Federal finance minister Morneau pitches small business on tax reform

Federal finance minister Bill Morneau was in Waterloo, Ont. Friday, pitching his tax break planand "tax fairness" as a government press release calls itto a small business forum.

Morneauand Small Business and Tourism Minister Bardish Chaggervisited Communitech, a small-business based incubator focused on southern Ontario's tech sector.

The finance minister said the Liberal government has heard the concerns of small business owners about proposed changes to passive investments, like stocks and real estate, that are parked in a business. Many proprietors earmark these investments for retirement as they do not have access to other traditional savings vehicles like a pension plan.

Morneau said the proposal has been tweaked to allowup to $1 million inpassive investments be kept in a small business which will ensure "flexibility to ensure they can have a retirement plan that makes sense."

He also said the government has now set clear guidelines for "income sprinkling," to ensure payouts are only made to family members that actually play a role in the company. The Liberals scrapped proposed changes to the capital gains regime.

• 'I need to do more': Morneau takes steps to calm ethics controversy
• Morneau unveils gentler tax proposals for private corporations

Morneau has been under fire since the Globe and Mail reported Monday thatMorneaudid notput his business assets into a blind trust. That led opposition critics to accuse him of conflict of interest in sponsoring legislation involving private pensions, C-27, that could benefit him financially.

During a news conference Thursday on Parliament Hill, Morneausaid he will unload the million shares, worth about $20 million,he has in Morneau Shepell, the human resources and pension management company his father founded.

His other assets will be placed in a blind trust in order to avoid any public perception of conflict of interest, he said.

Tax backtrack

Morneauhas also climbed down from another controversial tax proposal to address the concerns of farmers and fishers.

The finance minister said the government is abandoningthe proposed tax reform that would have restricted the conversion of income into capital gains.

"We're going to take a step back and reconsider that aspect of our tax proposal," he said at a farm alongside Agriculture Minister Lawrence MacAulay in Erinsville, Ont., about halfway between Toronto and Ottawa, and three area Liberal MPs.

The proposal would have made it more difficult for farmers and other business owners to pass on their businesses to their children.

Scheer also in region

Earlier in the morning, Conservative leader Andrew Scheer also spoke to two small business forums in Waterloo Region.

• Conservative leader Scheer decries 'irony' of small business tax plan

Scheer described what he sees as "irony" in Morneau's propsedsmall business tax reforms while "we have a prime minister and a finance minister that used their own accounting schemes and accounting measures to avoid paying higher taxes."