to increase workforce digital literacy. “By creating a stronger, more resilient cyber security framework we can better protect both our businesses and our citizens,” concluded Mr. Beatty.

The Canadian Chamber of Commerce is the vital connection between business and the federal government. It helps shape public policy and decision-making to the benefit of businesses, communities and families across Canada with a network of over 450 chambers of commerce and boards of trade, representing 200,000 businesses of all sizes in all sectors of the economy and in all regions. Follow us on Twitter @CdnChamberofCom.

Guillaum W. Dubreuil
Director, Public Affairs and Media Relations
The Canadian Chamber of Commerce