We’ve only just launched into 2016, and already there are some strong economic headwinds.
Business owners are being buffeted by uncertainty in the markets and a challenging tax environment. Commodity prices have cratered, and oil is now at its lowest level since 2003. The loonie has sunk to 70 cents U.S. Growth is sluggish, with the Bank of Canada predicting that real gross domestic product will expand by only 1.4% this year.
Meanwhile, the federal government is expected to deliver a Budget in March that will try to rekindle the economy through infrastructure investment – something on the order of $120 billion over the next decade.
In the face of lower-than-expected revenue and massive stimulus spending, Ottawa will be looking for additional tax dollars. Already, it has introduced a tax hike for those earning income above $200,000; the tax rate has been raised to 33%. For an Ontario resident, the combined Federal and Provincial rate on income above $220,000 will be $54%. As well, the maximum annual contribution to TFSAs has been rolled back from $10,000 to $5,500.
What other challenges lay ahead? Here’s what we see looming on the horizon:
• An end to income-splitting for families with children under 18.
• The introduction of the Ontario Retirement Pension Plan (ORPP) in 2017.
• Expected implementation of the Trans-Pacific Partnership.
• New export opportunities with the low Canadian dollar, but increased tax compliance complexity with international sales.
SB Partners participated in the pre-Budget meetings of both the Oakville and Burlington Chambers of Commerce where we discussed many of these issues and expressed our concerns on behalf of privately-owned enterprises.
While SMEs create most of the new jobs and are responsible for over half of the nation’s GDP, the impact of corporate and personal tax is borne by one person in the owner-operated business. We understand – we’re business owners too. And so we are committed to giving you every advantage we can, being there for you, being part of your team.
We’re vigilant in identifying the issues and proactive in developing the innovative tax strategies you’ll need in these demanding times. No surprises, not on our watch.
Here’s to fair sailing in 2016.