ReeferMadness

You're hilarious. You started out, like canuck, arguing there were no advantages. Now you're saying the advantages are reasonable. How can advantages that don't exist be reasonable?

Seems like it's time to sum up what has transpired in this thread. The blatant and gross levels of unfairness with the tax system seem to stem from 3 areas: Businesses have a legitimate need to hire staff, defer income to lean years, invest income and conduct activities that merit special tax code treatment. The problem is when business owners use these activities in ways that don't really benefit the business but are used to put themselves in advantageous positions from a tax standpoint. It can be really difficult from an auditing standpoint to differentiate in many circumstances. Many independent professionals are using these same tactics, even if their business really doesn't need them. For example, does the consultant hire a maid when Johnny gets to be a teenager and doesn't want to clean the office anymore? There appear to be significant numbers of people who push the system past any reasonable level, like what it happening with KPMG and their gifting scam. That the case has spent years in front of the courts shows that the system is unwieldly and needs fixing.

Damn. I'm glad I don't work for you. Is it acceptable for employees to kiss your ring or do you have them kneel and kiss your boots?

Maybe so - but that makes you an anomaly. And this really isn't about you - it's about the system that is unfair and lends itself to abuse. So.... instead of making the system fair, you think everyone should take advantage of it?

Or you pay your wife a dividend. Or your adult kids. Or you hold it until you are in a lower tax bracket and pay yourself then. All advantages that the average joe doesn't get. And don't give me the "help the economy" crap. Almost everything helps the economy. But if you seriously want to make the GDP spin faster, put it into the hands of people who will spend it locally - give your employees a raise. Go back and re-read your own words. You said there had to be some benefit to owning a business, as if it wouldn't be worth it if you had to pay the same taxes as everyone else. So, that's 2 benefits. You get to invest the money that for other people would have been paid in taxes. And you can choose to pay yourself at a time when you are in a lower tax bracket. Or are you someone who is wealthy enough that you will never be in a lower tax bracket? If that's the case you can choose to pay your kids... or your grand kids.

I think what you mean to say is that it works to your benefit.

Wow. So all that money you make from your business is of no benefit unless you get it without paying taxes? And whenever a business owner talks publicly about his business, you always hear of him saying how he's proud of building something and he has this vision of what he wants his business to be. Are you saying that's all crap? There does need to be some benefit (your words) and apparently it wouldn't be worth it if the CRA didn't slash your tax bill. Is that what you're telling us?

What nonsense. Go back and read through again. Be like msj and have the integrity to admit that there is a huge cottage industry in providing people like you tax advantages that don't exist for the rest of us.

WHAT? A couple of posts earlier, you're talking about how you use a holding company as a dodge to pay minimum tax and other people are using a life insurance scam to avoid paying any tax at all. But the system is fine, right? Or are you agreeing with Tim in claiming that as long as you hire someone you feel entitled to not pay taxes?

No. Tax averaging is a huge advantage. I wish I could do it as an employee. The fisherman actually pays less tax in year 2 than he would without it.

Taxation of capital gains uses tax history as well. You can carry forward capital losses. You can carry forward business losses. I'm sure there are other things as well but msj would be the guy to talk to this.

Our tax system already has used tax history. It used to be that the child tax benefit relied on your previous year's income. There are probably other things that do as well.

Yeah. Maybe he said that but really he's not. He could best be described as a career politician. And there is a Conservative ad that goes after Mulcair for being just that. Hypocrites.

And the liability insurance costs $190K?

You can pay the corporate tax (which is quite low for small businesses) and then pay it back to yourself in dividends after your retire and have little or no other income. Maybe you should hire msj - seems like he has it figured out better than whoever you're using.

Do people make $200K a year in tips?

Only if the kids are minors. I can pay my kids to clean my house but I can't deduct it from my income. I can't arbitrarily take any portion of my income and put it in my retirement plan and not pay tax on it.

It's actually Mr. Cooper. It seems like he is very elderly and perhaps no longer able to look after his own affairs. CBC interviewed his son Marshall Cooper who pleaded ignorance of Canadian tax laws. He said he went to the experts so it's their fault if there's a problem. Which totally makes sense. Why wouldn't it be totally legitimate for him to be receiving millions of dollars and pay not tax?

This is true when companies hire individual contractors directly. However, there is a work-around (people go through a 3rd party agency). They are employees of neither the company nor the 3rd party agency.

For people who really have profit and loss risk, that's one thing. Like Spanky said though, a lot of small businesses are professionals (doctors, dentists, consultants) who've incorporated. I've worked with consultants who showed up to work every day the same as I did as an employee. However, because they were "independent", they could write off a ton of home office expenses. I had someone tell me she wrote off her pet expenses. I know someone who used to run an accounting business and dealt a lot with independent professionals. He said that as long as expenses were within a reasonable amount of revenues, CRA would generally not even look at them. It costs CRA money to audit so theyre going to focus on the obvious and big items.

This isn't true - it's not even close to being true. Maybe you need a better accountant. When a business pays the owner salary, it is treated the same way as anyone else. But a lot of the money gets paid out in dividends, which are treated preferentially. And suddenly, the wife and kids are all shareholders, which allows income splitting in a way that is not available to normal employees. But this is only the tip of the iceberg. All kinds of personal expenses suddenly become business expenses - part of your home is suddenly an "office". - your wife is now your bookkeeper and director of marketing - your kids get paid for cleaning your office - a percentage of your car expenses are now business writeoffs - your lunches are now business writeoffs Also, after your retire, your corporation can live on. In practical terms this means that you can split income across years in a way that normal employees can't. For example, if as an employee, you make 100k per year, you pay tax on that every year. Then you try to save money on what's left. But the corporation can pay you only what you need to live (say 60k) per year. Then you can save the rest and when you retire, continue to collect dividends. Over time, this can save you and enormous amount of income tax. You didn't bother to read the article, did you. Certainly Canada does. Lots of people would like a little break on their first $50k of income.

For someone who couldn't care less, you sure have a lot of opinions. Which would be fine except that without exception, they are almost all misguided or just plain wrong. Go and do some research on insite before you spout off. There is a reason that health authorities support safe injection sites.

Maybe you should read the article.

You're missing the point. A person who has a job and makes the same amount will pay thousands of dollars in income tax. This thread isn't about the definition of wealth, it's about tax fairness.

In general, I would agree and in fact I would say that it makes sense to legalize most drugs. I would suggest that health and criminal experts study them case by case and recommend approaches that would deliver the least harm to society; including harm to the people ingesting the drugs, impact to personal liberty, overall cost, and associated crime impacts. For example, it may well be cheaper and less harmful for the government to simply give addicts heroin and a safe place to inject. That would take money away from organized crime, reduce the impetus for people to steal to support their drug habits, reduce associated policing and court costs, ensure that the drug content and purity was controlled and ensure that help is on hand in case of accidental overdoses. It also allows for counseling to be available when the addicts decide they want to quit. I understand that this would be controversial but we need to get past the the mentality that says we can just control peoples behavior through big brother tactics. Short of implementing a police state, it doesn't work.