March 24, 2009

Tax Worries for Small Business Owners in Canada

You can see a lot by just looking.
--- Yogi Berra

Do you work with small business owners? 

The Canadian Federation of Independent Business (CFIB) has oodles of information that you can access at as a nonmember. Knowing the timely concerns of their 105,000 members makes you more credible and your suggestions more relevant.

Statistics Canada reports that overall employment for the year ending in February 2009 fell 1.8%, a loss of 258,000 jobs. 

However, businesses with less than 100 employees grew modestly:
  • 1-19 employees: +0.6% (added 29,700 jobs)
  • 20-99 employees: +0.1% (added 4,700 jobs)
We'll now look at findings from two of the many CFIB surveys. Some questions allowed multiple answers. You'll find links to the reports at the end of this post.

Tax Competitiveness
This survey took place in June 2007 and 7,845 members responded. As you would expect, tax has a big impact.

Taxes Most Affecting Business Growth
The taxes that most affect business growth are
  1. payroll tax (e.g., employment insurance, Canada Pension Plan): 63%
  2. corporate income tax: 54%
  3. property/capital tax: 47%
  4. personal income tax: 43%
  5. sales tax (e.g., GST and provincial): 43%
Tax Reduction Priorities
Priorities for tax reductions are
  1. personal income tax: 67%
  2. fuel tax, other excise tax, duties and tariffs: 61%
  3. corporate income tax: 45%
Use Of Tax Savings
Savings from tax reductions would be used to
  1. invest in new equipment: 66%
  2. pay down debt: 53%
  3. increase employee wages: 53%
  4. hire additional employees: 39%
  5. invest in additional employee training: 32%
Canada Revenue Agency (CRA)
This survey took place in April 2008 and 8,271 CFIB members replied.

Service from the CRA over the last three years stayed the same for 70% of respondents, improved for 11% and worsened for 19%. The biggest issues are
  • accessibility of staff
  • readability and simplicity of the information
  • promptness of written responses
Over the last three years, 24% of businesses were visited by a CRA auditor. Here's why
  1. GST: 52%
  2. Income tax (personal and/or corporate): 39%
  3. payroll deductions (e.g., employment insurance): 36%
  4. GST and income tax: 30%
The auditors were rated acceptable or better for overall professionalism, courtesy and knowledge by 82%-86% of respondents.

Over a three year period, businesses spent 69 hours meeting the auditor's requests. 

Cost of Complying
Businesses spend an average of $18,300 complying with tax obligations (federal, provincial and municipal). 

Worth Joining?
There's much more available from CFIB. I''m intrigued by reports on how businesses market and the thorny issue of succession planning. 

Are you a small business owner too? You may want to join. You'll give CFIB a bigger voice and get opportunities to network with other members. 


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