Fundamentals of Corporate Taxation with Kim Moody | E003
How corporations, and owners, are taxed.
Summary:
In this episode of Financial Planning for Canadian Business Owners, Jason Pereira, award-winning financial planner, university lecturer, writer, and host interviews Kim Moody, Director of Canadian Tax Advisory Services at Moodys Gartner Tax Law in the Calgary area. Kim Moody talks about the expertise that Moody Gartner offers, the general percentages of taxation that businesses face, the differences in paying dividends and salaries, the Kiddie Tax rule, and what to know before paying family members.
Episode Highlights:
● 01:07: – Kim Moody explains Moodys Gartner and what they do.
● 02:05: – How are corporations taxed in Canada?
● 03:47: – What is the tax benefit of not taking money out personally against the business?
● 05:09: – Kim talks about the limit of $50,000 in passive income.
● 08:38: – Why is the belief that paying dividends is better than paying income a fallacy?
● 12:00: – Corporations are giving up their CPT contributions if they are paying out dividends and giving up the ability to earn RST.
● 13:26: – What does it take to pay a salary or dividend to a family member?
● 15:37: – How have the rules changed for paying dividends to family members?
● 20:15: – Kim Moody talks about the Kiddie Tax rule.
● 22:13: – The average business owner makes less than $70,000 a year to take care of their families and generally work more than a 40-hour work week.
● 26:06: – It is not about being careful what you wish for, it is about what is best for the country.
3 Key Points
1. Moodys Gartner has a very strong Canada-United States bench handling
anything in the cross borner private client space, with offices in Toronto, Edmonton, Calgary,
2. Corporations are taxes on active business income, generated in Canada, then the first $500,000 is subject to a preferential rate which varies by province but is typically 10%. Anything over that is taxed at the general rate between 25-27%.
3. There is a limit of $50,000 in passive income that a small business can make before it starts to potentially suffer because they will pull back on the ability to use the lower tax rate.
Tweetable Quotes:
● “Moodys Gartner is a tax law firm. We also have a companion accounting firm, Moody's Private Client and we service private clients, high net worth and ultra high net worth private clients at a tax specialist level.” – Kim Moody
● “Maximize the referral by not taking those funds out so that ultimately you maximize and use the time value of money so when you ultimately do take the money out and pay another level of personal tax, you are dealing with more” – Kim Moody
● “Would you pay an arm’s length person the same amount of money for the same services? If the answer is yes, then more than likely that salary that you are paying to the family member is reasonable, then all is well.” – Kim Moody
Resources Mentioned:
● Facebook – Jason Pereira’s
● LinkedIn – Jason Pereira’s
● jasonpereira.ca – Jason Pereira’s
● Linkedin – KimMoody
● moodystax.com – Moodys Gartner Tax Law
● FintechImpact.co – Website
Full Transcript:
Speaker 1: Welcome to the Financial Planning for Canadian Business Owners podcasts. You will hear about industry insights with award-winning financial planner and entrepreneur, Jason Pereira. Through the interviews with different experts with their stories and advice, you will learn how you can navigate the challenges of being an entrepreneur, plan for success and make the most of your business and life. And now your host, Jason Pereira.
Jason Pereira: Hello and welcome to Financial Planning for Canadian Business Owners. I'm your host Jason Pereira. Before we get started on the show today, I'd like to invite you to visit my website, Jasonpereira.ca and sign up for my newsletter. There you'll get notification of any new podcast episodes, blog posts, or television appearances.
Jason Pereira: So moving on, today's episode is going to show I have Kim Moody of Moody's Gartner. Kim has a well known and respected tax expert and I brought him in and he was kind enough to share his time today to provide us with the fundamentals of corporate taxation. And with that, here's my interview with Kim Moody.
Jason Pereira: Hello, Kim.
Kim Moody: How are you doing?
Jason Pereira: Good, thanks for taking time.
Kim Moody: My pleasure.
Jason Pereira: So Kim Moody, tell us about Moody's Gartner and what it is you do?
Kim Moody: Well, Moody's Gartner is a tax law firm. We also have a companion accounting firm, Moody's Private Client. And we serve as private clients, high net worth and ultra high net worth private clients at a tax specialist level. And one of our claims to fame is Canada, U.S. We have a very strong Canada, U.S. bench. So anything cross-border in the private client space we tend to excel at. And we have offices in Edmonton, Calgary, Toronto and we're growing and we're having fun.
Jason Pereira: Excellent. Glad to hear. So thank you for taking the time to come on the show. And I brought you on specific because you're a very prominent tax authority in this country. And I wanted to give the listeners a good fundamental understanding of some basic fundamental issues surrounding corporate taxation. So we're going to dive into a couple of different areas, but I want to start off with just the general basics of corporate taxation. So give the audience a rundown of how corporations are taxed in this country.
Kim Moody: Well corporations, if they have income, business income, and I'll talk about private corporations because that's my area of expertise, although public corporations are very similar. But on business income they're taxed at a certain rate. And if that business income is considered to be active business income, so effectively you're in business and it's generated in Canada, then the first $500,000 of that income is subject to a preferential rate. We call that the small business rate and that generally, it varies by province. For example, it was at 12% it's now slid down to 10% on the first $500,000 of profits. And anything in access to that, you'll be subject to the rate, the general rate, which is 26% it was last year in 2019. And in Alberta, which is my home province, but it's now in 2020, at 25%. so the general corporate rate varies across the provinces as well. But it's generally the 25 to 27% range. Now if that company earns investment income, then it's taxed in a different regime.
Jason Pereira: Excellent. We'll come back to that in a little bit.
Jason Pereira: So this is substantially lower than top marginal rate across the country, because top marginal rate, depending on where you draw the line and which province, we're talking about high 40s to low 50s across the board. But again, there's a very good economic policy reason why we do this, and it's to hopefully help businesses stimulate the economy, hire more people, and do all the right things. So basically there's clearly an advantage there. Can we talk about what the benefit is of that tax rate differences? Let's say I don't end up reinvesting funds in my general operations that I paid, what's call it, low teens to 20%, 20-ish percentage. What's the advantage in not taking that money out, paying myself personally?
Kim Moody: Well, the advantages that you can maintain a deferral. Let's say you've been subject to the corp, of the corporation has been subject to the general rate, let's say 25%. well the remaining 75% or 75 cent dollars stay in the company and either be reinvested in business assets or reinvested in passive assets. Like on an extreme, let's say it's cash and you invest in the GIC. Well that's an advantage that ultimately you're reinvesting higher 75 cent dollars because if you had earned that income personally, let's say it's you're taxed at 50% at the high rate, well you're reinvesting 50 cent dollars. So the whole idea is to maximize the deferral by not taking those funds out so that ultimately you maximize and use the time value of money so that when you ultimately do take the money out and pay another level of personal tax that you're dealing with more money because you've had the benefit of the deferral for so many years. Now the government is well aware of this.
Jason Pereira: [inaudible 00:04:47] aware of it, unfortunately.
Kim Moody: Yeah. And they tried to attack that in a massive way in the July 18, 2017 private corporation tax proposals, but they backed down from that. Ultimately what they wanted to do was to prevent that deferral and the way that they in bulk that was going to be rather radical, but they backed down from that.
Jason Pereira: Still, there's a limit now, so there's a limit of $50,000 in passive income that a small business can make before it starts to potentially suffer because they will ratchet back on our ability to use the lower tax rate, corporally. Can you talk about how that works?
Kim Moody: Yeah, and that was the compromise that they introduced when they backed down from the radical proposals, which would have eliminated all deferral essentially. So what they did, which is pretty rough justice in terms of tax policy, to the extent that a private corporation or any of its associated companies has more than $50,000 of investment income, which can include the interest, dividends, capital gains, royalties, things like that. Then every dollar and excess of that amount over 50,000 will result in a $5 reduction in the amount that is subject to the lowest tax rate. So in other words, if you have $500,000 that's available to be used at the small business rate, but you have $50,000 of passive income inside those companies. Oh, sorry, $50,001. Then now you've got $5 less that you can have at the small business rates. So using my simple example, you'd have 499,995 that is only available at the small business rate.
Jason Pereira: And that can be pretty punitive. I mean, we look at the tax that they're paying on that extra $1 of income, we're talking passive rates, which are 50%. and then if we're going to lose a $5 small business rate room and have that tax at the difference at the higher rate. So let's just say, arguments sake, there's a 15% difference between the lower and the higher rate. So now 15 times five is 75%, plus the 50 we paid like this is the thing people seem to realize is that there's actually marginal tax rates in corporations now in these circumstances that exceed 100% some promises.
Kim Moody: That's right. Yeah. And certainly the Department of Finance is aware of this, but it was a compromise in their mind as proposed to the original proposal. So I totally agree with you, Jason. It's a bad tax policy. I understand what they're trying to do. They're trying to prohibit or limit the amount of accumulation of funds inside a private corporation that is subject to the lowest tax rate, but the way they're doing it in my view is just not right. When you have marginal tax rates that are well in excess of 100%.
Jason Pereira: Yeah. I mean, when I have this conversation with people and business owners in the form of that, yes, believe it or not, in this country, it is entirely possible to make an extra dollar and pay $1.20. I mean, luckily I'm an Ontario and the province didn't follow that and it's not quite as bad, but it's still north of 50%, 70%. but the reality is there's not a single person out there from a simple justice standpoint that thinks that making a dollar and paying more than a dollar is anywhere near justified.
Kim Moody: Absolutely, totally agree.
Jason Pereira: Yeah. So once the money's in there and it's growing, we have that now. Now the good thing about this also is we often talk to business owners is this is a nice way to help insulate them from the volatility of being a business owner. So I could be taught marginal one year and leave money behind the corporation.
Jason Pereira: I could have a really bad year next year. And I basically lose, I don't have enough money to pay myself, but I can then draw those funds out later and pay a lower tax rates. Or I could use this as another alternative to an RSP and take money out when I'm in retirement with lower tax rates. But one of the things that often comes up in conversation here, and one of the big myths that kind of exists is that oftentimes you think you'll find the business owners who think that they're going to pay a lot less tax if they pay themselves dividends out of the corporation and income. Can we talk about the concept of integration and why that belief is a fallacy?
Kim Moody: Well, this is something that's difficult for the average person to understand, but the way I describe it to my students and to clients, business owners, is that when you pay corporate tax, effectively, that is just a prepayment of tax. The media is really horrible at this. Where they'll always attack corporations and say, "Look at this low rate that they're paying compared to the workers that pay a much higher rate." In my home province in Alberta, our provincial government has reduced corporate tax rates by 4% to be phased in over the next four years. The opposition NDP are calling that a four and a half billion dollar tax giveaway. I mean that is just so plainly misleading.
Jason Pereira: To whom, to whom?
Kim Moody: Exactly.
Jason Pereira: I had this conversation when I teach as well about tax rates and corporations. And I will say, I actually think there's an argument for zero and here's the reason why. What does a corporation do with their money? They invest in capital, they hire more people. They either hold on the money as a small business and then pay very high tax rates like we just discussed before investing that money or they pay it out as dividends.
Kim Moody: Absolutely.
Jason Pereira: Which they then will pay personal tax rates. So they don't just bury it somewhere and it's lost to society in some way, shape or form. This is not a way to basically give a bunch of billionaires the ability to buy more votes. This is just the first two options are incredibly economically stimulative. And at the end of the day, eventually it all comes out anyway in higher taxation.
Kim Moody: That's exactly right. And now, I know the NDP are not that stupid, but they are that misleading when they state things like four and a half billion dollar tax giveaway. You're right. To who? Because at the end of the day, the Canadian tax system has been designed and it's been this way for roughly 50 years, is to have integration. Now what does that mean? What that means is, is that the legal form of how you earn your income should not matter. In other words, did you earn $100 personally? Then the overall tax rates? Should be the same had that $100 been earned by a corporation. The difference, of course, is that if you earn a hundred dollars personally, you're going to pay that right away, that tax rate. Whereas if you earn it through a corporation, then you're going to pay the tax as a combination of corporate tax.
Kim Moody: And then eventually when you take the remaining money out, you'll pay a dividend tax on a dividend. And so the whole theory of integration is to make sure that the tax rates are the same. And it's very generally works across Canada. And although the corporation flow through tax rates, especially on investment income, it actually costs you more tax these days, especially in Ontario, Alberta, it's both roughly, right now, about a 4% increase. In other words, if I add interesting cover and personally versus interesting can earn through a corporation, I'm going to pay about 5% more through a corporation, which they need to clean that up. And Alberta is, Ontario is not at the moment. That's the theory of integration.
Jason Pereira: You have 14 jurisdiction, right? You've got federal plus three territories and all the provinces and the feds changed something. Every province, then if they want to keep this the same way, it has to change their tax policy. There's little gaps in efficiency, but in general the message is pretty straight forward. Take income, take dividends. By the time you add up what you're paying the feds either in one check or two checks, it's the same inquiry.
Kim Moody: That's exactly right. With the difference being the time value of money in a corporation if you can hold the funds in the corporation.
Jason Pereira: And the two other points I always make to them is, and this is sometimes not always communicated to them, they're giving up their CPP contributions if they're doing it in dividends versus income, [inaudible 00:12:13]. That's got to be an informed decision. And they're also giving up the ability to earn RSP room and utilize that later by taking dividends instead of income. So there is no one correct answer. At the end of the day, the tax decision needs to be driven from, in my mind, from various factors to deferral, the CPPD, RSP and any differences in gaps and integration. But it's not a simple, "Oh, I'm paying less." It's funny because I even have this conversation about publicly traded corporations with people who are just like, "Oh, dividends are awesome because I pay less tax." I'm like, "Well no, you're paying less tax because the big company paid more tax." So at the end of the day, if corporate tax rates were zero, your dividend could be significantly larger. So it is what it is.
Jason Pereira: So moving on to dividends, this has become a more complicated situation in Canada than it used to be for small businesses. Specifically one of the things the feds tackled a couple of years ago was the concept of income splitting. They thought it was completely unfair and unjustified for people who own businesses to potentially "split income" with family members, as if the family members had nothing to do with the success of the business. And made it very difficult to pay, let's put it this way, this way there's a number of tests that one has to qualify for in order to split income with the family members. So this is really the split income conversation, but dividends are part of it. Let's talk about what necessarily has to happen for myself or any of the business owners to pay their spouse or family member any form of income. Let's start with with, with actually salary and then let's go to dividends.
Kim Moody: Sure. I mean the tests for salaries are conceptually pretty simple. The issue is if you pay a salary to a family member out of a company or just out of a proprietorship or partnership, the issue is is that salary reasonable? And really what the courts look at is would you pay an arm's length person the same amount of money for the same services? And if the answer is yes, then more than likely that that salary that you're paying to the family member is reasonable and all as well. If it turns out that it's not reasonable, then there's provisions in the Income Tax Act that will deny the deduction of that amount. So for example, if a private corporation pays $10,000 to little Johnny and little Johnny is basically doing nothing and it's not reasonable to justify the payment of that salary, then that company will be denied the deduction or that $10,000 if it's ever audited, but it's still taxable in little Johnny's hands. So the result is it's double tax and then that's pretty much it in terms of the legal tests and the tax tests on salaries.
Jason Pereira: But that's the legal test, right? I mean the first test is what the auditor thinks, right? This is one of the things I don't like about some of these changes is the ambiguity. They said reasonableness, but it's really reasonable as to in the eyes of the auditor at the time of the audit. Right?
Kim Moody: Well, just to be clear though, Jason, these reasonableness tests for salaries have been around forever, so there are no changes that were made in recent years as a result of the reasonableness for salaries. I think what you're referring to is the reasonableness on dividends, which I could talk about right now if you want me to,
Jason Pereira: Yeah, so let's jump into dividends, which is definitely the more complex of the two situations. So it used to be that for example, my spouse could own a class of shares that I could then dividend her as a share owner and just like she was owning a publicly traded corporation. And she would have that income tax in her hands as dividends. So not an uncommon tax planning strategy for business owners in the past. But the rules around that change pretty dramatically. So can we speak to what that looks like?
Kim Moody: Sure. So it's going to be difficult for me to summarize this in such a short period of time, but I'll do my best here.
Jason Pereira: For the record, if you're curious about this or confused about it, Kim and his company put together a very interesting flow chart that is one of our major reference points that has all the considerations for paying a dividend. It's a little bit frightening, but it is incredibly helpful. So I'll let you, with that segue, I'll let you get into it.
Kim Moody: Well, thanks Jason. And just to expand on that, the reason why we put that flowchart together was pretty selfish to begin with. We wanted to understand these rules because we're tax geeks and we deal with complexity on a day to day basis. So we're used to it. But I can tell you when these rules came out, we had a really, really hard time understanding these rules. And the only way that we could even make sense of it was to put this flowchart together. And it's something that we work with all the time, but the short answer is this. Like you nicely summarized prior to the introduction, these rules, you would pay a dividend to your spouse and the spouse would be subject to a tax rates on dividends, which are lower than salaries because there's already been corporate tax paid.
Kim Moody: So that's right. What they did is they introduced a set of rules that expanded on the existing kitty tax rules. So the so-called kitty tax rules have been around since the year 2000, which basically would invoke attacks if dividends or other sources of income work or paid to a minor child out of the business. So if you paid a dividend to either a direct or indirect minor child shareholder, then that dividend will be subject to the so-called kitty tax and subject to the highest tax rate on that dividend. And effectively, what they did is they said, we're going to expand that kitty tax rule to any related person. So your spouse, your adult children, those are the most common. And the only way you get out of those rules is if you meet certain exceptions. And so they introduced exceptions for inherited the shares from a deceased parent, and that parent was active in the business, very complex there.
Kim Moody: There's another exception if the spouse or children work in the business and at a minimum of 20 hours per week or less, if ultimately it's reasonable to assume that they make a significant contribution. There's exceptions for certain types of shareholdings, so-called excluded share exception if you hold 10% or more of the boats and value of the shares and the business is not a service business. And it just goes on and on that these rules are major, major, complex and applied to virtually every single business owner in Canada. Which is the problem that I have with these rules.
Kim Moody: I mean it's one thing to foist complex rules on a small group of people who can hire smart people to interpret them. But it's another thing to foist significant complexity to such a broad group of people and the average accountant that has no ability to interpret these rules. And that sounds arrogant and I shouldn't say no ability to interpret, but let's just say it's fair to say that most accountants struggle greatly with the application and interpretation of these rules. So that's the problem I have with it. Because anytime you pay these dividends, now you got to think about, is it reasonable, am I into these rules? And if it turns out your into the rules and you can't justify reasonableness, then that dividend is subject to the highest tax rate.
Jason Pereira: Yeah. And as you said, they all think it's Caribbean at all. For you to say that, cause the end of the day really the issue is burden is always on the taxpayer, right? Like it's always our obligation to make sure we file everything correctly. And when we hire professionals, there's different levels of professionals quite honestly. And the more complexity in the system, the more likely we are to run afoul of those rules and resulted in unneeded, unwanted penalties. And your flowchart alone I think has like seven or eight decision points with like sub-bullets that probably total someone neighborhood of 25 to 30 different factors, if not more, that determine whether or not you can or cannot pay this dividend and have a tax within the hands of the person who received it. So it's not a stretch to say that I don't think anyone in the public is served at all by this level of complexity to the simple act of paying money from a corporation, let alone the tax authorities to having to actually police this.
Kim Moody: Yeah. No, I totally agree. And when these rules were first introduced, Jason, that your listeners might be interested to know that there is a number of us behind the scenes that tried to advocate for significant changes to these rules. I think most of us would agree that there is some mischief, especially with children, paying dividends out to adult children and then using those cheaper funds to go to university, for example.
Jason Pereira: There is evidence to that, yes. Dividends that peaked at 18 then trailed off as they approached early 20s, yeah, that was normal.
Kim Moody: And when you look around the world, especially to our neighbor to the south of us, the United States, I mean first of all, they have a limited form of family taxation. You can file married, filing jointly and pay a common tax. Canada does not have that, but they also have a version of the kitty tax rules, which is, and I'm going to oversimplify this, but it's relatively straight forward. Whereas I believe off the top of my head it's 25 and under for children. If it's reasonable to conclude that that income would have otherwise been paid to the parent, then instead of being subject to the highest tax rate on that income, the child is subject to the marginal tax rate of the parents. Which makes more sense to me. But in Canada, the way they introduce these rules, that child is subject to the highest tax rates.
Kim Moody: So it's very, very punitive. So we wanted to say, listen, if you want to clean up this mischief, why don't you introduce a bright line test like the United States has? But ultimately at the end of the day, the government was very resistant to that idea and proceeded with this complexity, which is very disappointing.
Jason Pereira: It is. I mean, and for those listeners who don't recall this. Two summers ago I think they introduced these policies and then there's very little time to comment. And I will say this much, I have never seen the industry across so many [inaudible 00:21:33] moves so fast to form coalitions and lobbying. I know you were involved on a heavy basis, I thank you for that. And I was involved in various organizations and various direct communication with MPs who were also, many of them, not very happy with what came out of this. And they very quickly dropped two of the four provisions they were looking for.
Jason Pereira: But I think at the end of the day, there were two kinds of, we need to save face on doing something. So I can sum up this legislation by saying, we're not saying you can't pay a dividend. We're just saying you have to walk across glass to do it, in a lot of cases.
Kim Moody: That's a fair summary. Peace be with you. What I say to accountants is, and I lecture quite often, is peace be with you if you haven't changed the way that you've been practicing with your clients and you haven't documented your files to justify the payment of dividends to family members. Because at the end of the day, there are significant complexities and you need to turn your mind to whether or not these rules apply.
Jason Pereira: It is an undue burden. And I agree with you. I mean, I remember exactly what you're talking about in terms of the U.S. test and being applied to the marginal one. That's kind of fair, right? Like it should have been paid to the kid. If it's paid to the parent, this tax bill would have been ... and the difference between top marginal and the lower rates is pretty substantial in this country. Ontario will use 53% as its top line. Imagine a situation where two family members working in a business, they just kind of screwed up and it went a little bit unreasonable because of the amount of money that was necessary to sustain themselves through some emergency or whatever it was. And it took it out and they ended up getting slapped for it. And let's say that those two were in the mid 30s, 36 cents, to suddenly turn around and say, "That should be paid, so then paid to that person, should've been paid to that person."
Jason Pereira: And if it had been paid that second person, it would have been taxed at 36 to 40 but no, we're going to tax you at 53, that's just an undue burden and it's just [inaudible 00:23:23] .
Kim Moody: Totally agree.
Kim Moody: And the other thing that drives me crazy is that these rules are specifically targeted to the so-called middle-class business owner. And there's a lot of rhetoric that comes out of this federal government about the wealthy and they need to pay a little bit more and got unfair tax breaks for the wealthy. It's just such a bunch of garbage but an unnecessary divisiveness in my view, because we're all Canadians, whether you're rich or poor, we're all Canadians. But these rules are targeted specifically at the middle- class business owner because do the real wealthy care about income splitting?
Jason Pereira: No.
Kim Moody: No.
Jason Pereira: They're already at 33 across the board.
Kim Moody: Exactly. So they don't care about this stuff. The middle-class business owner, again, I hate using that phrase middle class, because I don't even know what that means.
Jason Pereira: Let's call that average.
Kim Moody: Yeah, average is probably better. The average business owner, do they make a lot of money? No. There's lots of statistics that show that the average business owner makes less than $70,000 per year to feed a family, which is pretty modest considering all the risks and ups and downs that that go on.
Jason Pereira: I had data that I showed my MP that showed that those business owners themselves actually work far more than a 40 hour work week. So when you break down the hours, the average business owner is making less per hour than the average employee person.
Kim Moody: Yeah, no question. And so when you have that $70,000 business owner, all of a sudden paying marginal tax rates on the first dollar at the high rate on dividends, which in Ontario is, I don't know what it is off the top of my head, but let's say it's 48%, that's ridiculous. And that is very unfair in my view.
Jason Pereira: Yeah, I mean I think I've seen you make comments in the past on this and if not, I'm sure you're in support of it, but I think there's been a rising chorus of people saying we need to go back to the drawing board and look at the entire tax code in this country and actually start to actually fix this. Let's modernize this tax code that was developed back in the 70s for the modern era and start unwinding all this ridiculous tangle of complexity we have that unfortunately business owners who are listening to this podcast are all subject to in the worst possible way. I mean, personal tax filings, not that complicated. You have the audacity, so you'll take the risk to start a business and employ people in this country and then it becomes, well, technically now you're kind of the enemy.
Kim Moody: Yeah. Which played itself out during the July, 2017 private corporation tax battle. The rhetoric that came out of that was so offensive. So the bottom line is yes, you have heard me speak on that before because I'm pretty loud, like a lot of other tax people are across this country, that it is way, way overdue for us to do an overhaul and have another Royal commission on taxation that breaks down rate from its bare structure to see what needs to change, what needs to be modernized. And there's a lot of academics across Canada that when they hear people like me saying that they ... some of them will say, "Well you better be careful what you wish for."
Kim Moody: And that just drives me crazy because it's such a selfish comment and such a selfish rebuttal and such a shallow rebuttal, frankly. Because at the end of the day, people like me, and I would submit that there's a lot of people like me in the tax community across Canada, we want what's best for the country. It's not about being careful what you wish for. It's about what's best for the country. And for business owners, one of the key objectives is to reduce the complexity. And if I was involved in an exercise like the Royal commission that would be front and center is let's make this as simple as we can.
Jason Pereira: Absolutely. Well hopefully that rising chorus of voices continues to grow in. And frankly, as the tax code seems to get even more complicated as we just recently had an increase this month to the personal exemption, which now has a claw back.
Kim Moody: Ridiculous stuff.
Jason Pereira: Unfortunately the government has a propensity for labeling things that are taxes, not taxes, but just creating all these phantom taxes and hidden tax rates. So hopefully we see a reversal down the future and then going back to the drawing board and actually setting this country straight. But for now, I thank you for this contribution because frankly, this will hopefully provide some basic understanding for business owners about what it is they're facing. I also commend you for the lobbying and the effort you've done in the past. It helps frame this up because I've seen you're a very vocal advocate and it's one the reasons why I wanted you on the show. Where can people find you before we close out?
Kim Moody: They can go to our website at www.Moodystax.com. M-O-D-D-Y-S-T-A-X.com and you'll find us there.
Jason Pereira: Perfect. Kim, thank you very much.
Kim Moody: My pleasure, Jason. Thanks again.
Jason Pereira: So that was my meeting with Kim Moody of Moody's Gartner. As you can see, Canadian corporate taxation is unfortunately in need of a bit of an overhaul, but until then we have to work as best we can within the structure we have. So hopefully that taught you that you should seek out the proper advice when looking for tax advice, especially with your department. As always, my name is Jason Pereira and this has been Financial Planning for Canadian Business Owners. If you enjoyed this podcast, please be sure to leave a review. Take care.
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