The Greater Charlottetown Area Chamber of Commerce welcomed further explanation from Federal Finance Minister, Bill Morneau on proposed tax changes to business income sprinkling. However, concern remains that not enough time has been given to understand the impact of the new rules before they take effect on January 1, 2018.
“The clarification offered on the federal government’s income sprinkling rules is important to the business community. However, we are concerned government is rushing these changes through,” said Greater Charlottetown Area Chamber of Commerce President, Rory Francis. “There is a substantial amount of detail to review before the changes take effect in just two and a half weeks.”
The Chamber recommends the implementation of the changes be postponed by at least one year to allow time to consider the consequences of the new rules.
“It is important we understand the economic impact of these changes before they are enacted,” said Francis. “There are also practical operational reasons to postpone their implementation. Business advisors need time to understand the legislation and business owners need time to meet with advisors to learn how the changes impact them. Time is also needed for owners to reorganize their businesses to comply with the new rules.”
While some positive modifications to the federal government’s tax proposal were announced in the fall, the Chamber is still very concerned about the potential negative impacts the tax changes may have on business investment and growth. In addition to the incoming sprinkling details provided, the Chamber awaits further information on proposed changes to passive investments which is expected to be released as part of the 2018 federal budget.