It’s time to pause and reconsider proposed rules on taxation of private companies
In our detailed review and submission to the federal government on their proposed changes to private company taxation, we urge them to delay the implementation of the proposals.
There are many technical reasons why we are calling for a delay, but most importantly we believe that such a significant shift in tax policy for private corporations requires more analysis and discussion to address the many concerns actively being expressed by numerous affected parties, including entrepreneurs, small business owners, professionals and others.
The proposed tax policies could have many unintended consequences, including reducing the competitiveness of Canada and the attractiveness of our country as a place to invest, build and grow. This is against a global backdrop where other countries are competing to attract business and capital.
KPMG in Canada also shares concerns around the changes leading to significant additional complexities in the already challenging set of tax rules and compliance requirements in Canada. Our analysis concludes that some of the proposed changes will also result in unintended consequences – such as negatively affecting intergenerational transfers of a private business.
Significant changes in tax legislation require a robust review and a 75 day consultation period is much too brief. Time is needed for much more review and discussion between the business community, various professional groups, other affected parties, tax professionals and the government; and the affected private companies need time to fully understand the changes and the potential direct impacts.
We hope that the federal government will take the many concerns expressed by the tax and business community during the consultations into account before proceeding with these proposals.
KPMG welcomes the opportunity to contribute to the public debate and be a part of the way forward.