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Report on Small Business newsletter: What happened with the federal tax proposals this week

Joel Fransen, a dentist in the Lower Mainland, says the $50,000 threshold could impact his expansion and retirement plans in the future.

Richmond Endodontic Centre

Small Business Week started with a bang with the announcement the federal government is reviving a campaign promise to drop the small business tax rate. It was part of a series of almost daily policy announcements this week to try to appease small business owners who were angered by a set of proposed tax changes aimed at private incorporated businesses announced in July​. It's been a lot to digest, so here's a quick recap, with links to full stories below.

  • The federal government will move forward on an election pledge to lower the small business tax rate to 9% from 10.5% by 2019
  • Plans to stop allowing income splitting for family members not active in a business will move forward; Finance Minister Bill Morneau said the proposal will be "simplified"
  • The government will not move forward with proposed measures to limit access to the Lifetime Capital Gains Exemption
  • Proposed rules to discourage using corporations for passive investing will move forward, but a new threshhold will allow $50,000 in income a year to be exempt from the new higher tax. For example, that means $1 million held inside a corporation could earn a 5% rate of return and that income would be taxed under the old rules 
  • The government is scrapping proposed rules meant to curtail the conversion of income to capital gains, which caused concern in relation to intergenerational transfers and insurance policies held inside corporations
  • Morneau promised incentives will be maintained for venture capitalists and angel investors. Consultations will be held on how this can be achieved

There are still a lot of details that have yet to be announced. Stay tuned for updates at globeandmail.com/smallbusiness and on Twitter at @GlobeSmallBiz - Sarah Efron, Globe and Mail Small Business Editor

Liberals set $50,000 a year threshold on taxing investments in corporations

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The Liberal government is revising its proposed changes to small-business tax rules in a way that Finance Minister Bill Morneau says will better target Canada's wealthiest investors. The government intends to allow incorporated businesses to generate up to $50,000 a year in passive-investment income – equivalent to a return of 5 per cent on $1-million in savings – before controversial new rules aimed at curbing the use of corporations for personal savings would be applied. Full story

Revised passive-income rules discourage small-business growth, critics say

Ottawa's updated proposal for taxing passive investments made through private corporations is better than before but still doesn't go far enough, say some small-business owners and industry experts. Full story

Tax cut receives a lukewarm welcome from small-business owners

Patrick Kerrigan certainly isn't going to complain about Ottawa's plan to cut his corporate taxes, but he says the fight to protect his small family business from other, potentially punitive tax changes is far from over. Full story

Revised tax policy for small businesses hinders growth, economists say

Ottawa's decision to resurrect its small-business tax cuts is a case of shrewd politics trumping sound policy. While the political urgency behind the move had become glaring, the economic logic is sorely lacking, even contradictory. Full story

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When Kickstarter isn't enough

When their two young nephews moved overseas, siblings Josie Elfassy-Isakow and Ronny Elfassy wanted to make sure the boys would remember them. The pair decided to make a personalized book to ship to the boys, one that would help them recognize not only names but also the faces of their far-off family members when they flipped through its pages at bedtime. So the brother and sister printed their pictures on magnets designed to be used as characters in a story they co-wrote; their prototype book featured magnetized pages with designated spaces. Full story

Minimum wage hikes can spur business owners to rethink how they run their companies

With the Ontario minimum wage jumping to $14 an hour in January, small business owners need to start looking at everything from pricing to staffing to keep payroll pressures in check. The sharp increase in costs could scuttle some businesses. If handled intelligently, though, some business owners could come out ahead. Full story

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Facebook Live can help your business cut through the noise

With 23 million Canadians using Facebook every month, it makes sense for brands to leverage the platform to connect with their audiences. But with so many people sharing content there every day, it can be difficult to stand out. One feature some small businesses are turning to is Facebook Live. Full story

Marketing in the age of anxiety

I recently had a conversation with a friend who admitted to seeming a bit more anxious than usual lately. She's not alone. I've had the same conversation with several others over the last little while. That's because our phones are constantly buzzing with news apps and social-media status updates about natural disasters, the threat of nuclear war and the fracturing political landscape south of the border. Full story

Clearbanc, Michele Romanow work with Facebook for easy small business financing

"The number one thing that prevents entrepreneurs from growing big businesses is access to capital," says tech entrepreneur and CBC Dragon Michele Romanow. She's looking to change that for e-commerce businesses. Full story

Startup helps foreigners head to university here

If you live in another country and want to study at a Canadian or American university, it can take up to 18 months to complete the application and receive a response. Martin Basiri knows all about that. So he founded Apply Board Inc. with his  brother Meti to make the process easier. Full story

Thomas Canning to plead guilty to mislabelling products as organic

A bankrupt Maidstone tomato processing company that received a controversial $3-million provincial grant is expected to plead guilty next month to purposely mislabelling products as organic. Full story

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