Federal finance minister Morneau pitches small business on tax reform
Federal finance minister Bill Morneau was in Waterloo, Ont. Friday, pitching his tax break plan and "tax fairness" — as a government press release calls it — to a small business forum.
Morneau and Small Business and Tourism Minister Bardish Chagger visited Communitech, a small-business based incubator focused on southern Ontario's tech sector.
The finance minister said the Liberal government has heard the concerns of small business owners about proposed changes to passive investments, like stocks and real estate, that are parked in a business. Many proprietors earmark these investments for retirement as they do not have access to other traditional savings vehicles like a pension plan.
Morneau said the proposal has been tweaked to allow up to $1 million in passive investments be kept in a small business which will ensure "flexibility to ensure they can have a retirement plan that makes sense."
He also said the government has now set clear guidelines for "income sprinkling," to ensure payouts are only made to family members that actually play a role in the company. The Liberals scrapped proposed changes to the capital gains regime.
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Morneau has been under fire since the Globe and Mail reported Monday that Morneau did not put his business assets into a blind trust. That led opposition critics to accuse him of conflict of interest in sponsoring legislation involving private pensions, C-27, that could benefit him financially.
During a news conference Thursday on Parliament Hill, Morneau said he will unload the million shares, worth about $20 million, he has in Morneau Shepell, the human resources and pension management company his father founded.
His other assets will be placed in a blind trust in order to avoid any public perception of conflict of interest, he said.
Morneau has also climbed down from another controversial tax proposal to address the concerns of farmers and fishers.
The finance minister said the government is abandoning the proposed tax reform that would have restricted the conversion of income into capital gains.
"We're going to take a step back and reconsider that aspect of our tax proposal," he said at a farm alongside Agriculture Minister Lawrence MacAulay in Erinsville, Ont., about halfway between Toronto and Ottawa, and three area Liberal MPs.
The proposal would have made it more difficult for farmers and other business owners to pass on their businesses to their children.
Scheer also in region
Earlier in the morning, Conservative leader Andrew Scheer also spoke to two small business forums in Waterloo Region.
Scheer described what he sees as "irony" in Morneau's propsed small business tax reforms while "we have a prime minister and a finance minister that used their own accounting schemes and accounting measures to avoid paying higher taxes."