The Conservative Party of Canada says it will repeal certain tax changes affecting small businesses if elected in next month’s federal election.
In a release on Tuesday, the Tories announced several measures to support small business, topping the list with a full repeal of the new rules for passive investment income.
The reversal would restore full access to the small-business tax rate for corporations earning more than $50,000 in passive investment income in a given year, a supporting document said. Full access to refundable taxes for corporations on the distribution of eligible dividends would also be restored.
The rules for passive income were introduced by the Liberal government in its 2018 budget, effective in the 2019 tax year.
The Conservatives also pledged to exempt spouses (including common-law partners) from the tax on split income (TOSI). Effective in 2018, TOSI was expanded to include adults and more types of income — part of the Liberal government’s controversial 2017 tax changes.
Today’s announcement by the Tories aligns with recent requests from the Canadian Federation of Independent Business. A vocal critic of the Liberals’ tax changes for private corporations, the federation asked the federal parties earlier this month to repeal the passive income rules and exempt spouses from TOSI, among other measures.
Other efforts announced by the Tories today to support small businesses include deregulation, with a 25% reduction of federal regulations over four years; a two-for-one rule for regulations, whereby any new regulation would require scrapping two others; and the assignment of a minister to lead red-tape reduction efforts.
The Conservatives also pledged changes related to the Canada Revenue Agency (CRA). For example, the Tories said they’d make it easier to navigate the tax system and get set up with the CRA by creating information packages for small businesses. If elected, the Conservatives would also reduce complexity in CRA rules and appoint an expert panel to review taxation to make it modern, simple and fair.
The release also said the Tories would champion Canada’s small businesses globally and mandate that ministers and regulators support “innovation, economic growth and global competitiveness.”
In the release, Conservative leader Andrew Scheer said that a Conservative government would “continue to celebrate small businesses as drivers of prosperity, and not view them merely as sources of revenue.”