Have you sold your shares?
Evidence of meeting #109 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was system.
A video is available from Parliament.
Evidence of meeting #109 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was system.
A video is available from Parliament.
12:10 p.m.
Liberal
The Chair Liberal Wayne Easter
Mr. Poilievre, we are trying not to personalize this. This is an important issue. We've heard from 24 witnesses on this issue and they raised a lot of points. I don't believe any of them raised the minister's personal finances, so if we could stick to the issue, we'd appreciate that.
12:10 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
It is a deeply personal issue to all the people this government has accused of paying too little tax. It invites reflection. If this is about fairness and about taxing the wealthiest people at a higher rate, can the minister give us even one example of a measure in his proposals that would cause the millionaire shareholders of his billionaire business to pay a penny more?
12:10 p.m.
Liberal
Bill Morneau Liberal Toronto Centre, ON
Mr. Chair, I'm happy to talk about what we're trying to achieve here and recognize that the member may be misunderstanding the after-tax payments that the people get from enterprises, and the money that is parked inside companies.
We're trying to make sure that we have a system that doesn't increasingly provide benefits to the wealthiest. What we've seen—
12:10 p.m.
Liberal
Bill Morneau Liberal Toronto Centre, ON
—over the last 15 years quite clearly is that the ability has grown for people to leave money in passive investments inside their companies.
12:10 p.m.
Liberal
Bill Morneau Liberal Toronto Centre, ON
That ability, which has grown, is not necessarily generating economic activity, and it's also not one that is a similar benefit available to other Canadians. Getting at that we know will make a difference to our tax system to make it fairer, and at the same time it will encourage people to invest in growing our economy.
12:10 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
I guess the problem, Minister, is that you say when small businesses save money in their company, it's dead money, but when a big multinational company like Morneau Shepell or Bombardier, for that matter, set aside millions of dollars of so-called passive income, that's just fine and there will be no new taxes on that money.
Can you understand why the owner of the corner store or the family farm is offended that you would impose higher taxes on their savings, but companies like your billion-dollar family business will not pay a penny more?
12:10 p.m.
Liberal
Bill Morneau Liberal Toronto Centre, ON
It's important to understand what we're trying to do here. We know that these incorporated vehicles are an opportunity for people to either invest in their active business, which is very positive for our economy and which we want; leave money within their company for future investments, which is absolutely important for those small businesses, and we have a way to make sure that happens; or put money in a passive investment account, which is allowing them, especially as they get more and more money within their company, to shield more and more money from tax, to defer tax—
12:15 p.m.
Liberal
Bill Morneau Liberal Toronto Centre, ON
That benefit is what we're looking at. We're trying to make sure that we have a system that has the right incentives and creates the opportunity for small businesses to thrive, while not creating a large ability for people to defer taxes, which others can't have.
12:15 p.m.
Liberal
Raj Grewal Liberal Brampton East, ON
Thank you, Mr. Chair.
Minister, it's always good to see you. We'll jump right into it.
Minister, how many CCPCs do we have in Canada?
12:15 p.m.
Liberal
Raj Grewal Liberal Brampton East, ON
Over the last five to 10 years, have you seen a rise in the number of CCPCs in Canada?
12:15 p.m.
Liberal
Bill Morneau Liberal Toronto Centre, ON
The number about 15 years ago was about 1.2 million. In particular, the growth has been among professionals. Over the same time period, we've seen about a 300% increase in those vehicles.
12:15 p.m.
Liberal
Raj Grewal Liberal Brampton East, ON
We just heard from the CMA in the last panel. They said that 66% of their members are incorporated, and the balance are employees. Then, when we asked them what the average corporate income was of their members, they said it was $339,000. A lot of their feedback was: “We're going to be upset about income sprinkling.”
Minister, I just want to make sure that Canadians understand that if your spouse or your children are working in your corporation, they will continue to be allowed to do that.
12:15 p.m.
Liberal
Bill Morneau Liberal Toronto Centre, ON
The issue around income sprinkling is very much about making sure that we have a system that doesn't generate advantages that really aren't intended to be there.
If a family is running a business, or if a professional has his or her spouse or children actively engaged in what they are doing, we believe that's really important to continue. We want to make sure that spouses and family members can work, whether it be in a professional office or small business, or on the family farm. That's critically important.
What we're saying—and we're hearing from across the country a lot of understanding of this issue—is that for people who aren't engaged in any way in the professional office or in the small business, they shouldn't be getting income sprinkled just so that the person who is engaged can lower their income and pay a lower rate of tax. That's the goal.
12:15 p.m.
Liberal
Raj Grewal Liberal Brampton East, ON
Thank you, minister, for that clarification.
I've heard a lot of feedback in my constituency and as a member in the finance committee. People are really worried about unintended consequences. Particularly farmers across the country are worried. I know our government focus is not on unintended consequences or making the lives of farmers more difficult.
Because these are proposals and we are going though the consultation process, could you please comment on how we will ensure that the family farm is still protected in Canada.