Minister Morneau Discusses Tax Fairness With Standing Committee on Finance
September 28, 2017 – Ottawa, Ontario – Department of Finance Canada
The Government of Canada is committed to changing a tax system where wealthy and high income individuals can use their corporations to pay lower rates of taxation than hard-working middle class Canadians, and is listening to small business owners, professionals and experts to ensure a fair approach.
Finance Minister Bill Morneau met today with members of the House of Commons Standing Committee on Finance about the Government's ongoing consultations on tax advantages involving Canadian-controlled private corporations. Minister Morneau encouraged a fact-based discussion on the Government's proposals and on the importance of levelling the playing field for the middle class by keeping high income and wealthy individuals from using private corporations to pay lower tax rates than middle class Canadians earning much less per year.
The Government is ensuring that the hard work of small business owners is rewarded by maintaining the lowest small business tax rate in the G7. With a combined general corporate tax rate that is 12 percentage points lower than our largest trading partner, the United States, the Government is helping businesses small and large to expand and create jobs. These rates are designed to help Canadian businesses create middle class jobs, invest in their community and grow—and the Government wants to make sure they are being used fairly.
"As the economy grows, Canadians need and deserve to know that their tax system is fair. Currently, we have a tax system that encourages the wealthy to incorporate to get tax advantages over the middle class. We don't think that's fair. We will listen to Canadians to ensure we get it right as we take the next step in our plan to grow the economy in a way that works for the middle class. That's why Small Business and Tourism Minister Bardish Chagger, my new Parliamentary Secretary Joël Lightbound, and I are visiting small business owners, professionals, and farmers and fishers across the country, listening to ideas and answering questions."
- Bill Morneau, Minister of Finance
- An increasing number of Canadians—often high income individuals—are using private corporations in ways that allow them to reduce their personal taxes. In some cases, someone earning $300,000 with a spouse and two adult children can use a private corporation to get tax savings that amount to roughly what the average Canadian earns in a year.
- The Government of Canada is consulting Canadians on proposals to ensure equity in Canada's tax system while maintaining Canada's low and competitive business tax rates. According to the Coalition for Small Business Tax Fairness, two thirds of businesses in Canada earn less than $73,000 a year. These hard-working middle class small businesses are not our focus.
- Canada has a combined general corporate tax rate that is 12 percentage points lower than our largest trading partner, the United States.
- Small businesses in Canada benefit from support that includes a reduced federal income tax rate of 10.5 per cent on their first $500,000 of active business income.
- The combined federal-provincial-territorial average tax rate for small business is 14.4 per cent, the lowest in the G7 and fourth lowest among Organisation for Economic Co-operation and Development countries. Small businesses can retain more of their earnings to reinvest, supporting growth and job creation.
- In addition to generous tax support, small businesses also benefit from direct program support for scaling up, including access to financing and foreign markets, support for innovation, and services to build entrepreneurial and management capacity through programs such as the Industrial Research Assistance Program and the Canada Small Business Financing Program. A number of federal entities provide support for small and medium-sized enterprises including Innovation, Science and Economic Development Canada, Global Affairs Canada's Trade Commissioner Service, Export Development Canada, and the regional development agencies. Most notably, the Business Development Bank of Canada serves 49,000 Canadian small and medium-sized enterprises and has reached a total of over $29 billion committed to small and medium-sized businesses.
- Minister Morneau Brings Listening Tour to Toronto
- Minister Morneau Brings Listening Tour to Fredericton
- Minister Morneau Brings Listening Tour to Halifax
- Minister Morneau Brings Listening Tour to Gatineau
- Ministers Morneau and Chagger Kick Off National Listening Tour With Small Business Owners
- Minister Morneau Announces Next Steps in Improving Fairness in the Tax System
- Minister Morneau Brings Message of Tax Fairness to Toronto Region Board of Trade
Media may contact:
Office of the Minister of Finance
613-369-5699 / 613-462-5469
Department of Finance Canada