September 18, 2017
Speech at the Chartered Professional Accountants Canada's The ONE National Conference 2017
Check Against Delivery
Good afternoon. It's great to be here with you at The ONE Conference.
I want to thank Joy Thomas, President and CEO of CPA Canada, and Johanne Charbonneau, the Chair of CPA Ontario, for the welcome.
It was important for me to be here to hear from you, and to listen.
This is a consultation, after all, and I know there are opinions, ideas and insights in this room that will help us get it right.
I'm looking forward to taking questions in just a few minutes, but first I want to tell you about our goal to address some of the inherent unfairness that is built in to our tax system.
walked down from Parliament Hill, where Question Period just wrapped up.
What's clear from that experience is that there is a lot of misinformation and myths out there about what we want to accomplish or whether we are truly consulting.
I want to reassure you, first and foremost, that I am committed to ensuring a healthy, thriving business environment and to protecting Canadian businesses' ability to invest, grow and create jobs.
On that front our plan is working.
We are now the fastest growing economy in the G7—by a wide margin.
The economy is growing at an impressively strong 4.5 per cent—faster than it has been since the beginning of 2006.
In the two years since we came to office, 400,000 jobs have been created.
That's all good news.
But let me be blunt: this is not good enough for me.
We need more than economic growth.
We need an economy where all Canadians—not just the wealthy few—should experience the benefits and opportunities that come with that success.
And, my friends, there is work to do to ensure fairness for middle class Canadians.
I’m not indifferent to a system that allows an incorporated professional who earns $300,000 to save as much or more in taxes as the average Canadian earns in a year.
I’m not indifferent to a system where a single mother of young children pays more tax than a married professional with two adult children.
My job is to make sure everyone gets a real and fair chance at success.
That's why the very first thing our Government did was to increase taxes on the top one per cent.
And the proposals we've put forward take that objective one step further.
We know that incorporation—combined with the lowest small business tax rate in the G7—offers hard-working middle class business owners the ability to sell shares, raise capital and limit liability.
But for the wealthiest, incorporation offers something different.
I'll explain with a simple example, which I alluded to earlier.
The average income in Canada is estimated to be about $49,000 this year.
In some cases, an incorporated professional earning $300,000 with a spouse and two adult children can save about the same amount in taxes by sprinkling income.
And what that means in practice is that an incorporated professional—like a doctor—can be taxed at a lower rate than a salaried nurse practitioner or police officer making much less per year.
As the economy grows, Canadians need and deserve to know that their tax system is fair.
Right now, it's not.
And so we're asking for your help.
Many of you have provided comments on our proposals—I even recognize a few of you from Twitter.
But in all honesty, I welcome your constructive feedback, and we are pleased that these issues are getting the attention that they deserve.
These are big changes, and we need to get them right.
That's why Minister Chagger and I are on a listening tour right now, visiting small business owners and professionals across the country, listening to ideas and answering questions.
Just this week, this tour will take me through Toronto, Southwestern Ontario, Montréal and Atlantic Canada.
And while the goal of this tour is to hear from Canadians, my second priority has been to address some misconceptions.
So allow me to bust some of the most widely held myths I've heard about our proposals.
First and foremost, we are not increasing the small business tax rate.
Our proposals will have no impact on a business's ability to save, for business purposes, and Canadian small businesses will continue to benefit from the lowest small business taxes in the G7.
Our proposals will not affect an individual's ability to incorporate their business.
Nor will they prevent business owners from employing family members.
Second, it's also important to note that middle class Canadians and small businesses are not the focus of our proposed changes.
Two thirds of businesses in Canada earn less than $73,000 a year.
Take our proposed changes to passive investment income rules—which, let's remember, currently allow for the creation of a personal savings account inside a corporation.
For those changes to really have an impact, a business owner needs to earn more than $150,000.
Which brings me to a third and very important point. I recognize that there are those business owners and professionals who have saved and planned for their retirement under the existing rules.
I want to reassure everyone that our proposed changes would only apply on a go-forward basis—not to existing savings, nor to investment income from those savings.
And finally, I've heard from many women entrepreneurs and professionals who face unique challenges, and I want to thank them for bringing their concerns forward.
I am particularly interested in better understanding how these changes could affect women differently than men.
And I can assure you that any measures we take will continue to help support women's ongoing success.
I also commend small business owners for reminding us that what they do takes guts, and that the risks they take are real.
I know first-hand the hard work it takes to run and grow a business.
As the Prime Minister has stated, we are always open to better ways to fix the problems identified in our consultations.
But we are going to fix them.
Because our Government was elected to help grow the middle class.
And we know that an economy that works for the middle class is an economy that works for everyone.
A fair tax system is one of the surest ways to make sure our economy is really working for business owners, salaried employees, men, women and all those in the middle class.
what this is about. And I look forward to working with you on ensuring we do
I'll be happy to take your questions.