KAMLOOPS — Proposed changes to the federal tax system are causing quite a stir locally.
That from Starr Carson, managing partner for KPMG's Kamloops office.
One of the proposals seeks to tax employees for discounts they get at work, the other is a proposal aimed at reining in 'income sprinkling,' also known as 'income splitting,' which allows small businesses to shift income to family members who don't necessarily work for them.
(On Wednesday, the federal government appeared to backtrack on the change to employee discounts when it said it planned to hold an internal review on the matter.)
"So, these changes which affect private companies are widely regarded amongst many accountants and lawyers as the most significant tax changes we've seen from a policy point of view in the last 25-30 years," Carson told CFJC Today. "Maybe since the introduction of the GST. And they affect all private companies regardless of size and they're going to have a very profound impact on changing what's been longstanding policy on many items."
And though Carson thinks the goverment will probably clarify the retail discount issue "one way or another quickly," he thinks the controversy surrounding income splitting isn't going away anytime soon.
"It's been extremely controversial. I've not seen this level of engagement from our clients ever in terms of their reaction and many of them are very concerned about it. It affects a lot of companies."
He expects there will be some indirect effects on the rest of the population, too.
"I guess to the extent it will raise a lot of revenue to the government. But the question that remains is, 'How is that revenue going to be dispersed back to taxpayers?' It may benefit various groups of people and it'll raise a lot of money but I don't know how the goverment in turn is going to offset the deficit that's currently occuring at the rate of about $29 to 30 billion a year."
Carson also dismissed the notion the changes will only impact the wealthy.
"These are very significant changes and a lot of what you read in the media may lead you to conclude that they only apply to wealthy people. But I would suggest they apply to a lot of Canadians not wealthy by most people's expectations."
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