Greg Foran, owner of Go Power Sports, said they have a good, solid business with a great team of nine employees and great products so he isn’t concerned about the business thriving. However, it remains to be seen how a new tax regime would affect his ability to expand the operation.
Foran said this includes the way they save and use money within the company to grow. They were in the process of hiring but Foran said they would now have to wait and see what happens with the proposed changes to determine how it impacts their bottom line. He said they might have to get more creative or “cut a little tighter around the edges.”
Go Power Sports deals in BRP products, with brands including Can-Am, Ski-Doo, Sea-Doo and CF Moto. Foran said they have a few million dollars in inventory.
With the understanding that he’s going to be able to grow the business in a healthy way so he can pass it on or sell it to his children, he’s comfortable with that. However, he said the proposed tax changes would make a significant, perhaps catastrophic, difference to businesses and the economy. People won’t be as willing to take that risk.
“The government is positioning small business owners as being wealthy people who are skirting the tax laws and taking advantage and it’s not true,” Foran said, pointing out that they’re working within the existing tax structure.
He asks why put his family through such financial risk when he could go back to the private sector where he earned more money 15 years ago, not have to work weekends or worry at night.
Liberal Finance Minister Bill Morneau announced intentions in July to close so-called loopholes that the government says allow business owners earning higher incomes to avoid paying higher tax rates.
The proposal looks to limit passive business income taxation; targets methodology for changing income into dividends or capital gains; and targets “income sprinkling”, which allows business owners to split income among family members whether or not they’re involved in the business.
A 75-day consultation period regarding the proposed changes was initiated. It concluded Oct. 2. Morneau has recently stated in the media that, following consultations, changes to the tax proposal will be needed.
Deputy Opposition Whip John Brassard, Conservative MP for Barrie-Innsisfi, Ontario, visited Go Power Sports on Oct. 5 to discuss Foran’s concerns. This was just prior to an Annapolis Valley Chamber of Commerce meeting in Kentville on the proposed tax changes.
Brassard said the last thing businesses need is uncertainty. Changing the rules mid-game completely blows business plans apart and announcing the changes in mid summer meant many Canadians weren’t made aware.
Brassard said Prime Minister Justin Trudeau set the tone in an interview where he said there are a lot of small business people who use their enterprises to avoid paying their fair share of taxes but this isn’t true.
“The challenge was that the narrative that they used and the language that they used was really divisive,” Brassard said. “They were referring to tax cheats, they were talking about wealthy business owners, well, you know, that’s not the case.”
He said there are more than a million small businesses in Canada employing 8 million people, the “bread and butter businesses” that could potentially be impacted. This will take money out of the hands of employees and their dependants. Brassard said businesses are also holding back on making charitable donations because of uncertainty.
He said that the last time there were fundamental tax changes proposed, it took seven years for the Carter Commission to determine what was fair, equitable and what would help the economy. Brassard said a recent motion put forth in the House of Commons to extend the consultation period to Jan. 31, 2018, was unsuccessful with all Liberal MP’s voting it down.
