Carpe diem

In the three days leading up to Monday’s deadline, lots happened. The second of October is worth remembering. That’s the date the government will stop listening to how people feel about crushing new taxes on small businesses, and prepare legislation. Soon we’ll see if the brief, 75-day, consultation period was a sham, or meaningful.

As you know on Friday the finance minister was hammered at his carefully-staged Town Hall event in Oakville. It did not go the way Finance officials had planned. The minister surely was furious. On the weekend 260 significant business leaders delivered a letter of protest to Bill, saying his changes could seriously hurt the economy. Meantime Ottawa’s proposals have been pilloried by labour unions, farming organizations, manufacturers, exporters, entrepreneurs, medical associations, vets and the Royal Canadian Association of Bloggers (heh, heh).

Those who misunderstand the changes may agree with them. Others who swallowed the disingenuous messaging that landscapers, convenience store operators, welding shop owners, anaesthesiologists and lawyers are tax cheats and loopholers, are supporters of the far-reaching proposals. In the wake of this exercise there is far less harmony and mutual respect than at the beginning. The techniques used by the T2 gang have been geniously Trumpian, pitting one group (employees) against another (self-employed). Not much here to be proud of.

Well, let’s move on. If you fancy being an entrepreneur, starting out on your own – being self-employed, accepting risk in return for more freedom, independence, choice and potential return – there are alternatives. One is establishing a sole proprietorship.

Simply stated, this is you deciding to start a business under your own name and without a legal entity. In most provinces you can go online, register a name (it might cost you a few bucks), get a master business license, and be done. The income generated from the enterprise will be added to whatever other cash you bring in, and virtually every expense a corporation could claim is also deductible by a sole proprietor. That goes right down to a portion of your mortgage interest, wardrobe and property tax. You file income taxes on the usual form (but with a simple addendum) and this can avoid the two or three grand an accountant will charge for an incorporation filing. Some people worry they have more personal liability operating as a SP rather than an Inc., but this is a false concern. If somebody wants to sue you, after all, a company you own all the shares of will not protect. Ask a lawyer.

So what are the advantages?

Well, when Bill & Justin get their way, money earned inside a corporation (retained earnings) will be taxed at the rate of 50.5% and then taxed again when it is taken out by shareholders/owners as dividends. The total tax grabbed by Ottawa will end up being between 70% and 73%. Now do you understand why millions of people are outraged?

In contrast, the maximum marginal tax rate for an individual is 53%, and that clicks in around the $250,000 mark. Besides, if you take it all as income, you get to make a $25,000 RRSP contribution, which reduces your tax load by about $12,500.

Then there’s the spousal effect. Once the T2 hammer comes down, a husband and wife who together funded, created and built a business will not be able to efficiently share the proceeds of its success in the form of income (salary or dividends) unless they’re both employees and can pass a CRA test to prove it. Ironically, if the two were not married, they could each receive tax-efficient dividends in recognition of their financial contribution. Instead, all money received will be taxed at the highest personal rate. Since over 80% of the people negatively affected by this ban on ‘income-sprinkling’ are women, it makes a lie of the Trudeau government being “feminist.” Quite the opposite.

In any case, with a sole proprietorship, no sweat. If your husband or wife sacrifices to support the business, they can be compensated by you from your after-tax (after deductions) income, whether they toil as employees or not. You can also establish a partnership with your spouse – cheap, quick and online. Partners are then taxed on their business earnings in proportion to their share of the enterprise. Any losses from the enterprise can be used to reduce taxes owing from other sources of income (like your day job as a CRA auditor). Plus, wages paid to a spouse are deductible from the income of the business. There’s no test to ensure a marketable task is being performed – no bureaucrat crawling over your sole proprietorship. Nobody from Ottawa will denigrate and embarrass your mate.

Naturally this won’t help someone who incorporated, played by the rules for the past 15 years and built up their retirement savings in the business because they do not have a pension. They now face a 70% tax, plus the scorn of myopic citizens who never took a similar risk.

I hear the changes might not raise enough to pay for the bureaucracy required to enact them. Maybe that’s the point. When we all work for government, nobody’s a rebel.

213 comments ↓

#1 Lost...but not leased on 10.01.17 at 3:06 pm

U snooze U lose

#2 Russ on 10.01.17 at 3:07 pm

Garth, et al.

A number of doomers have warned about a “wealth grab”. Where the libbers will go after RRSP assets, TFSAs, etc. and even taxing home values.

Is a maneuver such as above even remotely possible?

Is it within their taxing jurisdiction to go after property or is that only available to provincial governments?

#3 For those about to flop... on 10.01.17 at 3:10 pm

Meantime Ottawa’s proposals have been pilloried by labour unions, farming organizations, manufacturers, exporters, entrepreneurs, medical associations, vets and the Royal Canadian Association of Bloggers (heh, heh).-Garth.

///////////////////////////

I think it makes more sense to call it the Canadian Royal Association of Bloggers or C.R.A.B.

And if you become the Superintendent then you could have a business card that looks like this.

Garth Turner CRABS.

Dorothy will be thrilled…

M43BC

#4 Pete on 10.01.17 at 3:10 pm

After 2008 market crash the criminals who caused got off 100%. Companies with the blessing of government went after the unions and smashed them to the ground. Everyone cheered. Then they went after all the other workers reducing pay and benefits like they did to union workers. Everyone else cheered. Now they are going after the greedy small biz owners. Guess what no one cares. The masses are cheering and no one cares of your plight. Its pay back time and no one will back you. Now so funny when they come for you.

#5 GenZ on 10.01.17 at 3:14 pm

First!

#6 Pete on 10.01.17 at 3:14 pm

The unions were everyones first line of defence. You all cheered and now you all will suffer. small biz it seems that maybe you are also greedy and lazy like union workers and so they come for you.

#7 Canadian Crab on 10.01.17 at 3:15 pm

Does anyone know if current retained earnings in a pc will be exempt from new taxes. Will the new tax only apply to retained earnings accumulated after the date the legislation goes into effect.

M50AB

#8 crowdedelevatorfartz on 10.01.17 at 3:16 pm

“The total tax grabbed by Ottawa will end up being between 70% and 73%. Now do you understand why millions of people are outraged?”

*******

The death of Entrepreneurship in this country.
OR
The downfall of the Trudeau Liberals Part Deux.

#9 Lost...but not leased on 10.01.17 at 3:17 pm

Question:

Why does T2 and Moroneau leave the sole proprietorship “loopholes” open ?

#10 Victor V on 10.01.17 at 3:22 pm

Trudeau must ‘fully understand’ effect of tax changes: Stephen McNeil

https://globalnews.ca/news/3776145/trudeau-must-fully-understand-affect-of-tax-changes-on-various-regions-mcneil/

#11 Stan Brooks on 10.01.17 at 3:25 pm

This is not the point.

We should not be allowing elitist truly wealthy bureaucrats to make rush decisions that impact our society in such negative way.

– there is clear conflict of interests with Bill’s company and he should immediately resign his position.
– the decisions are rushed and forceful
– the small Business owners were directly offended by the minister and his trolls as tax cheats.
– the proposals were announced in deeply divisive manner, with the very intent to divide.
– the tax proposals can not be implemented as proposed and will give CRA huge leverage – you will be at the mercy of you auditor and his arbitrary opinion.
It seems the end goal is to instill fear in the normal working people.

This thingy is far from over and a done deal and will cost the politicos – T2 and the will guy dearly.

Just watch the town hall in Oakville on video. Pathetic, timing peoples question in intimidating manner. Bill can’t listen to critiques for even 1 hour as he is busy?

These people should be forced to travel with public transit and experience the taxpayers response and opinions first hand.

#12 Howard on 10.01.17 at 3:32 pm

Terrorist attack in Edmonton, and all PM Trust Fund can think to say in response is that “diversity is our strength” garbage.

#13 Bruce Allen on 10.01.17 at 3:36 pm

It’s why our entire economic and political system –on both sides of the border — needs to implode and be reset. For crying out loud, nobody seems to “get it” that it’s time to flush the whole damn system down the sewer and expose the entire facade for what it is and what it has been: A FACADE. The only “winners” here, folks, were the people who caused all the problems in the first place–and were rewarded the most. Why does it seem the older I get, the dumber people seem to me?

#14 Stan Brooks on 10.01.17 at 3:40 pm

#2 Russ on 10.01.17 at 3:07 pm
Garth, et al.

A number of doomers have warned about a “wealth grab”. Where the libbers will go after RRSP assets, TFSAs, etc. and even taxing home values.

Is a maneuver such as above even remotely possible?

Is it within their taxing jurisdiction to go after property or is that only available to provincial governments?

———————————–

Absolutely, they will steal that.

They consider your money theirs.

I wonder who would be stupid enough to believe these guys, lie after lie after lie.

Do not trust them that they won’t tax TFSAs (identifying it as a tax loophole) or over tax the RRSP or directly nationalize it.

I can clearly see 10 years from now another rich wealthy bureaucrat announcing immediate decision (no consultation period allowed) that taxes TFSAs one time at 65 % and then adds extra tax on RRSP withdrawals pending nationalization in exchange of ‘guaranteed’ by the government pension which will be quickly reduced to crumbs by inflation.

The arguments for that will be no different than the current assault on small Businesses.

#15 paracho on 10.01.17 at 3:45 pm

Another nail in the coffin for the GTA real estate market

#16 Dan.t on 10.01.17 at 3:53 pm

Now you are getting it. Don’t rock the boat, when gov says spend and spend on 1 asset, then gives massive incentives to buy houses, condos, and anything RE related just Hop on board… shadow flipping, consignment flips, undeclared rental income, you are all good!

Small business- you are the true enemy of the state! Gut em, make em villains and frauds… but realturds… all fraud forgiven. 2k fine for outright fraud, deceptive practices and so on, why?

It goes with gov plan. Ask NDP in BC. They won’t go near RE with 10 foot poll. Weird how that happened.

It’s Canada, learn to take it and like it. Sad. You overestimate the public and critical thinking. Everyone just watches global tv and waits to be told how to think.

Respect to all business owners- zero guaranteed reward, insane hard to make it, employ others but screw them- criminals. Sad but again, gov doesn’t care what you think.

#17 M on 10.01.17 at 3:53 pm

“When we all work for government, nobody’s a rebel.”

…you got it baby !

#18 Dan.t on 10.01.17 at 4:01 pm

One more comment- how much money could be made going after RE tax cheats. Like undeclared rental income, and 2-3 other illegal and tax fraudulent activities.

A lot more that drilling the mom and pop shop, but that is full taboo. Canada is buying and selling houses to each other. Period.

#19 Zed on 10.01.17 at 4:06 pm

Why are we not talking about real things that will help the finances of the government and the people?

– Increase the GST back to 7% and at the same time lower CPP and UIC contributions. That would help workers and companies to compete with the USA,
– move the OAS elegibility to age 67 like the Harper gang proposed, more workers in the system and less strain of the pension system,
– let Porter fly in Toronto Island with C-series jets and help Bombardier that way,
– build the Energy East pipeline to diversify away from “our friends” down south. Canada needs oil so we might as well use ours,
– review benefits of the Public Service, like pension cost sharing and sick leave to be more aligned with the public that it serves,
– stop letting people use their RRSP to fund a house. RRSP are for retirement!
– increase TSFA so people can save for whatever they want: early retirement, sabbatical, house purchase, back to school…

#20 Stan Brooks on 10.01.17 at 4:14 pm

#2 Russ on 10.01.17 at 3:07 pm

Here is a study by the World Economic Forum that estimates pension shortfalls for Canada to be 3 trillion dollars by 2015 and expect it to be 13 trillion by 2050.

http://www3.weforum.org/docs/WEF_White_Paper_We_Will_Live_to_100.pdf

see page 22.

So if you think your RRSP or TFSA is safe, think twice.

#21 X on 10.01.17 at 4:21 pm

re #11 Stan Brooks: “– there is clear conflict of interests with Bill’s company and he should immediately resign his position.
– the decisions are rushed”

I don’t disagree with ether comment. Not sure about a resignation, but definitely a conflict of interest, and definitely rushed.

#22 Leslie Wretchie Esq on 10.01.17 at 4:25 pm

Yes, why leave the Sole Proprietor Loophole open. Seems strange. A local small business owner told me recently that with the new tax plan a lot of local small business could be driven underground. Cash transactions only. Maybe that is why they want to heavilly reduce paper cash as well. Imagine the protests if this legislation goes through..

#23 Joe Schmoe on 10.01.17 at 4:26 pm

Well with Singh the leader of the NDP, JT won’t win a second election.

Question is will the next government rescind taxes?

#24 Fake News Again on 10.01.17 at 4:28 pm

“And all the Govt Workers rejoice because the now over taxed plebs will keep their Gold Plated Pensions alive for a little while longer……….thanks to Bilderberg Bill Morneau”

#25 Stan Brooks on 10.01.17 at 4:32 pm

The message to wild Bill and T2 by small Business owners should be blunt:

We will not allow you to treat us as inferior when compared to public servants and big public companies and employees.
If you insist on moving ahead with your ill advised and thought proposals and refuse further discussions we could simply refuse providing services at our discretion to any public sector workers.

Go to US for your health treatments and ask the wild Bill to make these expenses deductible (lmfao).

Bill and T2 must resign.

#26 Pete from St. Cesaire on 10.01.17 at 4:33 pm

Naturally this won’t help someone who incorporated, played by the rules for the past 15 years and built up their retirement savings in the business because they do not have a pension. They now face a 70% tax, plus the scorn of myopic citizens who never took a similar risk.
————————————————————
“myopic” or “clairvoyant”? Many people opt out of the whole rat-race thing because they can see ‘the writing on the wall’.

NEXT: wages paid to a spouse are deductible from the income of the business. There’s no test to ensure a marketable task is being performed – no bureaucrat crawling over your sole proprietorship. Nobody from Ottawa will denigrate and embarrass your mate.
—————————————————————
Sure, at the moment. Clairvoyant people can see the writing on the wall here too. They’ll be coming after this type of business too. (Probably starting the day after they win the next election.) Just like they will come after the RRSP’s, the TFSA’s, etc until everything is gone.

#27 Doghouse Dweller on 10.01.17 at 4:39 pm

Dog alert !!!!!!!

If you have had communication with Equifax or Trans-union because of the data hack keep an eye on your card statements.
Trans-union charged my credit card $19.95 just for visiting their con-artist website. No invoice, no warning, they just sign you up automatically for a hosing. Legal and approved by the Ministry of Fairness.

#28 Stan Brooks on 10.01.17 at 4:41 pm

Bill was really funny to watch when directly asked questions about bloated public pensions.

He basically said: let us screw you and then we can potentially think about fairness for fat government employee pensions.

Minister of fairness, soon to be of Minister of propaganda and truth.

We have seen this movie.

#29 Howard on 10.01.17 at 4:41 pm

#23 Joe Schmoe on 10.01.17 at 4:26 pm
Well with Singh the leader of the NDP, JT won’t win a second election.

Question is will the next government rescind taxes?

———————————-

I disagree. With both the NDP and the Tories led by non-Quebecois, T2 will likely sweep Quebec in 2019. He will lose seats elsewhere but will win enough in Quebec to save his majority.

Quebeckers will vote for their own each and every time.

#30 Penny Henny on 10.01.17 at 4:42 pm

#7 Canadian Crab on 10.01.17 at 3:15 pm
Does anyone know if current retained earnings in a pc will be exempt from new taxes. Will the new tax only apply to retained earnings accumulated after the date the legislation goes into effect.

M50AB

////////////////

it has been mentioned that current retained earnings will be exempt

#31 Gramps on 10.01.17 at 4:42 pm

Question is; if that was a Kia, would it still be asshole parking?

#32 John on 10.01.17 at 4:42 pm

I think Greece blew up when almost 50% of the people worked for the government. If you include people who work in healthcare, education, and all the other government paid industries, + government itself, we are probably getting up there.

Just before Greece blew up, everything was awesome. Everyone having a great time drinking espressos on patios, retired with big fat government pensions…. And then, KABOOM! Everything looks OK in Canada right now. (Morneau said strongest economy in a decade) But strength I the economy is in all the wrong places (Government spending and real estate). JMO, but we are in the boom, just before the KABOOM…. As it was in the USA in 2007.

One thing that nobody seems to be mentioning is that many small business avoid paying tax all together. VISA machines seem to be down a lot in some restaurants. Contractors who do work in housing seem to love cash. You see people buying goods that cost hundreds of dollars in stores, and paying with CASH (Guess these people just don’t like collecting rewards with credit cards. Yeah, that must be the reason). This is what happens when taxes are just too high. People get angry, and avoid paying taxes at all cost. In some cases, by not reporting income (As what happend in Greece). And of course, you also have people not starting new business, business shutting down/not growing. And people just leaving the country…. those that are ambitious, wealthy, and educated…. We won’t want those people here in this country now would we…. I mean, they aren’t T2 friendly so…. as ta la vista…. baby….

#33 Pete from St. Cesaire on 10.01.17 at 4:43 pm

#2 RUSS: A number of doomers have warned about a “wealth grab”. Where the libbers will go after RRSP assets, TFSAs, etc. and even taxing home values.
Is a maneuver such as above even remotely possible?
Is it within their taxing jurisdiction to go after property or is that only available to provincial governments?
————————————————————–
Is it within their jurisdiction? You obviously know nothing of the governmental system. They can change and enact anything they want to at any time. They could pass a law so heinous that it would make Nazi’s cringe but as long as they do it through proper parliamentary procedure they say that it is the law and you’d be a criminal to not comply.
The world economy is finished and the wealth grab is well under way. What do you think this new legislation is? It’s a part of the early stages of a total wealth grab. You don’t really think that the system would ever get to a point where it just says “to hell with it, we’re broke” and just fold up and go away leaving a power vacuum where another group might just take the reins of power and prosecute those who drove the society into such distress do you?

#34 Doug t on 10.01.17 at 4:55 pm

Arrogant asshats – nothing like getting elected because of your name –

RATM

#35 Giver - AB on 10.01.17 at 4:57 pm

>>Well, when Bill & Justin get their way, money earned inside a corporation (retained earnings) will be taxed at the rate of 50.5% and then taxed again when it is taken out by shareholders/owners as dividends. The total tax grabbed by Ottawa will end up being between 70% and 73%.

At best this is written poorly. At worst it is deliberately misleading. “Income earned inside a corporation (retained earnings)” makes it sound like company profits or retained earnings are going to be taxed at 73% and that is not at all what is being proposed.

As one of the 2 million entrepreneurs targetted by these proposals, I’d like to help clear the air a little on the idea of retaining earnings in a business. The liberals aren’t proposing to tax retained earnings. They are proposing to tax INCOME on retained earnings. If I want to save a 100k in my business for a rainy day then I’ll pay the small business tax rate (12% in BC) on my company profits to retain the earnings and hold them in my business as assets. If I decide to invest that 100K in my favorite ETF until I need it, and it generates income (say 6%), the tax the liberals are proposing is on the 6% income, not the 100k principal.

This in no way prevents me from holding capital in my business for a rainy day, it just makes holding capital less productive.

Hardly seems like the sky is falling to me.

#36 waiting on the westcoast on 10.01.17 at 4:59 pm

My accountants and lawyers are already putting on presentations for all their clients on how we will restructure to optimize given the intent of the libs.

Maybe it’s the lawyers and accountants who have financed the Liberals to keep their consulting businesses lucrative for the next few years… ;-)

#37 Hawk on 10.01.17 at 5:19 pm

What is strange even by the standards of the communists is how such a tax on retained earnings can be retro-actively implemented. Tax changes are implemented going forwards.

#38 Darryl on 10.01.17 at 5:23 pm

Simple
If my wife and I are both shareholders . Shut down all activity in the company until JT gets turfed and the Liebrals give up power (I would assume that the Conservatives will reverse it) .

Live of the retained earnings through dividends . If both of us are doing next to nothing then we are both doing equal work . That would entitle us to equal dividend payments

#39 Robert White on 10.01.17 at 5:24 pm

I laud the Trudeau Liberal management with respect to taxing Corporatists who are the only real cohort that have made Disposable Income Gains over the last three decades. Everyone else has made no real gains in Disposable Income since the early 1970s.

Eat the rich with relish.

Grumpy Marxists rule!

RW

#40 For those about to flop... on 10.01.17 at 5:31 pm

Pink Pumpkins being carved in Burnaby.

Quite the heavy pumpkin I just pulled out of a Burnaby garden.

Bought for 3.41 in April 2016 ,this case is doing what the majority of my cases do ,start a little higher and then slither down to the rough break even area after expenses and walk away with the minimum of dirt on their hands.

There is a reason they only took 2% off even though it is still vastly overpriced.

The assessment doesn’t even break through the three mark at 2.99 but one thing they have in their favour is a relatively new product to sell.

Only need to find one worm in the garden…

M43BC

7143 Paulus Court, Burnaby

May 10:$3,790,000
Sep 29: $3,698,000
Change: – 92000.00 -2%

https://www.zolo.ca/index.php?sarea=7143%20Paulus%20Court,%20Burnaby&filter=1

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAzVldKRg==

#41 Lost...but not leased on 10.01.17 at 5:39 pm

Beware….

Our federal party leaders(ie PC, NDP, LIBs) are comprised of parties ALL born in the 1970s…

with T2 as the relative elder statesman by default.

#42 Sarcastic Man on 10.01.17 at 5:43 pm

DELETED

#43 Spock on 10.01.17 at 5:49 pm

No way Canadian Screwed Millenial owns that car though it may be rented and CSM was possibly driving and parking it. ;-)

#44 palpha on 10.01.17 at 5:55 pm

The new tax on corporations will earn the government between $250 million and a billion dollars. Administering these changes will probably cost as much but will create some public service (unionized ) jobs. The federal deficit for 2016/2017 is projected to be 28.5 billion dollars.

The rich have now been taxed. Who is going to pay for the other 27.5 billion dollars? The middle class ?

Mr Trudeau does not have a tax problem. He has a spending problem. Every public sector person has essential won the lottery. They have indexed pensions and benefits that the rest of us can only dream of. Imagine having 12 massages per year paid for at the taxpayer expense in addition to your dental, medication and other extended health care benefits.

Public sector pensions are worth a fortune. After 25 years of service ( working 38 hours per week) most would get at least a pension worth $40,000. Get a quote from any life insurance company. An annuity at age 62 of $40,000 py would cost you $1,000,000. Of course this annuity would not be indexed to inflation and does not include any benefits. A 38 hour work week in my profession would also be considered a half time job.

My advice to screwed millennial is to get a government job and to read George Orwell’s book. Some pigs are more equal than others. Of course the new taxes won’t affect the truly rich like Trudeau who vacations on private islands or Morneau who registered his Ontario company in Alberta to pay less taxes.

#45 Spock on 10.01.17 at 5:55 pm

#19 Zed on 10.01.17 at 4:06 pm

What you have proposed makes too much sense and does not pass the test of fairness (whatever that is that these jokers in power think it is).

Other than that good points.

#19 Zed on 10.01.17 at 4:06 pm
Why are we not talking about real things that will help the finances of the government and the people?

– Increase the GST back to 7% and at the same time lower CPP and UIC contributions. That would help workers and companies to compete with the USA,
– move the OAS elegibility to age 67 like the Harper gang proposed, more workers in the system and less strain of the pension system,
– let Porter fly in Toronto Island with C-series jets and help Bombardier that way,
– build the Energy East pipeline to diversify away from “our friends” down south. Canada needs oil so we might as well use ours,
– review benefits of the Public Service, like pension cost sharing and sick leave to be more aligned with the public that it serves,
– stop letting people use their RRSP to fund a house. RRSP are for retirement!
– increase TSFA so people can save for whatever they want: early retirement, sabbatical, house purchase, back to school…

#46 crowdedelevatorfartz on 10.01.17 at 5:57 pm

@#40 Flopster

Unbelievable.
A friend lives around the corner from this box.
3.6 million to live in a boring neighborhood with no view… Nothing within walking distance …not even a corner store.
Greater fool doesnt even begin to describe the idiot that buys this place.

#47 crowdedelevatorfartz on 10.01.17 at 5:59 pm

@#41 Lost my lease.

The frightening thing is……you’re right.
Trudeau, the elder statesman.
We’re doomed.

#48 Spock on 10.01.17 at 6:05 pm

#35 Giver – AB on 10.01.17 at 4:57 pm

I think you misunderstood the first line.

Garth clearly says money *earned* inside a corporation (retained earnings) – there could have been the word “ON” before retained earning to make it more clear but there is nothing false about the statement.

Right now interest income is already taxed at 52%. Why would someone pick up the risk of stocks (ETFs) if they are going to be taxed at 50% no matter what.

>>> Hardly seems like the sky is falling to me. <<>Well, when Bill & Justin get their way, money earned inside a corporation (retained earnings) will be taxed at the rate of 50.5% and then taxed again when it is taken out by shareholders/owners as dividends. The total tax grabbed by Ottawa will end up being between 70% and 73%.

At best this is written poorly. At worst it is deliberately misleading. “Income earned inside a corporation (retained earnings)” makes it sound like company profits or retained earnings are going to be taxed at 73% and that is not at all what is being proposed.

As one of the 2 million entrepreneurs targetted by these proposals, I’d like to help clear the air a little on the idea of retaining earnings in a business. The liberals aren’t proposing to tax retained earnings. They are proposing to tax INCOME on retained earnings. If I want to save a 100k in my business for a rainy day then I’ll pay the small business tax rate (12% in BC) on my company profits to retain the earnings and hold them in my business as assets. If I decide to invest that 100K in my favorite ETF until I need it, and it generates income (say 6%), the tax the liberals are proposing is on the 6% income, not the 100k principal.

#49 I'm stupid on 10.01.17 at 6:05 pm

What do you expect from Trudeau? He’s a trust fund baby with every opportunity and all he was intelligent enough to do is become a drama teacher.

#50 Spock on 10.01.17 at 6:07 pm

Garth:

How easy would it be for the Conservatives (assuming they beat the idiot-in-chief) to roll back these draconian rules on small business?

Also the advice for sole proprietorship: Should currently incorporated folks look at moving to that model down the line?

#51 SueMe on 10.01.17 at 6:08 pm

Oh my gosh. I guess it doesn’t matter to Justin because there are more middle class votes to be had?

Next up – inheritance tax no doubt. Am I right?

Why doesnt anyone, ever, suggest that gov salaries be reduced? We can’t afford them anymore!!! In Manitoba it’s scary (to me at least) the sheer number of gov jobs and the salaries they pull down. All without the test of profit to ensure the right path is maintained.

I am personally holding back on some ideas/investments in this country because I’m just not sure where this is all leading.

Sincerely,
A very sad humble Canadian,
John.

#52 Lost...but not leased on 10.01.17 at 6:08 pm

Anybody have comments re… #35 Giver AB

the issue seems to get more confusing…

#53 For those about to flop... on 10.01.17 at 6:09 pm

CONFIRMED PINK DRAW.

This is a case that Adam the realtor helped me show you guys in real time.

It is official now and one off the reasons that I am putting this one up is they only held the property for around 6 months,maybe got spooked and got their money back.

Might have taken a small loss if opportunity costs are involved but lets give them the benefit of the doubt and just call it a draw.

The details…

Paid 1.65 February 2017

Sold 1.75 August 2017

As you can see by my b-grade notes I think the deal was struck back at the end of April so it really was a quick turnaround.

Hopefully for their sake they are sleeping better at night…

M43BC

3471 Rosamond Avenue, Richmond paid 1.65 sold or removed by April 30 Adam sold 1.75
2017 purchase no update

Feb 1:$1,688,000
Apr 25: $1,680,000
Change: – 8000.00 -0%

https://www.zolo.ca/richmond-real-estate/3471-rosamond-avenue

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDA1WFEwOA==

#54 MF on 10.01.17 at 6:11 pm

#38 Darryl on 10.01.17 at 5:23 pm

This is a key post and it is relevant to everyone here. Make sure you try your best to campaign in any way you can to get these morons voted out next election.

MF

#55 A123 on 10.01.17 at 6:12 pm

#23 Joes Schmoe
Well with Singh the leader of the NDP, JT won’t win a second election.
————
I guess we vote for Andrew Scheer?

#56 conan on 10.01.17 at 6:15 pm

Now do you understand why millions of people are outraged? – Garth

Not really, 90 percent of those peeps are not affected. They just think they are based on the silver spooners misinformation spiel.

I just see carefully crafted writing that tells half the truth. Yes, what you say happens, but its the peeps who have “large” retained earnings, that pay. Most of them being inheritors of this wealth. Sigh, you Cons would burn the planet down if it made money for you, oh wait, you do that all ready.

#57 Adam Jenkins on 10.01.17 at 6:15 pm

“a husband and wife who together funded, created and built a business will not be able to efficiently share the proceeds of its success…”

This is just plain horse$hit.

My spouse stays home and supports my career (raises kids, takes care of family life in general) while I work, as an employee, ridiculously long overtime hours trying to get promoted and get ahead, yet, at the end of the year, I can’t sprinkle any income on her.

Stick to your valid points, Shut up about the rest.

Life’s abut choices. You made yours. — Garth

#58 bubu on 10.01.17 at 6:16 pm

I would like to take 50% of my salary every year and leave the other 50% in an account to invest it and pay taxes when I take the money out as dividends (aka lower taxes)…. maybe pay my wife some because she supports me to go to work… this when I don’t have a job I can take money from that account….. let’s ask all incorporated guys to protest for us the employees who pay high taxes… deal?

#59 arfmoocat on 10.01.17 at 6:25 pm

That’s a tad misleading.

Joe Toilet that’s lucky to land a contract here and there like most small Inc.’s won’t be affected.

#60 MF on 10.01.17 at 6:27 pm

#4 Pete on 10.01.17 at 3:10 pm

-You posted this the other day and I read it. Interesting take. Almost poetic.

My take is even if business owners were praising the destruction of unions, we still have to realize how vital they are to our economy. There needs should be lots of incentives to start one. They are what makes the economy function and government should facilitate their success.

That’s why I take issues with this statement:

“I hear the changes might not raise enough to pay for the bureaucracy required to enact them. Maybe that’s the point. When we all work for government, nobody’s a rebel.”

-This private vs public angle is tiresome. One cannot survive without the other, and there are tons of public workers who disapprove of these Liberal policies. If you don’t like the policies enacted by our elected officials, then 1) don’t vote for them 2) run for office yourself 3) campaign on behalf of someone running on a different platform.

The blaming of police officers, teachers, and the like is getting real tiresome on this blog.

MF

#61 For those about to flop... on 10.01.17 at 6:28 pm

CONFIRMED PINK SNOW.

These guys are another example of what the end result of a lot of my cases is at the moment as the tug of war continues, they got more than they paid but it wasn’t enough.

The details…

Paid 1.95 April 2016

Sold 2.01 July 2017

So as you can see they basically split the known expenses but if you factor in the rest and opportunity cost ,you could have an end result of roughly a 100k loss.

The people that flipped it before these guys made the money…

M43BC

3208 Euclid Avenue, Vancouver paid 1.95 ass 1.48 sold or removed by August 2

Jun 16:$1,977,675
Jul 12: $1,798,000
Change: – 179675.00 -9%

https://www.zolo.ca/index.php?sarea=3208%20Euclid%20Avenue,%20Vancouver&filter=1

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAwMzZQNg==

#62 Damifino on 10.01.17 at 6:31 pm

#55 A123

I guess we vote for Andrew Scheer?
———————————

I suppose, but he won’t be able to undo the coming tax carnage. The existing system can be destroyed at the stroke of a pen, but I doubt a system that took years to settle into place could so easily be reinstated.

In the meantime, we’d be well advised to brace for other fresh initiatives. For example, changing (or even eliminating) the capital gains tax exemption and the end of dividend tax credits for Canadian equities.

#63 Outth on 10.01.17 at 6:40 pm

Our first line of defence is free markets, family unity, stable laws, and decentralised wage decisions.

Nobody should be making decisions about the majority of our income, by political power, voting, or any other kind of centralised power. That is how Venezuela and all communism failed.

God has a hand in deciding your income. Communist atheists do not accept that basic premise. Thus they lie to themselves about fairness and equality.

#64 dakkie on 10.01.17 at 6:46 pm

Canada’s War on Small Business

http://investmentwatchblog.com/canadas-war-on-small-business/

#65 Spock on 10.01.17 at 6:51 pm

#52 Lost…but not leased on 10.01.17 at 6:08 pm

Let me try to see if I can simplify:

Right now for capital gains on retained earnings invested is 50% tax free and 52% tax is paid on the remaining 50%. The tax free portion can flow to the shareholder through the CDA (Capital Dividend account).

What these jokers are proposing is that you pay 52% tax on the entire capital gain (no tax free amount) and hence no CDA – and then pay tax again in personal name when you take that money out.

Giver likes to give his money away to the Libs but I do not.

The following link may either be helpful or may confuse you even more.

http://bit.ly/2g25bhV

Why stop at 73% – maybe tax rate is 93%

http://bit.ly/2xT6Zn4

Taxation of passive income in a private corporation

http://bit.ly/2xQreRL

OR

https://globalnews.ca/news/3756214/trudeau-small-business-73-tax-changes/

http://business.financialpost.com/personal-finance/taxes/a-93-per-cent-tax-rate-private-corporation-tax-could-make-it-possible

http://blogs.ubc.ca/kevinmilligan/2017/09/04/taxation-of-passive-income-in-a-private-corporation/

#52 Lost…but not leased on 10.01.17 at 6:08 pm
Anybody have comments re… #35 Giver AB

the issue seems to get more confusing…

#66 Spock on 10.01.17 at 6:55 pm

#58 bubu on 10.01.17 at 6:16 pm

I am on board if you are willing to come to the other side and give up all your health benefits / retirement benefits / sick days / paid holidays / stock purchase plan benefits and any such other benefits. You also have to be liable if your employer has losses.

There will also be no EI and you have to 9.9% as CPP contribution (instead of 4.95%).

And if you are civil servant – no splitting of pension either.

Welcome aboard.

#58 bubu on 10.01.17 at 6:16 pm
I would like to take 50% of my salary every year and leave the other 50% in an account to invest it and pay taxes when I take the money out as dividends (aka lower taxes)…. maybe pay my wife some because she supports me to go to work… this when I don’t have a job I can take money from that account….. let’s ask all incorporated guys to protest for us the employees who pay high taxes… deal?

#67 Asterix1 on 10.01.17 at 7:05 pm

I own a small Incorporated company, can I still terminate the Inc and go the sole-propietorship route?

Will the gov’t block it? I would lose around 1000$ from Inc startup fees when I started. Oh well..

#68 pay your taxes on 10.01.17 at 7:10 pm

I came for the advice, but stayed for the hyperbole.

So all this fuss is about passive income on retained earnings? There would have to be a huge kitty for it to make much difference with the pitiful returns in today’s markets, more than Joe the plumber or Mike the mechanic is likely to accrue in their working years.

I guess if you’ve got a few million earning 5 percent, can sprinkle it out amongst family members, paid out and taxed as dividends, this tax will cut into someone’s ability to rise from the 1 percent to the 0.1 percent. A clever accountant could have you paying 20 percent tax on a rather large income (sorry, dividend), all perfectly legal too. Now who would come up with tax laws like that?

#69 Madcat on 10.01.17 at 7:19 pm

… Definitely going to have to call my accountant tomorrow. I know my business tax was around 15%… I get a dividend (which I think is taxed at 17%)… I wasn’t really paying attention to the new rules as I don’t income split with my partner… Do I need to be worried Garth? Is 15% jumping to 50%?!? Then to 70% once removed from the company?!?

#70 Blobby on 10.01.17 at 7:22 pm

I only encorporated from SP a year ago.

Sounds like that was a few grand down toilet..

#71 Madcat on 10.01.17 at 7:30 pm

Thank you for this clarification #35… I almost choked on my Lucky Charms when I read 70-73% Lol!!

“#35 Giver – AB on 10.01.17 at 4:57 pm
They are proposing to tax INCOME on retained earnings. If I want to save a 100k in my business for a rainy day then I’ll pay the small business tax rate (12% in BC) on my company profits to retain the earnings and hold them in my business as assets. If I decide to invest that 100K in my favorite ETF until I need it, and it generates income (say 6%), the tax the liberals are proposing is on the 6% income, not the 100k principal.

This in no way prevents me from holding capital in my business for a rainy day, it just makes holding capital less productive.”

The money is taxed again when withdrawn. Triple taxation. — Garth

#72 Bobs ur uncle on 10.01.17 at 7:31 pm

Life’s abut choices. You made yours. — Garth

And how does this not apply to all those folks who chose to incorporate? Hmmmmmm?

Is your retirement tax rate about to rise to 73%? — Garth

#73 Pete on 10.01.17 at 7:42 pm

MG #60

Yes , It’s getting very old all the public vs private talk. Everyone thinks the other guy has it so easy. While the level of hardship is not exactly the same, the truth is no one has it easy. Be a teacher , policeman , autoworker , and now your small biz guy. The point is many like to laugh and kick the other guy down. When it’s their turn for a shit pie to the face they seem shocked no one cares and or laughs. Now who do they think will care about small biz owners?

#74 SueMe on 10.01.17 at 7:43 pm

54 mf

Not so! With so many dependants on the gov you cannot win that vote! Most people will vote for their short term gain.

J

#75 Lost...but not leased on 10.01.17 at 7:43 pm

#64 Spock….

Thanks for the info..
One thing is clear…tax professionals will do well

Given what is explained, this will hit estates if the capital gains are taxed at the higher rate..especially estates that have appreciated after the deceased have passed.

I maintain that ALL capital gains will be hit eventually, is exemptions for RE/principal residence will be attacked to some degree at least incrementally.

The divide and conquer LIEberals ? People don’t get it..like the old NIEMOLLER saying about resistance attrition …..first they came for the X…then the Y…the then Z..but no one was left when they came for me…

More later about Gov’t pensions

#76 VICTORIA TEA PARTY on 10.01.17 at 7:47 pm

OUR WORST NIGHTMARE…

…will be if the T2 Crowd decides to end ALL so-called tax loopholes, including single partnerships, as you describe this date.

Or all of the other “tax deduction advantages” you’ve also described in recent months.

On our way to Socialist Nirvana, where some people are just a little more “equal” than others (read Animal Farm), the future is looking brighter and brighter for the vastly ignorant Class Warfare Specialists who visit this blog way too often.

Be careful what you wish for there, you Bozos.

After they’ve done doing us they’ll then be on to you.

And who will back you up?

Nobody.

#77 AB Boxster on 10.01.17 at 7:54 pm

#57 Adam Jenkins on 10.01.17 at 6:15 pm

I can’t sprinkle any income on her.
———————————
Gee,
Who was it that finally began to allow income splitting to occur between spouses?

Was it Trudeau?
Hardly.

It was the Conservatives, under Harper idiot.

And it was repealed inder T2.

You vote Liberal you get taxed to death.
Always have, always will.

But hey, at least, you can console yourself knowing that dipshit is going to tax people that earn more than you.

Cuz if things are unfair to you, the best thing to do is to make things unfair to everyone.

It’s the Canadian way.

#78 Russ on 10.01.17 at 7:57 pm

Stan Brooks on 10.01.17 at 3:40 pm

I can clearly see 10 years from now another rich wealthy bureaucrat announcing immediate decision (no consultation period allowed) that taxes TFSAs one time at 65 % and then adds extra tax on RRSP withdrawals pending nationalization in exchange of ‘guaranteed’ by the government pension which will be quickly reduced to crumbs by inflation.

The arguments for that will be no different than the current assault on small Businesses.
===========================

Thanks Stan.

That makes sense.

It seems CRA can’t tax the property that is my RRSP assets but they can tax the withdrawal rate.

Lucky for me I can get it out soon enough… over 60.

#79 Russ on 10.01.17 at 8:06 pm

Adam Jenkins on 10.01.17 at 6:15 pm

“a husband and wife who together funded, created and built a business will not be able to efficiently share the proceeds of its success…”

This is just plain horse$hit.

My spouse stays home and supports my career (raises kids, takes care of family life in general) while I work, as an employee, ridiculously long overtime hours trying to get promoted and get ahead, yet, at the end of the year, I can’t sprinkle any income on her.

Stick to your valid points, Shut up about the rest.

Life’s abut choices. You made yours. — Garth
==============

Hey Adam,

Go back a few days and read my comments.

Tax #Fairness is about allowing us single income earners the allowance to split/sprinkle income as a family.

It is not about “crabs in the bucket” dragging others down to our level.

You’ve been had by the propaganda machine. It is time to resist.

#80 young & foolish on 10.01.17 at 8:09 pm

“A number of doomers have warned about a “wealth grab”. Where the libbers will go after RRSP assets, TFSAs, etc. and even taxing home values.
Is a maneuver such as above even remotely possible?”

It’s the Lefties’ dream.

#81 X on 10.01.17 at 8:16 pm

Always amazed at the employees who assume all companies make buckets of money, and how much tax dollars are avoided when profits are sprinkled to spouses, and earnings are retained for a downward cycle.

Completely lost is the fact that there are more failures than successes in business and that the lost money is gone. The time spent trying to start the business is gone. So is the income that could have been earned elsewhere during that period. And sometimes after a business fails the spouse is gone as well. Bankruptcy isn’t fun either, and it can effect your finances for years.

The amount of ignorance for those who have put in the hard work, blood, sweat and tears, and have been fortunate enough to run a successful business is truly disgraceful.

Given what one gives up, the tax fairness proposed is not fair. The proposed small business tax changes might have been more palatable if they came along with a single personal tax rate for all.

But tax fairness doesn’t mean for all. It means to get what you can out of the smallest amount of voters.

Crazy that it may cost more than it brings in. But what do you expect with a gov’t that is quite comfortable spending more than they bring in.

First the 1%ers were supposed to be taxed enough to make up for the Liberal spending spree, then the ‘rich’, then the ‘rich business owners’ who employ 50% of the people. Guess who is next average Joe? Because it isn’t going to be the banks, insurance companies, friends of T2 or Morneau-Sheppell.

#82 Stone on 10.01.17 at 8:18 pm

#57 Adam Jenkins on 10.01.17 at 6:15 pm
“a husband and wife who together funded, created and built a business will not be able to efficiently share the proceeds of its success…”

This is just plain horse$hit.

My spouse stays home and supports my career (raises kids, takes care of family life in general) while I work, as an employee, ridiculously long overtime hours trying to get promoted and get ahead, yet, at the end of the year, I can’t sprinkle any income on her.

Stick to your valid points, Shut up about the rest.

Life’s abut choices. You made yours. — Garth

—–
Yes, life is about choices. Rightly said. The choices we make allow us a certain level of adaptability, flexibility, and mobility.

Some willingly choose to constrain their choices and then decide to lash out at others for it because they didn’t have the foresight to plan beyond their next meal. Adam, you unfortunately fall in that category. Did you think to be as adaptible, flexible and mobile as possible or did you think the world would revolve around you to please your every whim? Choices, choices, choices. It’s time to look in the mirror again and see who you’re really angry with. It is yourself after all. For the self-employed who will be impacted by these inevitable consequences, they made their choices as well, for better or worse. Existence is not a fixed state. None of us is that special, myself included.

If you don’t like the choices you’ve made, don’t even be angry with yourself. Simply make new choices that will open news doors to the existance you want. Garth is entitled to his opinion. You’re entitled to yours. Attacking someone directly and personally with your choice of words only denigrates yourself.

Stop whining and wasting energy and time on being angry and venting. Many people on here are – it changes nothing though. Instead, use it to do something more productive. Buy some ETFs, collect some dividends, capital gains, and interest. Stay liquid. Be mobile to pick up and relocate at a moments notice. Think beyond your next meal. You can thank me later for the advice.

#83 #3 in the Majestic 12 on 10.01.17 at 8:19 pm

“By this means the government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.”
― John Maynard Keynes, The Economic Consequences of the Peace

CPP increases, minimum wage increases, carbon taxes, hydro costs (yes we are in Ontario), skyrocketing lease rates and now this. I genuinely fear for my own future, not just that of the 21 people my husband and I employ.
No need to say anything else–it’s all been said.
Bread and Circuses.
Kraft Dinner and Weed.

I was upset and anxious the day T2 was elected–and it has just grown. His father destroyed this country and he will finish the job. I never though I could detest any politician more than Kathleen Wynne.

Never say never.

#84 bubu on 10.01.17 at 8:22 pm

#65 Spock, I work in private so your assumptions are wrong…. no too many benefits …

“There will also be no EI and you have to 9.9% as CPP contribution (instead of 4.95%)” – me and my company pay the same 9.9%…. the difference from 4.95% to 9.9% can be my salary, no?

#85 Trojan House on 10.01.17 at 8:25 pm

Something that’s not mentioned a lot about in T2’s and Wild Bill’s changes is that lawyers (and it may be others, but not 100% certain) will have to pay tax on future income, that is, income that hasn’t even been billed to the client/customer yet!

Yes, that’s correct they will have to pay tax to the government before even one red cent is collected! I’d like to know what happens when they’ve paid the tax, then billed the client and for whatever reason, the client never pays their bill? Do they get to ask the CRA for a refund???

#86 Dominoes Lining Up on 10.01.17 at 8:30 pm

I promised earlier this summer to update the blog on what I have been hearing from some friends who are contacts connected with municipal property tax departments in GTA Ontario. After an enjoyable month plus on the ocean with little internet, I am back and finally had a meetup this past weekend with my friends. What they had to say was pretty compelling.

Mississauga and Brampton are having major problems with overdue property tax payments and staff are preparing briefs to council to substantially lower revenue expectations for the next three quarters as a result. The rate of increase of defaults has reached levels never seen before, they tell me.

In Toronto, my friends tell me that in July about 103,000 property tax arrears statements were sent out. In September, this grew to over 112,000 statements, with a total value of about $338,000,000 in revenues now under threat. Considering that there are apparently about 1.1 million properties in Toronto, to have 10% or so seriously behind in payments enough to trigger overdue notices is a major record benchmark, I am told.

Also, I am told that all three municipalities are looking into new fees for all the problems associated with sales closings that don’t happen. Apparently staff have been doing lots of extra work since June, and one of the biggest problems is sellers requesting special closing readings of utility accounts, only to cancel repeatedly as buyers are delaying then backing out of deals.

It is said that property tax payments are the second last domino to fall when homeowners cannot stay afloat; the last will be actual mortgage payments getting skipped, and apparently the 905 folks are already seeing a big spike in contacts from mortgage lenders whose clients have defaulted on the indirect tax payments they make through their banks.

It seems that they have reached a tipping point now with property taxes in the GTA bubble zone and things may get uglier with much more collections activity and repossession on the horizon.

#87 45north on 10.01.17 at 8:42 pm

on Friday the finance minister was hammered at his carefully-staged Town Hall event in Oakville. It did not go the way Finance officials had planned. The minister surely was furious. On the weekend 260 significant business leaders delivered a letter of protest to Bill, saying his changes could seriously hurt the economy.

here’s my post from last Friday:

I don’t recall any government deliberately launching a long-term campaign against a particular segment of society. One with depth and persistence.

I’m not overstating what the government has done – in the words of Lead Paint – “it’s the rhetoric and positioning”. It is the rhetoric and positioning. It puts forth the government’s position on small business. It’s telling small business “we don’t want you on our team”. My theory is Bill knew what he was doing. The question is what was his motivation? I think he sees a collapse in housing. Not a leveling off and a slow melt but a collapse. But that puts him in an odd position – he announces a major new government position but doesn’t reveal the motivation. That’s the opposite of standard political practice – first describe the motivation, second announce the position.

odd man out

#88 crowdedelevatorfartz on 10.01.17 at 8:51 pm

….and from the “Gee, I wish I had thought of that….”

We have a New Zealand artistic protest for the country’s diminishing water quality.

A huge sculpture of the Environment minister molded entirely out of horse manure.
Depicting the politician, pants down, squatting, defecating into a glass of water.

I cant make this stuff up…..

http://www.google.ca/url?url=http://www.nzherald.co.nz/nz/news/article.cfm%3Fc_id%3D1%26objectid%3D11920270&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwi5u-jf2tDWAhUCHGMKHY6ACSkQFggUMAA&usg=AOvVaw3XUSa4RbBDijhM5FlAgtjF

#89 Entrepreneur on 10.01.17 at 8:54 pm

It seems to me that the great leaders should be concentrating on encouraging small business not straggling them to death.

Even words will kill the spirit of new entrepreneurs like #80 X said “The time spent trying to start the business is gone.”

Gone, as so many have experienced closed doors, past and present, but with more proof as why bother going down that cross-ditched narrow road of entrepreneur, ungrateful and abandoned.

So, where is the incentives, the drive to keep the Canadian economy active?

#90 Duffy on 10.01.17 at 9:00 pm

This just tells me Justy with Trusty and his tax minister are wealthy enough to risk their own gov’t and added pension to push this tax grab through, loosing voter support as they go, makes one nervous how big and expensive that pre-election carrot will have to be.

#91 Hans on 10.01.17 at 9:02 pm

Probably already answered in previous blogs, but can’t someone “sprinkle” income by contributing to a spousal RSP? (assuming you have a spouse)

RRSP room is accumulated only through earned income taken as salary, not as after-tax corporate dividends. — Garth

#92 Big city livin' on 10.01.17 at 9:05 pm

Hi Garth,

Can you explain something to me? I was just looking at a number of open houses in Langley, BC today. The first area I looked at had 80s and 90s era little “doll houses” on tiny lots in the $750K – $800K range. The open houses were dead, the realtors stated that the listed prices were negotiable, and previously accepted offers had fallen through due to problems with obtaining financing.

The second area I looked at had 80s era regular sized houses on normal lots for between $850K – $900K… Nothing special, but with a bit of space like you’d expect to see in suburbia. I drove around in this area for about 30 minutes and out of 300+ houses, only a couple were for sale. And of the few houses for sale, all of them had “sold” stickers on their signs.

What is going on??!! Both areas were in the same neighborhood with the same schools and services nearby. Why were there be lots of houses for sale in micro-mini land and almost no houses for sale across the street where there’s some breathing room. Furthermore, why are the doll houses for sale for weeks on end, when their spacious (and more expensive) counterparts are snapped up before the first open house? Can you explain?

#93 Smoking Man on 10.01.17 at 9:10 pm

You guys all remember my savage road trip last month.

Well T2 and Billy boy and CRA. I sold Keys Me and Best invoice to my cousin Johnny in Florida for a dollar.

I helped him incorporate an LLC in Delaware. I helped him get sales reps and implimentation dudes.

Love the the guy. Hope he does well..

Said if you do good. Remember me.

CRA. Billy Boy, and T2. The left one or the right one. Your choice.

Going to spend the next two months after thanks giving in Florida. Just incase my cuz needs some help.

Screw your Dr Tax Canada.

#94 joblo on 10.01.17 at 9:12 pm

Good luck aspiring Kanadians, you may never know what it feels like to be ……….

http://www.canadianbusiness.com/lists-and-rankings/richest-people/top-25-richest-canadians-2017/image/26/

#95 2 Cents Canadian on 10.01.17 at 9:15 pm

So sad. When the salaried frustrated masses greatly outnumber the self employed go-getters and vote for people who will go after the self employed go-getters ….. it was inevitable this would happen. Let’s watch what happens now. Let’s all be average. Let’s all just barely get by. Lets pull anyone with drive and initiative back down to our frustrated level. Then Lets all hold out our hands when we retire and see what the government can provide for us. I see a tragic flaw in democracy when the ignorant masses vote in guys like Trump and T2. The lunatics are finally running the asylum. God help the smart, hardworking an driven ….. the witch hunt is on. How are we going to compete globally, create industry and employ Canadians when entrepreneurs are treated like lepers. We all can’t work for GM, Chrysler, Ford, Bombardier and the government. And you can’t sustain an economy selling houses to each other and stripping out equity to exist on. God dam this is such a short sighted (but ignorantly popular) rule change. Our kids are doomed. Shit! ….. I gotta go for a walk! Phew!!!

#96 OttawaMike on 10.01.17 at 9:21 pm

#53 Life’s abut choices. You made yours. — Garth

——-
The comment from Adam raises some important points:
If this is about fairness then all should be treated equally.
What about unmarried entrepreneurs who do not have a spouse to disperse the corporate dividends on?
What about TFSA’s and RRSPs? Won’t entrpreneurs who tied all their money up in the corp have large contribution room in these vehicles?

#97 Lead Paint on 10.01.17 at 9:24 pm

#80 X on 10.01.17 at 8:16 pm and 45north
– very well said. I’ve had lots of advice from family and friends on how to run a business, none of whom have, and several of whom work for the government.

While I don’t expect dolts like T2 and his little buddy to get it, I thought they at least wanted us to succeed. It seems a tipping point where the powers that be are turning against the productive and independent sectors of society. I don’t think the drama teacher in chief has much of an endgame, but he likes to be popular and righteous while protecting the family fortune.

#6 Pete on 10.01.17 at 3:14 pm

The ratio of workers in the private vs. public needs to weigh high in the former to afford the latter, and the wages, pensions and benefits need to be similar. That’s the issue. Don’t take it personally.

But as more people work for the government and vote for politicians that grow the government and the benefits for government workers, and then attacks private business… it really can’t help but get nasty sooner or later.

#98 Smoking Man on 10.01.17 at 9:26 pm

Entrupenurs are risk takers and creative mental cases that acadenia has no understanding off. That’s why they reside in the 99% club with the unionized idiots communist.

The guy who drafted the dr tax. A full on Antifa communist.

Catch me if can. All the letter “I”s are dotted.

I’m seriously thinking of running for the PC party.

Stupid idea.

#99 Debtslavecreator on 10.01.17 at 9:30 pm

Stan Brooks and all those worried about RRSP and TFSa being targeted – YES they will
The obvious early warning signs of this is already in sight with TFSAs being targeted under the excuse that if you’re trading its a business and taxed at 100%
Go to Moody’s Gartner blog
In it they have a post where they cover a IT issued by the CRA near Christmas in French only whee they confirm they will rely on 8 points from a 1980 s Case to determine if they will tax a registered plan at 100 %
The CRA also CLEARLY confirms they will consider any speculative investment in a RRSP/RIF as being covered
So there you have it. Corrupt bureaucrats will easily slap 100% tax on “gains” made in a RRSP /rif or TFSA when the stock Market doubles or triples due to your Canadian peso losing value rapidly
It is so easy to see them suddenly come out under “fairness” and slap 100% taxes
It is an outrage
The tax law firm states the CRA has refused to answer what constitutes frequent trading or more clarity on what are completely grey areas

See below

http://moodysgartner.com/canadian-tax-free-savings-accounts-canada-revenue-agency-audit-project/

TFSAs will not be taxed. Period. — Garth

#100 Dosouth on 10.01.17 at 9:32 pm

Life’s abut choices. You made yours. — Garth

Right on Garth…door swings both ways. So now back to real estate and rea life.

#101 Happy Housing Crash Everyone! on 10.01.17 at 9:35 pm

#85 Dominoes Lining Up

Thanks for the update(great job. Waited awhile for it ) Wow things are worse then anyone can imagine. maxed out speculators and home owners on the brink of ruin. If those numbers are correct then this house of cards is even worse then the blog dogs thought. You dirty lying

SHYSTERS. Only days away until you run out of SHYSTER appeals. SHYSTERS ruined the realtor name.

#102 dr. talc on 10.01.17 at 9:40 pm

looks like bill and t2 picked the wrong group to ‘go after’
too bad no one in Oakville brought up the hypocrisy or ‘fairness’ Bill’s retroactive tax legislation on oct 3

And Bill refuses to define his terms:
what is ‘fair’? is a flat % for everyone fair, i mean we all pay 13% hst, he won’t go there
what the hell is a ‘reasonableness’ test?
that’s right, whatever cra wants it to be
read the cra web site, full of lingo like:
‘in most cases’ ‘usually’
it all adds up to subjective interpretation of the tax code
which=un’fairness’
which=lawlessness

#103 Lost...but not leased on 10.01.17 at 9:42 pm

Gov’t and taxes…

I think T2 and Moroneau see what is happening in the U.S. re: civil servant pensions and are fearful of the Civil Servants in Canada…hence the tax grab.

Blame the private sector as opposed to the other side of the ledger. Blood out of stone VERSUS trim the fat?

Its a simple question..does T2 and Moroneau feel their is no fat..or worse..the Civil Service can expect pay raises and benefits? EVERYTHING should be opened to scrutiny.

Example: San Diego. The City was $3Billion in the hole re future pension liabilities. They have a policy for new employees that directs the gov’t pensions into 401K’s
a strategy which has successfully defended a court challenge.

Until such time as the Feds look at both sides they have no mandate nor credibility.
As it stands… they most certainly run the risk of (i)killing the private sector golden goose,
(ii) frustrating it, or
(iii)more loopholes explores and exploited.

#104 Lost...but not leased on 10.01.17 at 9:47 pm

#84 Trojan Horse

Please explain how one is taxed BEFORE actual income is acquired ?

#105 Smoking Man on 10.01.17 at 9:59 pm

#95 OttawaMike on 10.01.17 at 9:21 pm
#53 Life’s abut choices. You made yours. — Garth

——-
The comment from Adam raises some important points:
If this is about fairness then all should be treated equally.
What about unmarried entrepreneurs who do not have a spouse to disperse the corporate dividends on?
What about TFSA’s and RRSPs? Won’t entrpreneurs who tied all their money up in the corp have large contribution room in these vehicles?
….

The family is the biggest obstical to George Soros globalist dreams.

That’s why T2 is going after them. Wondering how many times T2 dropped to he’s knees for count Dracula.

#106 Giver - AB on 10.01.17 at 10:06 pm

The money is taxed again when withdrawn. Triple taxation. — Garth

How is this triple taxation?

The original capital is taxed at the small business rate when it moves from profit into retained earnings and then again when it comes back to me as dividends.

The income on the retained earnings is taxed once as proposed by the liberals and then again when I distribute it out.

Where is the third taxation?

“#35 Giver – AB on 10.01.17 at 4:57 pm
They are proposing to tax INCOME on retained earnings. If I want to save a 100k in my business for a rainy day then I’ll pay the small business tax rate (12% in BC) on my company profits to retain the earnings and hold them in my business as assets. If I decide to invest that 100K in my favorite ETF until I need it, and it generates income (say 6%), the tax the liberals are proposing is on the 6% income, not the 100k principal.

This in no way prevents me from holding capital in my business for a rainy day, it just makes holding capital less productive.”

#107 crowdedelevatorfartz on 10.01.17 at 10:11 pm

@#85 Dominos lining Up

Wow!
Canaries in the coal mine……..

#108 OttawaMike on 10.01.17 at 10:15 pm

#104 Smoking Man on 10.01.17 at 9:59 pm

Yeah I read your link to the globalist agenda the other night. Some of that is certainly plausible.

#109 Lost...but not leased on 10.01.17 at 10:18 pm

Civil Service pensions…

Example: Loyalton California…Population 769

Had (4) civil servants that it paid pensions to via CalPERS, (California Public Employees Retirement System), and wished to withdraw after its last guaranteed pensioner retired. The town felt that it was squared up…the end.

No quite…CalPERS wanted a termination fee of $1.6million to cover unfunded liabilities that CalPERS had allowed to grow for 17 years. Huh?

Loyalton could not afford this…then CalPERS informed the retirees their pension would be drastically cut by approx. 60%. Huh?…they can’t cover (4) people…then what about 1000’s of retirees?…is this a pissing match or messages being sent?

CalPERS pension debt is $170 Billion..and between 2003-2013 pension costs for California gov’ts have risen from $6.4 billion to $17.5 Billion.

The CalPERS reps claim that Gov’ts have an obligation to fulfill their agreements….???? well I think they are realizing they can’t get blood out of a stone and that perhaps a revolt is brewing.

This a microcosm of what is occurring all over the US

#110 Smoking Man on 10.01.17 at 10:27 pm

#107 OttawaMike on 10.01.17 at 10:15 pm
#104 Smoking Man on 10.01.17 at 9:59 pm

Yeah I read your link to the globalist agenda the other night. Some of that is certainly plausible.
….

Love you.

Getting to some one is a good thing. I’m a solo fighter against stupid teachers. That have no clue they are widgets in their own demise.

Thay don’t see the long game. I do that’s why I’m rich in an other man’s name.

#111 Flatlander on 10.01.17 at 10:30 pm

The Minister of National Defence, Harjit Sajjan, delivered the keynote address at a local charity dinner I attended this weekend, fresh off the plane from his NATO talks in Europe. Harjit outlined his immigration to Canada as a young boy and the realisation that any citizen of this country can achieve the highest level of success in their given field if they put their minds to it. I like the guy, didn’t vote for his party, but appreciated his view. Whether he supports the proposed tax changes or not, I find it disturbing that more Liberal MP’s with his optimism for individual success aren’t standing up to T2 and Morneau as they gut the very spirit that built this great country.

#112 Spock on 10.01.17 at 10:36 pm

#83 Bubu

You can ask the employer to pay you the extra 4.95% and see their reaction ;-)

Not much benefits in private. That is not indicative of most of the majority of private jobs that my friends are in but sorry to hear that. I would highly recommend joining a Government job before it is too late.

I have changed my views over the years – did not have much problems paying high taxes but the amount of money wasted by the powers that be with zero accountability has made me move to the other side. Look at all the money wasted by T2 and the Libs in Ontario (am sure they have wasted the same in other provinces but do not keep track of the details).

Seniors meanwhile are waiting for nursing beds while T2 gives away billions as foreign aid in the week after coming to power. I must say it does take a special person to waste and spend other peoples money and then walk around with a smug face and smile on your face as T2 and Bill do. Maybe some special training that they had to go through.

As Garth says tax avoidance is not a bad thing. Tax evasion is.

#113 MF on 10.01.17 at 10:37 pm

96 Lead Paint

The “public sector” can vote for whoever they want. Thing is They have to follow through with whatever idiotic policies the elected officials come up with. Ask any cop what they think about that. Actually a buddy of mine is a cop and he cannot stand the Libs.

It’s not just one vote block like you think. How many private employees and business owners voted Liberal???

The world is seldom so black and white.

MF

#114 Pete from St. Cesaire on 10.01.17 at 10:40 pm

Yes, that’s correct they will have to pay tax to the government before even one red cent is collected! I’d like to know what happens when they’ve paid the tax, then billed the client and for whatever reason, the client never pays their bill? Do they get to ask the CRA for a refund???
—————————————————————
I’ve been told that their only recourse is to sue the client or his estate. There may be some way to get creative about claiming it back but basically it’s just like with Employment Insurance; if a company owes you back pay EI deducts that amount from what they give to you even if you are never able to collect it due to the previous employer’s bankruptcy. It’s just too bad for you, you were at the bottom of the creditors list. Not EI’s fault.

#115 Spock on 10.01.17 at 10:44 pm

#105 Giver – AB on 10.01.17 at 10:06 pm

Let me see if we get this right – please feel free to correct.

1. The business income earned is taxed at the business tax rate (let us say around 15%).

2. The after tax money is retained earnings which are then invested in ETF’s which earn 6% like as Giver had referred to. This 6% is now taxed at 50% so you have 3% left.

3. That 3% when you take out is again taxed in the hands of the shareholder (the retained earnings will be taxed twice).

Not sure if that makes it easy but the above is my understanding of what is being proposed. If someone knows better please feel free to correct.

#105 Giver – AB on 10.01.17 at 10:06 pm
The money is taxed again when withdrawn. Triple taxation. — Garth

How is this triple taxation?

The original capital is taxed at the small business rate when it moves from profit into retained earnings and then again when it comes back to me as dividends.

The income on the retained earnings is taxed once as proposed by the liberals and then again when I distribute it out.

Where is the third taxation?

#116 Pete from St. Cesaire on 10.01.17 at 10:48 pm

#103 Lost…but not leased on 10.01.17 at 9:47 pm
#84 Trojan Horse
Please explain how one is taxed BEFORE actual income is acquired ?
————————————————————
Just like in retail. The store owes the HST to the govt AS SOON as the sale is made. The sale still stands regardless of whether the payment falls through or not, or if perhaps the buyers get a 1 year payment deferral from the store (common practise in furniture stores).

#117 Spock on 10.01.17 at 10:48 pm

#103 Lost…but not leased on 10.01.17 at 9:47 pm
#84 Trojan Horse

I am sure Trojan Horse can respond but I will add some. This is not new and I do not see anything in the new small business rule changes that will change this.

For most businesses, CRA requires the accrual accounting method. So basically your report income as you bill or invoice the same (earn it) and deduct expenses when you incur them regardless of when the money is actually received or paid.

In the accrual method, if a client fails to pay the invoice – the amount of which has already been reported in income – then the following year that same amount can be written off as bad debt (business expense) against business income.

Some small businesses and profession like commissioned folks or farms etc. have an option to select the cash method (only report the income and expenses when received or paid) OR the accrual method described above.

Hope that helps.

—————————

#103 Lost…but not leased on 10.01.17 at 9:47 pm
#84 Trojan Horse

Please explain how one is taxed BEFORE actual income is acquired ?

#118 saskatoon on 10.01.17 at 10:49 pm

the tax rate is ALWAYS 100 percent…

of whatever the government can force from your hands.

#119 Manitoba Whale on 10.01.17 at 10:55 pm

#89 Duffy on 10.01.17 at 9:00 pm
…losing voter support as they go, makes one nervous how big and expensive that pre-election carrot will have to be.
*****

Sad how cynical we have become with the politicians.

First those in Ontario in 2018 have to watch Premier Wynne opening the trapdoor to Ontarios’ future. Though her chances of being elected again are slim.

#120 TurnerNation on 10.01.17 at 10:58 pm

#12 Howard dunno man it’s kinda strange how the script each time is they load up at the “IS” gift shop and leave all manner of branded hankies and flag merchandise beside. What’s next, branded cuff links?
Who is being had here.

#121 Smoking Man on 10.01.17 at 11:00 pm

To the plumpy amazing wife. Sorry T2 It’s called family.

https://youtu.be/ZCOSPtyZAPA

#122 Ace Goodheart on 10.01.17 at 11:10 pm

You’re talking putting small business people (or business people in general) up against employees.

Business people train up to be animals. We know that, as famously put “the real world is a lie you have to rise above”.

We know the two most important things in life are bottom line and product flow. High flow, and keep your eye on the dollar. We know you have to put your back into it. We understand that sometimes eating and sleeping are luxuries.

One, a highly evolved, animalistic force, tied to nature and with its ear to the ground, moving with the flow, adjusting itself to every nuance of life and balance.

The other, similar to what happens when you leave a bacterial culture in a petri dish for too long without refrigeration.

Do you really think that a bunch of disgruntled employees and their fearless leader are going to beat us?

#123 Smoking Man on 10.01.17 at 11:11 pm

To my amazing wife. I’ve never give 2 shits about your topics. I just love you. Is that not enought.

https://youtu.be/NGorjBVag0I

#124 Prophet on 10.01.17 at 11:11 pm

The problem with socialism is that it always starts out with let’s all be equal and make the trains run on time. However it always ends up with people having to eat their pets.

#125 Smoking Man on 10.01.17 at 11:32 pm

I hate god for taking him and my nefew.

https://youtu.be/2qiRVerg66w

Man was a god to me even thought we dident have the same appreciation for sink holes.

#126 Backmarker on 10.01.17 at 11:35 pm

#102 Bill already showed his hand that his priority is to protect public service employees.

http://www.macleans.ca/economy/economicanalysis/public-sector-workers-took-a-record-number-of-sick-days-last-year/

#127 chapter 9 on 10.01.17 at 11:54 pm

#107 Ottawa Mike
Yeah I read your link to globalist agenda the other night some of that is certainly plausible.

Earlier this year Bill C-47 was tabled that requires records to be kept on gun owners who have imported or exported their firearm, a back door registry.
The passing of this bill could be a valid reason to implement the UN marking scheme. This regulation would mean that every firearm must have “Canada” or “CA”, a serial number, the manufacturer’s name(on the receiver) and a two digit code for the year it was imported. Firearms cannot be marked at the point of manufacture, only after being released from CBSA and within 60 days. We import approx. 350,000 firearms a year. The cost of a CNC laser engraving machine is nearly $100,000. Every make and model needs a fixture specifically for that make and model at a cost of $3000.00
A gun store may have 100 different makes and models $300,000. And let’s not forget labor and computer systems needed to track all this activity so it can be reported to the United Nations.
In Nazi Germany the SS just kicked in your door, this method saves the cost of replacing a door but has the same effect- gun control. A big thanks to my MP for the heads up.

#128 Cubanito on 10.01.17 at 11:54 pm

Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery. Winston Churchill

#129 MF on 10.01.17 at 11:57 pm

Jagmeet Singh just won the NDP leadership race!

Awesome.

This will take away lots of Indian voters who vote Liberal, effectively splitting the anti conservative vote.

MF

#130 MF on 10.02.17 at 12:03 am

#110 Flatlander on 10.01.17 at 10:30 pm

Harjit is the ONLY Liberal MP I like.

MF

#131 Smoking Man on 10.02.17 at 12:06 am

To my late nephew mark. This song wa on when my kids held your caskit.

Miss you man.

https://youtu.be/g3ENX3aHlqU

#132 cd on 10.02.17 at 12:25 am

I tried going out with a girl who worked at the city library once. Since less and less people are going to libraries nowadays, she was trying to add new programs to bring people in. So they added an adult colouring program and a cake pan borrowing service (yes thats borrowing weirdly shaped cake pans so you can make something like a christmas tree cake).

I was thinking that we pay taxes so we can have a cake service, nice. Then I was thinking that since she is a city worker, she will retire with a pension. So we need a ton of tax revenue forever and ever so this stuff can exist.

The main question I’m wondering, if it is it possible to scrap a lot of silly and useless services and programs and then save a lot of money and not increase taxes? There are a lot of bigger things too (like say the gov. general).

#133 numbass numbaz on 10.02.17 at 12:29 am

Maybe the shortage is a simple numbers game of inputs and ouputs. You decide!

http://vancouversun.com/news/local-news/recruiters-scramble-to-find-teachers-to-fill-b-c-shortage

#134 Vampire studies GMST on 10.02.17 at 12:51 am

116 Spock – good explanation.

I have also been told by my accountant that work in
progress (WIP) will also be added to taxable income at
the year end. If we pay tax on this amount, the WIP
would be deducted from the receivable in the year
following. The net effect is just losing the deferral on
what is a relatively small amount. So our rule will be for everybody to get a bill at years end whether the project
is complete or not.

#135 mousey on 10.02.17 at 1:19 am

My super insider information is that they are going to throw the incorps a bone by backing off on the retained earnings tax grab. Oh, yes, and thanks for the information about the sole proprietorships.

#136 Ponzius Pilatus on 10.02.17 at 1:48 am

What a bunch of cry babies on the blog today.
Most of you would not last a period in a hockey game.
Suck it up and pay the price.
Jees, what happend to the true Canadian grit.

#137 Dolce Vita on 10.02.17 at 1:53 am

Burnaby home sellers provide an alternate definition to the “ML” in MLS (My Realty Check today – some data entry errors here, take note of the listing date order, more negative than calculated):

5891 Mckee Street, Burnaby, BC V5J 2V4
$3,188,000 2017-07-10
$3,988,000 2017-01-05…should be 1st in the list
$2,998,000 2017-07-20
$2,925,000 2017-08-03
$2,888,000 2017-08-08
$2,838,000 2017-08-17
$2,798,000 2017-08-28
$2,768,000 2017-08-30
$2,698,000 2017-09-11
Overall Change= -$ 490,000.00
Percent: -15.37
e-valueBC= $2,077,000

3865 Southwood Street, Burnaby, BC V5J 2E3
$1,499,999 2017-07-10
$1,650,000 2017-05-15…should be 1st in the list
$1,599,000 2017-06-12
$1,500,000 2017-08-08
$1,475,000 2017-09-13
$1,400,000 2017-09-28
Overall Change= -$ 99,999.00
Percent: -6.67
e-valueBC= $1,637,000

5470 Carson Street, Burnaby, BC V5J 2Z2
$1,790,000 2017-07-14
$1,650,000 2017-07-17
$1,549,000 2017-07-25
$1,499,000 2017-08-14
$1,350,000 2017-08-28
$1,299,900 2017-08-31
Overall Change= -$ 490,100.00
Percent: -27.38
e-valueBC= $1,548,000

5042 Watling Street, Burnaby, BC V5J 1W7
$2,390,000 2017-07-17
$2,798,000 2016-12-15…should be 1st in the list
$2,688,000 2017-02-23
$2,699,000 2017-05-01
$2,690,000 2017-08-03
$2,738,000 2017-09-06
Overall Change= $ 348,000.00
Percent: 14.56
e-valueBC= $2,283,000

#138 Ponzius Pilatus on 10.02.17 at 1:59 am

#99 Dosouth on 10.01.17 at 9:32 pm
Life’s abut choices. You made yours. — Garth

Right on Garth…door swings both ways. So now back to real estate and rea life.
———
Sorry,
But I could not resist.
Only in Western Movies featuring Clint Eastwood do saloon doors swing both ways.

#139 Honky Donkey Blues on 10.02.17 at 2:05 am

“When we all work for government, nobody’s a rebel.”

This is what life under a Monarchy is about – preservation of the Crown. Politicians in Canada are not public servants, they are Crown servants whose job is public service. When the PM travels to G7/G20/NAFTA summits , he is representing the Queen of Canada – not citizens.

#140 Screwed Canadian Millenial on 10.02.17 at 2:12 am

TFSAs will not be taxed. Period. — Garth

https://www.youtube.com/watch?v=NPOb3DlB7WA

#141 Dolce Vita on 10.02.17 at 2:13 am

“…and the Royal Canadian Association of Bloggers (heh, heh).”

Valiant effort Garth on fomenting popular opinion against proposed small business taxation.

You changed my mind, as did other Commenters.

I oppose what the Libs plan to do.

Still, Morneau makes one semi-valid argument that the intent of Retained Earnings is to see them reinvested in the business as assets such as equipment purchases that, for example, would increase productivity and ultimately boost the economy overall.

And not as an investment tax shelter for retirement (the latter of course, helps out firms like yours Garth, sorry…and your angst in part, is appreciated here).

Then of course the counter argument is that those retained earnings investments put capital into the hands of firms that perform well, are good economic decision makers and that will ultimately boost the economy.

What a mess.

Easier just to say drop what you are planning Morneau and Trudeau, lick your wounds and call it a day.

#142 Dolce Vita on 10.02.17 at 2:52 am

My pet peeve, assignment resellers that do not pay their taxes. Not much to report here by CRA other than court action below and 1 guy in Surrey not reporting rental income, $130 K fine.

CRA going to court with 2 YVR developments. Developer says “nothing to hide” and going to court with CRA “out of respect for buyers’ privacy.” CRA wants to make sure assignment resellers paid their GST on the flip and declared the flip in their income.

A YVR Realtor reckons about 25% were assignment flipped.
_____________________________
CRA fining local firms that facilitate foreign investors that, per CRA, provide: “false addresses and phone numbers to clients so they could maintain the appearance of residency in Canada.”
_____________________________
And, Minister Lebouthillier, listing their accomplishments for the extra $1 Billion thrown their way in last budget, “preliminary results” shared by the CRA, from April 1, 2016 through March 31, 2017, include:

• 335 cases referred for criminal investigations
• 123 search warrants executed
• 32 criminal charges laid under the Income Tax Act, Excise Tax Act and/or the Criminal Code
• 37 convictions
• $10 million in court fines and 50.6 years of jail time
• 111,712 audits completed
• $12.5B in fiscal impact

How did they get $12.5B fiscal impact from +110K audits resulting in $10MM fines? Opportunity cost of 50.6 years of jail time added in?

Inspired/Creative Government accounting?
_____________________________

http://www.westerninvestor.com/news/british-columbia/cra-probe-into-vancouver-condo-flipping-1.22255655

https://www.canada.ca/en/border-services-agency/news/2017/09/four_more_sentencesinthelargestimmigrationfraudcaseinbritishcolu.html

https://www.canada.ca/en/revenue-agency/news/2017/09/minister_lebouthilliershareswithcanadiansthelatestresultsofcrack.html

#143 Chaddywack on 10.02.17 at 3:32 am

I’m a bit confused with this post on proprietors……Garth said:

“If your husband or wife sacrifices to support the business, they can be compensated by you from your after-tax (after deductions) income, whether they toil as employees or not”

and

“There’s no test to ensure a marketable task is being performed – no bureaucrat crawling over your sole proprietorship.”

I thought that in order to pay wages to a spouse there is a reasonableness test even as a proprietor. (E.g. what a similar person would be paid in the free market) So if your wife is doing your bookkeeping she would have to earn approximately what an bookeeper earns in the job market and she has to keep timesheets and prove she did the work?

Am I missing something?

#144 Oft deleted much maligned stock picker on 10.02.17 at 5:53 am

The real solution to Canada’s tax revenue debacle is to defund all public service pensions….claw every dime the taxpayer has donated and leave the civil servants , current and retired, with what they’ve deposited themselves….but…..tax that as passive savings at 73%. The streets would run with milk and honey. Income tax could be cut by 90% overnight. The boom would be unimaginable.

Oh….and fit the guy who thinks thousands more windmills….as loopy crazy dangerous as that sounds to the base power needs of an industrialized country… Why have you no concern or pity for the millions of rare and endangered, migrating birds that are slaughtered every year by those well water polluting monstrosities? Rare falcons, hawks and eagles litter the ground under every windmill….but where is the green insanity rage over the massacre?

#145 westcdn on 10.02.17 at 6:02 am

#199 NoName on 09.30.17 at 12:48 pm
“As i sad before humans are doomed, soon raccoons will take over…”

I used to say at least bank robbers have the decency to wear a mask because thieves/slackers exist anytime, anywhere. I still say life is tougher for many than others. It was said that adversity should build character. I have enough character/attitude to handle – thank you very much.

I found a few internet articles that got me thinking about societies. https://qz.com/1090183/what-if-most-creative-breakthroughs-come-from-ordinary-people-not-geniuses/
The key point is collaboration to some degree. Everyone’s mileage will vary.
The Monty Hall problem. https://priceonomics.com/the-time-everyone-corrected-the-worlds-smartest/ She took a lot of heat from male PhD’s who thought they were smarter. The key point – biases.

My conclusion – keep an open mind.

I have been comparing mutual funds to ETF’s. I am a Canadian stock picker but it can be as dangerous as option and forex trading – count on losing unless you have access to front running information. Just for fun, I chose HMMJ:tsx to analyze. Here is their published portfolio. http://www.horizonsetfs.com/horizons/media/pdfs/productsheets/HMMJ-Product-Sheet.pdf
It is a pretty good spread if you are betting on the Canada cannabis industry. Personally, I try to pick the best 1 or 2 of the lot if I am going there. There is safety in numbers so if you can’t bore yourself with reading financials and news releases, this is a good way to bet and minimize losses. However, if you can choose correctly, there is serious coin on the table.

I am willing to take the chance. Most ETF’s are based on “indexes”. An ETF administer just rebalances their mandate/index hence the low MER. But who builds the indexes? Would you believe banks and brokerages with input from the sponsors of the ETF. You can easily build a customised ETF to sell to a client. That is why you need screening to see what the heck individual stocks you are buying.

Anyway, my recommendation is to get out of mutual funds and buy blue chip ETF’s if you can’t stomach losses to make a gain. Active mutual manager/index creator vs me – odds are not good for me.

Now I am starting to think – why were public trusts crushed but not yet private?

#146 Dharma Bum on 10.02.17 at 6:50 am

#32 John

“And of course, you also have people not starting new business, business shutting down/not growing. And people just leaving the country…. those that are ambitious, wealthy, and educated….”
——————————————————————–

….those are the Dharma Bums!

Come and join us.

Leave he rat race. Start enjoying your life.

Stop working to fill the government’s coffers.

#147 Manitoba Whale on 10.02.17 at 7:26 am

#113 Pete from St. Cesaire on 10.01.17 at 10:40 pm
Yes, that’s correct they will have to pay tax to the government before even one red cent is collected!
*****

Isn’t that how accrual accounting works? Every business has accounts receivables open at the end of their fiscal year, as well as at any time of the year. Tax is paid whether or not the monies have been collected.

#148 Be careful what you wish for on 10.02.17 at 8:14 am

#128 MF on 10.01.17 at 11:57 pm

Jagmeet Singh just won the NDP leadership race!

Awesome.

This will take away lots of Indian voters who vote Liberal, effectively splitting the anti conservative vote.

MF
—————

Or, you could very well be looking at Canada’s first Indian Prime Minister.

I foresee an NDP federal gov in the near future. We’re so screwed.

Singh was born in Scarborough and grew up in St, John’s Newfoundland and Windsor, ON. He is not “Indian.” Indo-Canadian might be a more apt description. Or just Canadian. Still a socialist, though. — Garth

#149 crowdedelevatorfartz on 10.02.17 at 8:27 am

@#141 Dolce Vita

Its a shame that the CRA and Customs spent how many millions investigating, charging, prosecuting etc. the Immigration frauds of New Can ?
And the sentences handed down were;
$95k fine and a 2 year SUSPENDED sentence ( no jail time)
$50k fine and 6 months house arrest.
$10k fine and community hours.

Slap on the wrist.
Expect more of the same to occur.

And if you or I were to do the same?
CRA would freeze bank accounts, seize assets, and we’d be Bubba’s bunk mate for a painfully long time.

#150 My Sister Said... on 10.02.17 at 8:45 am

This is my first ever post… so here it goes… I remember when my sister explained the world to me… she said “average is the easiest”. When you are average, everything is designed to work best for you. If you want to be extraordinary, or at least above average, it will be harder. Well, self employed people, and even more so those who create employment for others, are definitely above average. The world will never be easy for above average people. This is not the first time the government has made this harder for you… but you will adapt in order to remain above average. Garth, thanks for putting out there some ideas on how to do just that… that’s what keep me coming back to read your blog (and sometimes the comments).

#151 MF on 10.02.17 at 8:48 am

#143 Oft deleted much maligned stock picker on 10.02.17 at 5

My dad has a public pension. Worked for over 30 years for it. My parents use that money to go out to eat, buy junk, and contribute to the economy.

I’ll tell you what we should do though, and that’s ignore the worthless “advice” of some ex pat living in a third world dump who contributes a grand total of zero to our country and economy.

MF

#152 MoneyfromA$ia on 10.02.17 at 8:57 am

Looking at the best income strategy is the one the government still turns a blind eye to, Grow ops and renting every room in your house out including closets.

This government is ignorant.

#153 Penny Henny on 10.02.17 at 9:00 am

#35 Giver – AB on 10.01.17 at 4:57 pm
>>Well, when Bill & Justin get their way, money earned inside a corporation (retained earnings) will be taxed at the rate of 50.5% and then taxed again when it is taken out by shareholders/owners as dividends. The total tax grabbed by Ottawa will end up being between 70% and 73%.

At best this is written poorly. At worst it is deliberately misleading. “Income earned inside a corporation (retained earnings)” makes it sound like company profits or retained earnings are going to be taxed at 73% and that is not at all what is being proposed.

As one of the 2 million entrepreneurs targetted by these proposals, I’d like to help clear the air a little on the idea of retaining earnings in a business. The liberals aren’t proposing to tax retained earnings. They are proposing to tax INCOME on retained earnings. If I want to save a 100k in my business for a rainy day then I’ll pay the small business tax rate (12% in BC) on my company profits to retain the earnings and hold them in my business as assets. If I decide to invest that 100K in my favorite ETF until I need it, and it generates income (say 6%), the tax the liberals are proposing is on the 6% income, not the 100k principal.

This in no way prevents me from holding capital in my business for a rainy day, it just makes holding capital less productive.

Hardly seems like the sky is falling to me.

/////////////////////////////

Thanks for presenting that in an honest and unbiased manor.

#154 MF on 10.02.17 at 9:05 am

#135 Ponzius Pilatus on 10.02.17 at 1:48 a

It’s true man.

The amount of blaming and complaining on here would put the “whiniest” of millennials to shame. What an embarrassment.

MF

#155 Stan Brooks on 10.02.17 at 9:14 am

I guess our self-appointed minister of fairness does not really worry about oligopolies:

https://ca.finance.yahoo.com/news/canada-telcos-appear-dictionary-definition-194800216.html

http://www.investopedia.com/terms/o/oligopoly.asp

Our Telcos are the very definition of oligopoly.
They missed somehow our banks.

Looking for T2 to appoint a minister of finance in the place of the self appointed minister of fairness who does not really care about the finance aspects of Canadian politics any more.

Oh, I forgot, these are you friends, not enemies like the small Businesses.

====================

What is an ‘Oligopoly’
Oligopoly is a market structure in which a small number of firms has the large majority of market share. An oligopoly is similar to a monopoly, except that rather than one firm, two or more firms dominate the market. There is no precise upper limit to the number of firms in an oligopoly, but the number must be low enough that the actions of one firm significantly impact and influence the others.

BREAKING DOWN ‘Oligopoly’
An example of an oligopoly is the wireless service industry in Canada, in which three companies – Rogers Communications Inc (RCI), BCE Inc (BCE) subsidiary Bell and Telus Corp (TU) – control approximately 90% of the market. Canadians are conscious of this oligopolistic market structure and often lump the three together as “Robelus,” as though they were indistinguishable. In fact, they are often indistinguishable in price: in early 2014 all three companies raised the price for smartphone plans to $80 in most markets, more or less in tandem.

Read more: Oligopoly http://www.investopedia.com/terms/o/oligopoly.asp#ixzz4uM8xgKCV
Follow us: Investopedia on Facebook

#156 Penny Henny on 10.02.17 at 9:14 am

#85 Dominoes Lining Up on 10.01.17 at 8:30 pm
I promised earlier this summer to update the blog on what I have been hearing from some friends who are contacts connected with municipal property tax departments in GTA Ontario. After an enjoyable month plus on the ocean with little internet, I am back and finally had a meetup this past weekend with my friends. What they had to say was pretty compelling.

///////////////////////////

Nuggets of information like this is what makes it worthwhile to sift through the comments section.
Thank You

#157 n1tro on 10.02.17 at 9:23 am

#23 Joe Schmoe on 10.01.17 at 4:26 pm
Well with Singh the leader of the NDP, JT won’t win a second election.
——————————-
I don’t think there are enough immigrants in Canada let alone be unified enough to vote Singh in. Also, Singh’s mandate is pandering to the poor and not all immigrants are poor.

But hey, it’s a new world. If Singh gets in, all we have to deal with are the feminazis crying it is unfair that another “man” got the top spot.

#158 fancy_pants on 10.02.17 at 9:28 am

additional revenues drawn by the proposed tax changes may be consumed by the additional cost of wrangling such. voluntary compliance will not be forthcoming, perhaps resulting in a smaller more elusive revenue source. after shuffling the chairs, they may find themselves further in the red

however, since the goal is the pursuit of socialist equality and the distribution of wealth and income, whether it is overall beneficial is moot as long as it draws the haves closer to the havenots, all in the name of equality

#159 Stan Brooks on 10.02.17 at 9:30 am

#140 Dolce Vita on 10.02.17 at 2:13 am

Warren Buffett has 100 billions in cash reserves in Berkshire Hathaway. Apple has over 250 billions, Microsoft – over 100 billions, Google/Alphabet – close to that.

Do you see the secretary of treasury in US going after them and telling them to move on and invest these ‘dead’ money?

The minister of fairness has no place in finance, he is clearly not competent in that area. Stick to fairness, Bill.

#160 fancy_pants on 10.02.17 at 9:34 am

The best example of the danger of socialism was demonstrated by a college professor

One day, his class was complaining that it was unfair that some students got A’s while others struggled to pass. So, the professor gave in and told them that on the next test, he would use a point distribution system to grade the tests, so that essentially the students with higher grades would give points to the students with the lower grades.

After the first test, everyone was for the most part satisifed. The A students only went down to a B, and the D students got a raise up to a C. However, as time went on, the A students began to realize that they didn’t need to study because the amount of work they put in had no direct effect on their individual grade… see where this is going?

When there is no competition, no incentive to work harder, smarter, and better than the person next to you, then the majority of people won’t. Socialism eliminates motivation, innovation and productivity. That is why socialism is a dangerous economic framework to build a country on.

#161 Gravy Train on 10.02.17 at 9:38 am

A polyglot and a polymath, Julie Payette CC CMM COM CQ CD takes office today as Governor General.

#162 crowdedelevatorfartz on 10.02.17 at 9:46 am

@#143 Often maligned, inevitably deleted.

“The real solution to Canada’s tax revenue debacle is to defund all public service pensions….”

++++++

Actually I think the govt is trying to do it right now with the Pheonix payroll program :).
My 85 year old father( ex civil servant receiving a MASSIVELY juicy pension) received a request with his pension statement. ” If you have computer skills the govt needs you to help with the Payroll problems currently experienced )
They were gearing up to hire thousands of part time govt retirees with basic computer or phone skills to help with the backlog.

And no one gets fired.

Oh, and if you want to blame windmills for bird kills……Look no further than any large metropolitain city with hundreds or thousands of buildings lit at night.
Birds are attracted to light and buildings lit at night are like a magnet. Empty office buildings Kill more birds every night than any windmill farm.

https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&cad=rja&uact=8&ved=0ahUKEwjtudTFidLWAhXoxFQKHSjKBDQQFgg7MAY&url=https%3A%2F%2Fwww.theglobeandmail.com%2Farts%2Fbig-city-bright-lights-dead-birds%2Farticle4161842%2F&usg=AOvVaw16_PErqrDFoHM38ntPlJQR

#163 n1tro on 10.02.17 at 9:52 am

#57 Adam Jenkins on 10.01.17 at 6:15 pm
“a husband and wife who together funded, created and built a business will not be able to efficiently share the proceeds of its success…”

This is just plain horse$hit.

My spouse stays home and supports my career (raises kids, takes care of family life in general) while I work, as an employee, ridiculously long overtime hours trying to get promoted and get ahead, yet, at the end of the year, I can’t sprinkle any income on her.

Stick to your valid points, Shut up about the rest.
—————————————
“…ridiculously long overtime hours trying to get promoted and get ahead…” – maybe, just maybe, you suck at your job thus requiring such over time? The term is work “smarter” not “harder”.

Want to sprinkle income? Do as Garth says and become a sole proprietor or better yet, a partnership with your wife. Then you can bill by the hour and get paid for the “ridiculously long overtime hours” and there is no need to get “promoted or ahead” as you split the money with your wife. What’s stopping you??

#164 45north on 10.02.17 at 9:53 am

Dominoes: Mississauga and Brampton are having major problems with overdue property tax payments and staff are preparing briefs to council to substantially lower revenue expectations for the next three quarters as a result. The rate of increase of defaults has reached levels never seen before, they tell me.

thanks for the update. I’ve book-marked your post.

Happy Housing Crash: thanks for pointing it out.

news of overdue property tax is hard to hide – too many people involved who do not have a direct stake. The realtors lie. The banks keep quiet.

I see the problem of lack of revenue compounding – first the municipalities see the problem then provincial and federal governments. At some point, the idea of fiscal discipline is going to come up. At the federal level, Shared Services is spending $1.4 billion a year. To centralize and control the IT divisions in each department such as Revenue Canada, Statistics Canada and Agriculture Canada ( where I used to work ). You cannot just cut Shared Services. There are major contracts with private industry who would still like to be paid. Off the cuff, there are a 1000 civil servants whose careers depend on Shared Services, significant numbers would resign – at significant cost to the tax payer. I’d say that if Shared Services were immediately cut, it would cost $1.4 billion for the next four years.

#165 Pooched! on 10.02.17 at 10:02 am

Garth, is it 48% on my retained earnings for the year or 48% on the interest my retained earnings may make?

Big difference!

Retained earnings are what’s left after you pay federal and provincial tax. The gains on earnings are taxed. When taken into income, they are re-taxed. — Garth

#166 Pritzl on 10.02.17 at 10:09 am

Ooh the irony. A conservative decrying divisive politics. Do conservatives have their memories wiped or their consciences removed in order to live with their hypocrisy?

Also note how when some policy affects their bottom line they all cry in unison, “the sky is falling”? I’m not saying I agree 100% with the changes but the deluge of false arguments is shameful. Being incorporated does not stop you from contributing to EI, (so you can get maternity leave) buying health insurance or saving for retirement. Choosing other options because the tax laws allowed it is fine. But you can’t suggest it’s the end of the world when said laws are revised.

You can still pay real contributors to your business and money re-invested in the business will not be touched. Trying to shelter money from taxes though will be harder, as it should be. The only shame is that capital gains remain sacrosanct.

Also, this BS about risk is laughable. The ultimate goal of opening your own business is higher rewards, better work, or both. That’s why you take on the risk. No one owes you anything for making that choice.

A brief note on you calling me a conservative. My last House of Commons gig was as a Liberal MP and special advisor to the Leader of the Opposition. I was first elected as a Progressive Conservative, and ran for leader of that party. My time as a Harperite ended in debris. — Garth

#167 HaHaHa on 10.02.17 at 10:35 am

And Harper was mean. Boo Hoo fellow Canadians. At least he wasn’t an airhead hypocrite. You all deserve this joke. Canada is back and the rest of the world could give 2 shits.

#168 The2ndcomingofJohnGalt on 10.02.17 at 10:46 am

Hi Garth,been reading your blog every day since I stumbled upon it browsing on the topic of the real estate market in Vancouver last year,thought provoking,and informative,love the comment section,keep up the good work!

#169 Keith on 10.02.17 at 10:57 am

@ #131 cd

It’s tempting to look at government as being inherently wasteful of significant amounts of the public’s money. The difficult thing about it is that many politicians in history have campaigned on “cutting government waste.”

Many of us could cut out a significant amount of personal spending that is “wants” not needs. I have to believe that if it was possible to cut two or three or five or ten percent of government spending without paying a huge political cost, it would have been done by now. What a coup for a finance minister to significantly cut spending, without hurting services to the public.

I would love for our host to share from the inside what it’s like to be in cabinet and trying to cut government spending.

#170 AB Boxster on 10.02.17 at 11:20 am

#135 Ponzius Pilatus on 10.02.17 at 1:48 am


Jees, what happend to the true Canadian grit.

———————————————-
Yeah.
Cuz, nothing exemplifies true Canadian grit and determination, like stepping up to pay more and more taxes to a socialist government that pisses it away on its useless pet projects.

It’s OK though. The bill will come due on you, not me.
Your generation is so screwed.

#171 n1tro on 10.02.17 at 11:45 am

#110 Flatlander on 10.01.17 at 10:30 pm
….I find it disturbing that more Liberal MP’s with his optimism for individual success aren’t standing up to T2 and Morneau as they gut the very spirit that built this great country.
————————————-
That’s because they are brainwashed, don’t understand the impact, bit of both, or fully understand but don’t want to be booted like Garth out of their own party.

#172 Pritzl on 10.02.17 at 11:46 am

A brief note on you calling me a conservative. My last House of Commons gig was as a Liberal MP and special advisor to the Leader of the Opposition. I was first elected as a Progressive Conservative, and ran for leader of that party. My time as a Harperite ended in debris. — Garth
—-
Methinks thou doth protest too much Garth. Just because you didn’t get along with King Harper, does not mean you suddenly ditched all your conservative values. If it walks like a duck and quacks like a duck…

To be fair, you appear to be socially liberal and fiscally conservative. Nothing wrong with that. I am too to some degree. However, one needs to examine their own motivations when taking a position. e.g. As the spouse of a physician, I am actually adversely affected by the decision to limit income sprinkling. Nevertheless, I believe I succeeded in divorcing myself from judging by my pocketbook and forming an opinion based on common sense.

#173 FOUR FINGERS WATSON on 10.02.17 at 11:55 am

Large corporations pay tax on their earnings. These after tax earnings are then distributed as dividends to shareholders and the same dollars distributed to shareholders are taxed again ! Double taxation ! If the government can do that then your precious TFSA is fair game. Wake up !

#174 Be careful what you wish for on 10.02.17 at 12:09 pm

Singh was born in Scarborough and grew up in St, John’s Newfoundland and Windsor, ON. He is not “Indian.” Indo-Canadian might be a more apt description. Or just Canadian. Still a socialist, though. — Garth

Agreed.

The question is, will Jagmeet split the left vote or unite it? I’m leaning towards the latter…

How do you think over-leveraged, massively indebted Canadians will react when the full effects of falling RE prices and tightening credit hits home? Remember, most Canadians own RE and can’t even pay their bills if they miss a single paycheque, can’t tolerate a 1% rise in rates, and most importantly, RE is their ONLY investment. What happens when the RE goes *poof*, and along with it, their hopes, dreams and ability to take out another HELOC in order to stay afloat?

They will vote out the incumbent and swing hard left.

The NDP has twice been the beneficiary of the 2 most recent notable Canadian RE declines. See Bob Rae and Rachel Notley.

I watched Mr. Singh’s acceptance speech. With a little polish, he’s just charismatic enough to pull it off. And T2 voters are just dumb enough to vote NDP. Throw in a RE crash and it’s a done deal IMO.

#175 crowdedelevatorfartz on 10.02.17 at 12:12 pm

@#159 Gravy Train.

Congrats to Julie Payette for her accomplishment.
She’s finished her exemplary career with NASA and is now riding the Liberal Gravy Train of politically correct appointments.
Conservative appointed G.G. out.
Liberal appointed G.G. in.
One wonders what the Canadian Taxpayer must fork over to the retiring G.G. in pensions, perks and payouts.
She’s hit 3 of 4 “must have’s” in order to be hired as the Governor General.
She’s female, french, and photogenic.

The Governor General is an anachronistic position that should have been abolished when Canada repatriated its constitution in the early 1980’s. Why do we still need the Queen’s representative to read “Throne Speeches”?

Either way .
A “win win” in the PC world of Justin Trudeau’s debt laden 4 year mandate.

#176 Too Comfortable To Act on 10.02.17 at 12:14 pm

The reason new taxes and other actions will pass is…….people in the GTA are too comfortable. They still spend at 5bucks coffee, still line up to signup for a debt life via real estate. There’s been no real shit storm to affect them. So they don’t believe or choose to ignore most of this daily blog. Life is great why should they care? Oh right until it does happen.

#177 Eks dee Sipal on 10.02.17 at 12:54 pm

#158 fancy_pants

“When there is no competition, no incentive to work harder, smarter, and better than the person next to you, then the majority of people won’t. Socialism eliminates motivation, innovation and productivity. That is why socialism is a dangerous economic framework to build a country on.”

The above statement is NOT TRUE and not based on any factual evidence. But it may be true of certain people who call themselves Conservatives.

#178 Eks dee Sipal on 10.02.17 at 12:57 pm

BTW, that statement was drilled into my head as a little boy by my mother, who learned it from her father, who learned it from… etc…

Time and Experience and LOTS of money later have proven to me that it is simply untrue. Unless you understand the real definition of money, you will not understand how this is made into a religion for you.

Seek wisdom, not riches.

#179 Sus on 10.02.17 at 1:12 pm

wages paid to a spouse are deductible from the income of the business. There’s no test to ensure a marketable task is being performed – no bureaucrat crawling over your sole proprietorship. Nobody from Ottawa will denigrate and embarrass your mate.
———————————————————-

Pretty sure you’re wrong about this. Any so-called employee of either a small business corp. or sole proprietorship needs to prove their activities if asked by the CRA.

#180 Manitoba Whale on 10.02.17 at 1:24 pm

#140 Dolce Vita on 10.02.17 at 2:13 am

Warren Buffett has 100 billions in cash reserves in Berkshire Hathaway. Apple has over 250 billions, Microsoft – over 100 billions, Google/Alphabet – close to that.

Do you see the secretary of treasury in US going after them and telling them to move on and invest these ‘dead’ money.
*****

The ‘dead money’ comment really struck me as odd. He must be referring to small business not investing in more small businesses or more equipment. But why is that his concern? Is he going to suggest level of risk one takes in investing next? Which sector we are allowed to invest in?
What does he think of money in pensions then?

#181 Smoking Man on 10.02.17 at 1:25 pm

DELETED

#182 Manitoba Whale on 10.02.17 at 1:27 pm

The comment about laundering money in $20’s in the casino in BC is lost on me. Can someone explain that? How would they recover it?

I should just stick to my own businesses and industry. At least I know how to be a tax cheat there.

#183 IHCTD9 on 10.02.17 at 1:31 pm

#85 Dominoes Lining Up on 10.01.17 at 8:30 pm

It seems that they have reached a tipping point now with property taxes in the GTA bubble zone and things may get uglier with much more collections activity and repossession on the horizon.
_____________________________________

GTA property taxes are cheap too.

Interesting info though if true…

#184 Manitoba Whale on 10.02.17 at 1:37 pm

#158 fancy_pants on 10.02.17 at 9:34 am
The best example of the danger of socialism was demonstrated by a college professor…

*****
I still have a copy of that article, think I cut it out (aged myself) of an industrial monthly. I should re-read that clipping. Maybe post it here using OCR.

#185 Renter's Revenge! on 10.02.17 at 1:41 pm

#148 My Sister Said… on 10.02.17 at 8:45 am

Cool! I’ve had very similar thoughts to what your sister said, but my version is that it’s best to be slightly above average at everything in life, after which diminishing returns start to kick in. You still get respect from everyone, but you’re not so much better than them that they try to pull you back down. Plus it saves you the time and energy it takes to become the best at something, so you can direct that time and energy to becoming slightly above average at more things, which is good for diversification.

#186 What about Debt on 10.02.17 at 1:41 pm

Major issue under this new ruleset is that you could have significant financing issues.

Corporations allow businesses to pay for their debt using after-corporate-tax dollars. For a small business, you could pay your debts with 85-90 cents on the dollar you have left after taxes. If you have to pay the principal with after-personal tax dollars of 45-55 cents you could struggle to meet those payments if you are a highly leveraged operation.

Many new businesses, particularly those who are experienced fishermen and farmers buying into the business (eg: buying a licence/quota and related equipment) are essentially required by the bank to incorporate to start their business. These new rules will severely impact their ability to qualify for financing.

Trudeau and Morneau clearly just bought into the messaging that has been coming from the clueless heads at the Department of Finance for some time now. The folks in Finance are intelligent people but don’t understand business and how taxation is integrated into all the other aspects of carrying on a business. Tax policy changes have a nuanced effect on various industries and these blanket policy changes have many many unintended consequences that completely negate any benefit they purport to have.

#187 IHCTD9 on 10.02.17 at 1:44 pm

#172 Be careful what you wish for on 10.02.17 at 12:09 pm

The question is, will Jagmeet split the left vote or unite it? I’m leaning towards the latter…
__________________________________________

Who cares? What you should be worrying about is how you’re going to reduce your overall tax burden. You know it’s going up no matter who gets in, and you evidently know that more and more Canadians are getting more and more stupid, so you know that means more and more taxes.

It’s never been more clear, and whatever Jag does, you can bet your @ss it won’t be crusading for a smaller more efficient government. That’s all you need to know my brother.

The sooner you start paying them less – and I mean way less – the sooner you can stop worrying about what whoever is going to do if whatever happens.

#188 Graeme on 10.02.17 at 1:51 pm

Pritzyl,

I might be ‘adversely affected’ by the new laws as well. Like you, I am for Morneau’s plan, because I take myself out of the picture. It is unfair to have two different taxation schemes based on the concept that a stay at home spouse is automatically making an equal contribution to building a business. The good old, “cry me a river” clause doesn’t work when the majority of employees are working in conditions that would make Bob Cratchitt wince.

#189 n1tro on 10.02.17 at 1:52 pm

#180 Manitoba Whale on 10.02.17 at 1:27 pm
The comment about laundering money in $20’s in the casino in BC is lost on me. Can someone explain that? How would they recover it?

I should just stick to my own businesses and industry. At least I know how to be a tax cheat there.
————————

Take your ill gotten cash from drug dealing and the like, go to the casino and feed the machine. play a bit, and then cash out. Casino will write you a cheque and you cash it and it is clean since it looks like you won it from the casino. Casinos probably turn a blind eye to such activities since as you play, you are losing some of the money as it is going through the laundering cycle.

#190 crowdedelevatorfartz on 10.02.17 at 1:57 pm

@#180 Manitoba Whale

read and weep.

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwjeoKzGwdLWAhVrs1QKHeDOAH0QFggmMAA&url=http%3A%2F%2Fvancouversun.com%2Fnews%2Fnational%2Fexclusive-how-b-c-casinos-are-used-to-launder-millions-in-drug-cash&usg=AOvVaw2W8mPpWWxEvn7b-PKJlQUG

#191 fancy_pants on 10.02.17 at 2:02 pm

Eks dee Sipal

Money is simply a medium for postponed reward for completed effort. let me dumb it down for you to it’s simplest form. simple math really.

capitalism:
person A: 1 effort = 1 reward
person B: 3 effort = 3 reward
person C: 5 effort = 5 reward

socialism:
person A: 1 effort = 3 reward
person B: 3 effort = 3 reward
person C: 5 effort = 3 reward

I am all for some degree of socialism, helping the less fortunate etc etc.but to an extreme it is a poor model.

ps. playing the odds, I would almost guarantee I give more in charitable donations in one year than you give in five, so I don’t need you suggesting what my religion is.

#192 IHCTD9 on 10.02.17 at 2:04 pm

#178 Manitoba Whale on 10.02.17 at 1:24 pm

The ‘dead money’ comment really struck me as odd. He must be referring to small business not investing in more small businesses or more equipment. But why is that his concern? Is he going to suggest level of risk one takes in investing next? Which sector we are allowed to invest in?
What does he think of money in pensions then?
___________________________________

Trudeau obviously thinks that if you go out and buy a new flatbed truck or Lathe, that new business will magically appear to utilize the new purchases.

It makes me wonder where the hell he went to get his business degrees?

Oh, wait…

#193 Lost...but not leased on 10.02.17 at 2:19 pm

Re socialism..

Socialism is a precursor to communism.

Recall communist USSR= Union of Soviet Socialist Republics.

China is till Communist….it has 2 classes of citizens…it has morphed from a military dictatorship to a pseudo capitalist system…with the very rich at the top.

Canada?..IMHO T2 is attempting to wipe out the middle class…leaving the elites in charge with all their trusts and foundations….same end result as China.

The only difference is China worked its way up to this point, whereas many Western countries are tearing themselves down to achieve the same point.

#194 Stan Brooks on 10.02.17 at 2:22 pm

#178 Manitoba Whale on 10.02.17 at 1:24 pm

The ‘dead money’ comment really struck me as odd. He must be referring to small business not investing in more small businesses or more equipment. But why is that his concern? Is he going to suggest level of risk one takes in investing next? Which sector we are allowed to invest in?
What does he think of money in pensions then?
————————————–

It is a catch 22.

1. They will tell you to take risk and not to hoard money in a corporation, maybe they will even start measuring how successful the corporation is before recognizing it as such, if you lose money too bad, no recognition for spouse work or no recognition as a corporation at all.
How dare you not to be successful in this great Business environment (super clusters and other BS pushed by the liberals) fostered by such wise men?

and

2. At the same time they will tell you that the risk you are forced to take should not be counted as you should be paid the same as an employee who takes no risk.

So now you understand what goes on in the head of a liberal leader with deep knowledge of fairness/not finance. clear as mug.

#195 Stan Brooks on 10.02.17 at 2:23 pm

clear as mud

#196 IHCTD9 on 10.02.17 at 2:31 pm

#170 Pritzl on 10.02.17 at 11:46 am

… Nevertheless, I believe I succeeded in divorcing myself from judging by my pocketbook and forming an opinion based on common sense.
___________________________________________

So common sense is making yourself poorer while making government richer, and crossing your fingers that the benevolent hand of government does some good with it.

I hope the sanctimony is long lasting.

Seriously though, I’m glad folks like you exist. Trudeau needs you guys because folks like me aren’t playing ball.

Keep up the good work.

#197 Duke on 10.02.17 at 2:37 pm

Next big business will be Repo.

#198 Stan Brooks on 10.02.17 at 2:42 pm

#186 Graeme on 10.02.17 at 1:51 pm
Pritzyl,

I might be ‘adversely affected’ by the new laws as well. Like you, I am for Morneau’s plan, because I take myself out of the picture. It is unfair to have two different taxation schemes based on the concept that a stay at home spouse is automatically making an equal contribution to building a business. The good old, “cry me a river” clause doesn’t work when the majority of employees are working in conditions that would make Bob Cratchitt wince.

=========================

Let me see,

As a full time employee:
1. Did you mortgage your home or took a loan to start your job?
2. Have you ever had a year in which you take negative salary, i.e. occur losses after hard work and bring home nothing?
3. If you are a public servant why you have the right to income split your pension with your spouse and small Business owners don’t?
40 k public servant pension requires over 1 million in funding of which majority comes from the taxpayers.
Are you willing to return that/the taxpayers contributions and have your money contributed to the fund taxed at 73 % on withdrawal?
4. How many jobs (clients in the small Business world) did you have in your career?
How many nights did you not sleep thinking of work and what comes next month?
………………….
I can go for really long here.

When you experience any of the above in your full time job, come here and we will have an intelligent conversation.

#199 Victor V on 10.02.17 at 2:44 pm

#180 Manitoba Whale on 10.02.17 at 1:27 pm

The comment about laundering money in $20’s in the casino in BC is lost on me. Can someone explain that? How would they recover it?

I should just stick to my own businesses and industry. At least I know how to be a tax cheat there.

======================

Everything you need to know is here: http://vancouversun.com/news/local-news/whale-gamblers-ided-by-bclc-also-placed-big-bets-on-b-c-real-estate

#200 Stan Brooks on 10.02.17 at 2:53 pm

#186 Graeme on 10.02.17 at 1:51 pm
Pritzyl,

Oh, I forgot,

If you want to be equal, you can also voluntarily pay 10 % CPP instead of 5 as a small Business owner does.
Bill would love it.

Being a company to take all risk (but without the benefits of the public companies) while treated as an employee so the government rips all the benefits?
Sweet dreams.

Good luck with finding idiots for that.

#201 IHCTD9 on 10.02.17 at 2:54 pm

#186 Graeme on 10.02.17 at 1:51 pm
Pritzyl,

I might be ‘adversely affected’ by the new laws as well. Like you, I am for Morneau’s plan, because I take myself out of the picture. It is unfair to have two different taxation schemes based on the concept that a stay at home spouse is automatically making an equal contribution to building a business. The good old, “cry me a river” clause doesn’t work when the majority of employees are working in conditions that would make Bob Cratchitt wince.
_________________________

Excellent.

May I also suggest telling the wife/hubby to increase the 60 hr. weeks to 70-80? That way you will feel great about all the money your spouse is giving to the government, and all the great things they will (hopefully) do with it.

Thanks for your help, the more your spouse is taxed to death, the less reason the CRA will have to poke around at my house.

Keep up the good work.

#202 AGuyInVancouver on 10.02.17 at 2:55 pm

#180 Manitoba Whale on 10.02.17 at 1:27 pm
The comment about laundering money in $20’s in the casino in BC is lost on me. Can someone explain that? How would they recover it?

I should just stick to my own businesses and industry. At least I know how to be a tax cheat there…
_ _ _
Are we allowed to discuss this here now? Garth deleted my comment questioning how someone involved in this scam was able to get eight mortgages worth $28 million against an $8 million house. That would seem a pretty fair question on a blog dedicated to Economics, Real Estate and Money!

Think about it for a minute..of those eight lenders, were any legitimate banks or credit unions? If so, are their lending standards that lax? Or all these all shadow lenders, and if so, who is regulating them?

A better question: Why not talk about things that actually matter to the lives of people here? — Garth

#203 Victor V on 10.02.17 at 4:00 pm

Home Capital cuts 65 jobs; cost-cutting effort now ‘substantially complete’

https://beta.theglobeandmail.com/report-on-business/home-capital-cuts-jobs-as-cost-cutting-effort-now-substantially-complete/article36461950/

#204 Lee on 10.02.17 at 4:03 pm

CMHC seeking to make it easier for self-employed to get mortgage (See Nat Post). Expect to see a lot more of this to spruce up the housing market as it starts to slide a bit. Bit by bit the government will stop the bottom from falling out of the real estate market, and then up she goes again.

#205 waiting on the westcoast on 10.02.17 at 4:47 pm

#186 Graeme on 10.02.17 at 1:51 pm
“Pritzyl, I might be ‘adversely affected’ by the new laws as well. Like you, I am for Morneau’s plan, because I take myself out of the picture. It is unfair to have two different taxation schemes based on the concept that a stay at home spouse is automatically making an equal contribution to building a business. The good old, “cry me a river” clause doesn’t work when the majority of employees are working in conditions that would make Bob Cratchitt wince.”

Wow…

You have no idea… My first wife (whom I lost due to the trials and tribulations of building a startup) had to economically carry our family for the first few years. WE made decisions that radically affected our family to pursue a business opportunity. Eventually, she lost faith and I let her walk with our meagre assets while I took on all the debt. I think you should call her up and talk about your Bob Cratchitt issues…

My current wife and partner in business has agreed to take on a massive risk profile and forego many perks (like little stress, EI if things didn’t work out, etc) so we could become successful. Only the last few years have we been in a position for some creature comforts and travel, etc.

Spouses of entrepreneurs are true partners in the business. They actively support and provide counsel and ultimately make significant decisions that affect the development of the business. And they accept tremendous risk in doing so.

And now the government wants to treat me fairly… Would have loved a bit of the safety net while taking in all this risk, but hey, that wouldn’t be fair???

#206 AGuyInVancouver on 10.02.17 at 5:00 pm

A better question: Why not talk about things that actually matter to the lives of people here? — Garth
_ _ _
Garth, the house was in West Vancouver! Aren’t you concerned about who lent that money? What if a local credit unions is one of the lenders? And if they’re not, the ease at which someone like this was able to get multiple mortgages from alternative lenders for a property in Canada is mind-blowing. No wonder Vancouver’s prices are insane.

Actually I don’t care about one house. But knock yourself out. — Garth

#207 Jeff on 10.02.17 at 5:17 pm

I am no entrepreneur, but if I was one, I would do one of those things :

1) I’ld plan to move to the US.
2) I’ld reduce my number of working hours per week.

Our government penalize productivity and rewards stupid things such as lgbt. This is what he is going to achieve : Non productivity and population doing stupid stuff.

I miss harper.

#208 Keith in Rio on 10.02.17 at 5:34 pm

Ever wonder why you don’t see Venezuela or Brasil in the news ? The truth absolutely obliterates the oatmeal narrative the fake news presstitutes feed you.

Liberalism is rebranded socialism which is merely communism 2.0.

Garth is a gatekepeer of the temple if Marx.

SSDD………same shit, different day.

#209 Asterix1 on 10.02.17 at 5:46 pm

#201 Lee on 10.02.17 at 4:03 pm
…Bit by bit the government will stop the bottom from falling out of the real estate market, and then up she goes again.

————————————————————
As Garth mentioned a few days ago, “It now takes 75.4% of a family’s pre-tax earnings (or just over 100% of what’s actually brought home) to buy and carry a house, even after a massive 25% down payment”

Market is not going up! Party is over. Still a few people dancing but the music system is not even playing.

#210 Lost...but not leased on 10.02.17 at 5:57 pm

#203 AGuyInVancouver….

The issue you allude to is one that is not news….

What the problem is that many have valid suspicions…but there is often no political will at the time to investigate…till it becomes so blatantly obvious that the gov’t can no longer turn a blind eye.

It is interesting that T2 and Moroneau are effectively attacking people with domestic businesses and revenue sources, and not more effort at what is clearly suspicious activity.

#211 Denise#1 on 10.02.17 at 6:22 pm

#205 Keith in Rio

SSDD………same shit, different day.

====================================
A quote from Stephen King’s book “Dreamcatcher”. Good phrase, in an entertaining book.

#212 Arne on 10.03.17 at 12:50 am

Many thanks to #35 Giver for explaining it properly.

#213 Graeme on 10.03.17 at 3:14 am

#195 Stan Brooks,

I am a business owner who has struggled mightily to get my business up and running. I simply have too much personal pride to define the sometimes crushing loads I have operated under as any worse than most employees. You are not special and your struggles aren’t unique. The tax system needs to be impartial and not favor one over another.