Open Letter to the Finance Minister Regarding the Proposed Tax Changes

Open Letter to the Finance Minister Regarding the Proposed Tax Changes

If you have not heard of the proposed small business changes put forth by our Finance Minister in July, you can find out more about it on these two blog posts I wrote previously.

Unfair Proposed Tax Changes Entrepreneurs Need to Know About

The War on Small Business Owners and Landlords

I’ve seen a few open letters written by various business owners to the Finance Minister Bill Morneau.

I encourage everyone to write and talk to their MPs, send your feedback to the Finance Minister.

Contact your local Member of Parliament (MP),  you can find them using this link to voice you concerns.

Here’s my open letter to the Finance Minister.  

Feel free to adapt it to fit in your stories and make sure you send your feedback to your MP and the Finance Minister. 

Dear Mr. Bill Morneau,  

My husband and I are extremely disappointed with your proposed tax changes on private corporations.  It is difficult to believe that we, as hardworking small business owners, are called tax cheats in your proposed plans.

To give you some background, my husband, Erwin, and I are small business owners. Each of us has an individual business. Both of us own our businesses in corporations.  We have two young children under age of 4.

Erwin owns a real estate business, has 4 associates working with him and he also hires subcontractors with his business to help with marketing and website implementation. I am an accountant and have 4 employees.  

Before venturing out on our own, we used to be corporate employees paying maximum CPP & EI benefits.  We were both at one point enjoying the luxury of health benefit plans, job and financial security, paid vacation for 3 weeks every year and matched retirement plan contribution from our employers.  

We both gave up the cushy jobs to chase our dreams.  

We didn’t collect one penny from EI benefits for our children’s births.  We lived and struggled on single income for one full year when our first child was born.

We discussed and debated having the second child, wondering if we could afford to have our second given that we would not have any benefits to keep us going.

Meanwhile, my friends and old colleagues, who are working for Auditor General and Toronto Hydro, are enjoying top up maternity benefits for 8 months and more.

They are receiving full salary, as if they were working, while on maternity leave.  I didn’t have this luxury as a small business owner.

Thankfully, we have savings accumulated from our real estate investing through our corporations, the exact scheme that your proposed plan is targeting.  We decided that we would cash out if we truly couldn’t afford the second kid.  This exact same plan allowed us to have our second child, and now you’re calling it a tax cheat!

Without these legitimate tax incentives, our family would not be a family of four.  

Canada needs population growth and your proposed tax changes are not helping small business owners to build their families.

I still remember vividly the number of hours I had to work to build up my business.  I worked late hours, offered free one on one consultations to my prospects after business hours and during the weekends, away from my children and family so I could build up the client base.

I’ve never worked this hard ever in my life.  Not once in my corporate life.  That’s what I told my best friend last tax season.

I didn’t make much in the first two years of business.  I created jobs for my assistant and my senior accountant, but I barely made enough to call it a decent earning.  

I contributed to the Canadian economy and I paid for my employees’ CPP & EI.  

2017 is the first year I started seeing some cash sitting in the bank account, finally contributing to my family financially.  Being responsible parents, we are planning to use the corporate earnings to legitimately invest for our future, our retirement fund and our kids’ future education.  

You came out with the proposal accusing us of using this legitimate tax planning strategy as tax loopholes.  Investing through corporate tax earnings is not a loop hole.  It is the reward we get as a small business owner, after working our butts off to build up our business.

Small and medium sized business owners provide 90% of the employment in Canada.  Small businesses alone, specifically for those have fewer than 100 employees, employ 8,160K of people, out of 11,691K of private sector employment, equivalent to 70% of your private sector employment in Canada according to Statistics Canada.

Canadians need jobs.  Small businesses create jobs.  The Canadian economy needs small businesses.  The Canadian government needs to provide small business owners incentives to put in the 80-hour work week and pledge their own homes and life savings to create jobs and contribute to the Canadian economy.  

Canadian families need these legitimate tax incentives to survive, have a family and build a retirement fund, instead of relying on government funding.  

It’s foolish to claim that these proposed tax changes would not have an impact on small business owners.  

Without dividend sprinkling and investment through corporate earnings, how is a young female entrepreneur going to afford having children?

Tax Free Saving Accounts contribution limit is $5K a year.  Your government was the one who reduced the contribution limit.  These small chunks of savings are not sufficient for retirement.  

RRSP contribution limit is capped by the salary earned by the entrepreneur.  Entrepreneurs are not even eligible to contribute to RRSP if they choose to earn dividend income.

Recently, one of my friends is interested in joining my business.  She just got married a couple years ago and she’s planning to have children.

My advice to her was that she should wait until after kids to join me.  Small business owners take on all the risk and get zero benefits.  And she agreed.

Your policy is discouraging all young females to start their our own businesses and having a family at the same time.  It’s much easier finding a job and enjoying the benefits from the government and employers than starting a business and get nothing when I went on maternity leave.

I didn’t have to create the jobs.  I could have got a job and enjoyed the benefits.

Your policy is discouraging job creation and encouraging Canadian citizens to rely more on social benefits and governments for their retirement.

Tax fairness is about taxing people fairly, not to increase tax on hardworking Canadian residents.  You should instead consider reducing the tax burden for all Canadian citizens, including those having jobs.

Using “tax fairness” as the reason to increase the tax burden on the entrepreneurs is disgusting, when the government is using the same term to cover up their motivation for offsetting their large deficit.


Cherry Chan, CPA, CA

A small business owner who creates jobs and a mom of two who has never collected benefits.

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I agreed with your letter witch is a100% percent wrigth


Thanks for sharing!
I met with the MP of my circonscription 2 weeks ago and she recommended we write to minister Morneau to voice our concerns.
Your letter convinced me to write him as well.


There is a petition started by Michele Rampel Sadly there are barely anyone from Liberal ridings signed it.

The conversation between Finance Minister and their Liberal MPs could have likely been something like this….

“We have billions of deficits. If we don’t tax these small business owners, who will pay your salary?”

Unfortunately they’re using “tax fairness” as a cover up for their huge deficit. Money has to come from somewhere.

Jeff Orlans

Have you received a response from the Honorable Minister of Finance?

Nope. Unfortunately. Only a response confirming that they received the letter.
Many people did mention that they did receive a response from their Liberal MPs and long story short, they explained the proposal as being “fair”.

Ingrid Clayton

Yes, I too received a ridiculous response. Seems they have a generic letter that they send out to everyone. But response or not…we need to write and complain. We each need to tell our stories because they are obviously clueless about the positive impact that small business owners have on the economy. The more they hear it, the more they will start to realize how ridiculous their thinking is.

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