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  • 28 Aug 2017 13:48 | Nishan Singh

    Do you own a small, medium or large private business in Canada? New tax-planning proposals will affect your passive investments.

    On July 18, federal Finance Minister Bill Morneau introduced draft legislation, explanatory notes and a consultation paper proposing to fundamentally overhaul the system of taxation for private companies, their shareholders and family members. These proposals are broad-based and primarily target Canadian-controlled private corporations (CCPC), regardless of sector, industry or economic grouping. The proposals are far reaching and will undoubtedly affect all Canadian private businesses – not just incorporated professionals.

    The release of the proposal documents follow statements made in the Liberal Party election platform and the Trudeau government's 2017 federal budget that it wants to ensure that CCPC status is not used to reduce personal income-tax obligations for high-income earners, rather than supporting small businesses. The draft legislation identified the reinvestment of aftertax corporate earnings in passive investments as a priority tax-planning measure requiring significant change.

    The newly proposed tax-planning measures will fundamentally change the way corporate aftertax income reinvested in passive investments will be managed. Here's an overview of the proposed changes:

    Overview of passive income in corporations

    Currently, corporate business income is taxed at a lower rate than personal income, which leaves corporations more money to invest in their business. If a private corporation doesn't need to reinvest all of its earnings to expand the business and isn't ready to reinvest – perhaps waiting for new machinery to come out or waiting for a new opportunity to buy a building – they may invest those earnings in passive investments. These could consist of numerous different options, including savings accounts, GICs and stock portfolios held within the corporation or a related corporation. These investments allow small businesses to earn a return on their investment while holding the funds for future business needs.

    What's the perceived concern?

    The government perceives an unfair tax advantage when earnings are held inside a corporation not to expand the business, but to earn a return in the private corporation. Corporations will still pay the same amount, approximately 50-per-cent tax, on the passive investment income they earn with these aftertax funds. The government perceives there is an unfair tax advantage, as private corporations have more funds to invest given that the tax rate on their business income is less than that of an individual.

    What are the proposed changes?

    Several proposals have been issued to discourage the holding of passive investments in private corporations by neutralizing tax-assisted financial gains. The government is proposing to eliminate this perceived tax advantage by effectively increasing the tax rate substantially on earnings from corporate aftertax income reinvested in passive investments that are not related to the corporation's active business. For example, aftertax earnings reinvested in a portfolio of dividend-paying stocks would be affected.

    In the new proposals, the government outlined possible approaches for increasing the tax on earnings from such passive investments. Although the proposal documents state that the new rules would only apply on a go-forward basis, no details were provided on how passive assets currently owned by corporations would be grandfathered under the existing rules.

    What factors are the draft proposals not considering?

    The private businesses I know don't set up companies to gain an unfair tax advantage. The majority of private businesses in Canada have been operating as corporations for their entire business life cycle. The current tax system helps supports thousands of private businesses that employ millions of people and add significant value to the economy. Private businesses take risks – from loans to liability and beyond.

    It isn't "fair" to compare a private business with an individual employee and try to equate their overall returns on earned investment income. Private businesses risk all of their wealth to reap the rewards, and sometimes they fail. Employees have access to pension plans and don't risk losing all their wealth every day they go to work.

    What happens now?

    If you currently earn passive income through a private corporation, the proposed changes to legislation may result in a higher rate of tax on future distributions of this income. It's important for you to understand the financial consequences of the proposals on your bottom line – now, and in the future.

    The government has given taxpayers and professionals 75 days (until Oct. 2, 2017) to provide submissions on the proposals. Given the breadth and complexity of the proposals, it is hoped the government considers extending the timeline for submissions. Every private corporation could potentially be affected in some manner by the changes included in the proposal documents.


  • 22 Aug 2017 11:31 | Nishan Singh

    If there is one mantra of the real estate world that almost everyone is familiar with it’s: location, location, location! In my residential property management business, I am constantly working to help clients find well-located residential properties that will meet both their living and investing requirements. As you can imagine, this is no easy task as every family and every investor has a different set of criteria they are looking to satisfy. Is it close to a good school? Is it close to public transit and shopping? What about parks and other entertainment? The list goes on.

    This experience got me thinking about how location contributes to the success of my business and those of other entrepreneurs. What I think is clear, is that there is no one right location for all entrepreneurial efforts. Each entrepreneur and her business, much like each residential property client, will have a different set of needs and wants that will determine how important location will be to success. A technology start-up and a family-run delicatessen will have vastly different needs and wants and thus will need to make vastly different location decisions.

    If you are in the market for the perfect location to house your entrepreneurial venture, there are a number of things to consider before committing to a space. Here are three things that I believe all entrepreneurs should keep in mind:

    1) Where is the relevant talent?

    Location will play a big role in determining the difficulty and cost of acquiring the right employees. This is particularly true in the early stages of an entrepreneurial venture when the business is unable to entice top talent, with a strong brand or with attractive compensation packages for example, to relocate.

    At Buttonwood, we interact with many professionals relocating to Toronto. What I can say with certainty, is that lifestyle is an important component in the decision-making process of top-talent when it comes to where they will choose to work. Thus when locating a business, entrepreneurs looking to onboard new employees should also consider the lifestyle expectations of the type of talent that they will need to recruit, in order to make their businesses successful.

    Perhaps the optimal location choice for your business is to locate in your own home or to operate exclusively online. Location choices such as these can be supported through the use of freelance talent. With 55 million freelancers working for themselves (both virtually and in-person) in the U.S. market alone, virtual and home businesses have access to a growing pool of expertise.

    We also recommend that virtual and home-based businesses take extra care to build their online presence and domain authority. This will be the primary channel through which customers will interact with your business and thus, you will want to convey a high level of expertise across your website and social media accounts.

    2) How do target customers interact with your business?

    If your business relies on face-to-face interaction with its customers, then you may require a location with high visibility and lots of foot traffic. This is particularly true for retailers and hospitality based-businesses. Further, your business may also benefit greatly from being in a prestigious location, such as Yorkville here in Toronto. When direct contact with customers is key to your success, location plays a strategic role in driving sales revenue. Perhaps your customers interact with your business online and thus there is no sales related reason to be concerned about location. In this case, location can be strategically chosen to minimize costs.

    When helping our business clients find the perfect location, we stress the importance of keeping overhead costs as low as possible. When deciding on an ideal location, entrepreneurs must take care when weighing up the value-add of a physical space relative to its cost.

    3) What other businesses could impact the success of your business?

    Proximity to other businesses and entrepreneurs can be of great benefit to you and your business. First, being close to key suppliers can help to reduce the costs of getting the supplies and inventory your business may require. Second, being in the vicinity of other successful businesses can create a positive spillover effect. Both the customers and employees of other successful businesses have the potential to add to your customer base both directly (i.e. they may become your customers) and indirectly (i.e. they draw people to your neighbourhood who in turn will discover your business as well)

    While neighbouring businesses may be complementary, they may also be competitors. Before locating close to a direct competitor, you should take the time to do their research and understand whether the local market is large enough to support both businesses, whether the competitor is in a position to innovate or deliver greater additional value that would threaten the viability of your efforts, or if the costs of competing in the short term (even with a superior offering) would be too high to build enough initial momentum.

    While competition can make things difficult, locating close to competitors can in fact be a smart strategy. The presence of similar businesses proves that a local market exists for your offering. Additionally, it also proves that the resources necessary to run your businesses are accessible.

    For those entrepreneurs where a dedicated space doesn’t make sense, the growing shared-space market may provide an ideal location solution. Here in Toronto, the Centre for Social Innovation provides a great example of the model at work. The diversity of business activity and level of innovation going on in shared-working environments is truly astounding and can be beneficial to an entrepreneur looking to leverage the networking opportunities and skill-sets that being part of a community affords.

    The items above clearly demonstrate that location is a variable that all entrepreneurs should pay close attention to. What aspects of location were most important to you when you were getting started with your business? I look forward to hearing about!

    Written By: Sabine Ghali, Director at Buttonwood Property Management and an entrepreneur at heart who endeavors to help investors create real estate wealth over time in the Greater Toronto Area
    Source Link:

  • 14 Aug 2017 10:08 | Nishan Singh

    Don Paton spends most of his days pricing new jobs around the factories and industrial sites of Hamilton, or in hands-on work making the electrical connections for the cranes his company installs and repairs.

    The rest of his time he spends at a computer, usually tackling administrative work for his business, Ontario Crane Service. But last week he sat down to give Bill Morneau, Canada's finance minister, a piece of his mind.

    "To me it's like, they're trying to pit one part of society against the other part. Anybody who owns a business is a bad person, because they've got money in the bank, or they've got a rainy day fund," he says.

    His gripe is the federal government's proposal to close what it calls tax loopholes that private businesses use. Practices, the government's literature says, used to "gain unfair tax advantages."

    Paton, and a growing number of business owners across the country, disagree.

    3 changes considered

    Last month, Morneau launched a 75-day consultation period for three proposed changes:

    • The curtailment of "income sprinkling," a method by which business owners shift a portion of income to family members, either through salary or dividends.
    • The curbing of "passive investment income," which the government describes as the investment of money left in a corporation, for purposes other than to invest directly in growth.
    • The conversion of a corporation's regular income into capital gains, which typically attract a lower tax rate.

    The first two measures are attracting mounting criticism.

    Passive investment income

    Money left "passively" invested within the business, Paton says, has an important purpose. "They want me to take that cash out of the business so they can take more tax off it, and meanwhile if I hit a rough patch or a downturn I'm going to have to go to the bank and borrow that money and pay interest."

    Left in the business, the money is subject to the relatively lower small business tax rate, allowing Paton to invest a larger sum. But he bridles at the suggestion of unfairness.

    If he was an employee, he points out, there would be layers of government protection, including labour laws mandating severance payments, between him and the business cycle.

    But running his own business, it's his job to make sure he can still pay his five employees through a downturn. That sheltered investment isn't necessarily just for his own benefit. 

    Income sprinkling

    In downtown Calgary, David Wallach shares similar concerns, although, for the president and majority owner of a real estate services and management company, his objections extend to a crackdown on "income sprinkling."

    Sometimes this takes the form of paying salaries to other family members who work for the business. But the government is also taking aim at the practice of dividend payments to family members, something that hits close to home for Wallach.

    He owns his majority interest in Barclay Street Real Estate through a holding company, the shares of which are divided 50/50 between him and his wife.

    In good years — two of the last four — those shares have paid a dividend. Wallach says the money paid to his stay-at-home wife (taxed, but at a lower rate than if the money all accrued to him) helps to compensate for the risk the whole family has borne through his entrepreneurship.

    "If, God forbid, I divorced my wife of 33 years tomorrow, the government would say that half this business belongs to her. She stayed home and raised our three children, she's participated in the risk, the whole family did. So why shouldn't she be paid."

    Wallach also points out that Alberta has been mired in a deep economic funk for several years. He's had to meet payroll from his own pocket, he says, "but it's not my pocket, it's my family's pocket." He's also, in the past, risked the family home as collateral for a loan to the business. The risk of business, he says, is shared by the family, and tax law should recognize that.

    Anger spreading

    The Canadian Federation of Independent Business, representing more than 100,000 members, says it's heard mounting dissent about the tax changes. 

    "We're getting more understanding of what the potential impacts might be, and it's, I think, much broader than we initially thought ourselves. And I think this idea that it's targeting only wealthy individuals or professionals is not true," says Corinne Pohlmann, senior vice-president of national affairs.

    "Members in all types of sectors, and definitely many members who are not considered wealthy, are very concerned about the impacts of this on their businesses."

    Kim Moody, director of Canadian tax advisory at Moodys Gartner Tax Law in Calgary, says the clients he's briefed have been horrified. But the issue, he suggests, cuts deeper than just tax.

    "This is about economics. What the government will do here is stifle entrepreneurs who have been the backbone of Canada's growth … and all in a 75-day consultation period, held mainly over the summer, when everyone, including the government bureaucrats supposedly listening, are on holiday."


  • 11 Aug 2017 11:51 | Manjot Cheema (Administrator)

    OTTAWA  - New housing prices in Canada rose less than expected in June as Toronto paused for the first time in six months following provincial government measures to rein in the hot market, data from Statistics Canada showed on Thursday.

    National prices rose 0.2 per cent from the month before, short of analysts' forecasts for a gain of 0.4 per cent. The new housing price index excludes apartments and condominiums.Read More


  • 04 Jul 2017 10:27 | Nishan Singh

    The best thing about the “Canadian Dream” is that it’s whatever we can dare to dream.

    We come from every imaginable background yet there are two things just about every one of us strives for: security and prosperity.

    Achieving those goal requires a country that provides opportunity.

    Click here to learn about the four uniquely Canadian opportunities that help Canadians thrive.


  • 23 Jun 2017 20:02 | Nishan Singh

    LinkedIn has reached a user base of 500 million with 10 million active job listings, access to nine million companies, and more than 100,000 articles published every week.

    Other than that, Linkedin claims to have:

    • 61 million senior-level influencers
    • 40 million decision makers
    • 10.7 million opinion leaders
    • 6.8 million C-level execs
    • 3 million MBA graduates

    This makes LinkedIn one of the largest professional networking platforms where you can connect with and market your company and/or idea to key decisions makers.

    In this guide, I’ll walk you through:

    1. How to create your LinkedIn company page/profile
    2. How to enhance/optimize your LinkedIn company profile
    3. How to advertise on LinkedIn
  • 01 Jun 2017 10:11 | Nishan Singh

    Following Alberta’s lead, the Ontario government has committed to raising the minimum wage to $15 per hour by 2019 and, in addition, is upgrading the mandatory minimum vacation allowance for employees. Business owners now need to make a plan for how they will absorb these costs and determine what the impact will be on their business

    While the change to minimum wage is only targeted at those workers earning less than $15 per hour, the overall impact is scalable as the implications for compensation are far wider than simply bumping up the pay. In addition to forking over more for items calculated as a percentage of pay, such as payroll taxes, CPP, EI, benefits and company pension contributions, many business owners will also have to address pay increases for workers who are already earning more than $15 per hour to remain competitive while ensuring that pay is based on value to the organization...Learn More

  • 29 May 2017 16:12 | Nishan Singh

    The Ontario government is targeting red tape as it proposes wide-ranging changes to the provincial business environment amid growing uncertainty in its trade relationship with the United States. The eight-point strategy was presented to Premier Kathleen Wynne’s cabinet this week and is largely meant to help the province’s small businesses by making it harder for government to create new regulations, especially rules that would create expensive burdens or trade barriers.

    Read More
  • 17 May 2017 20:30 | Nishan Singh

    With the tax deadline behind us, many Canadians can look forward to a relaxing summer. But for a chosen few, a summer storm in the form of an audit may be brewing. 

    The Canada Revenue Agency conducts spot checks on tax returns either through a software program that detects irregularities or humans doing simple math that they discover doesn’t add up. Most are resolved without penalty.

    The CRA will usually tell you you’re being audited by letter, which should provide specifics and a possible request further documentation.

    If you paid a third party to do your taxes, they should be able to help – but keep in mind the return is only as good as the information you provided.

    TurboTax suggests a prompt response and tells Canadians what they can expect from an audit. Ignoring it will only make your situation worse.

    Read More

  • 29 Apr 2017 12:46 | Manjot Cheema (Administrator)

     Whether you are in the market, want to get into the market or thinking of getting out of the market – it is hard to find anyone not talking about real estate.

    For most Canadians, it is their largest asset and their most expensive asset so it isn’t surprising people have an opinion and in many cases concern.

    In recent years, there have been considerable changes to the real estate landscape from record prices, new rules, taxes and warnings. Adding to this increased competition, affordable challenges and ongoing talks of bubble-like conditions in Canada. So how are we feeling about the real estate market?Read More

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