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UBC Theses and Dissertations

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UBC Theses and Dissertations

Income taxation of the small business sector in Canada Nilson, Don Bruce

Abstract

This thesis examines the impact of taxation on small businesses in Canada. It reviews the relevant economic and taxation literature from a historical perspective to provide appropriate background for policy analysis. Other nations' tax systems are also considered. The key elements of the existing system are examined in order to define the present status and to identify the strengths and weaknesses. The learned proposals of various academics, professionals and other parties are reviewed in order to seek new ideas, comments and criticism on the system. The final chapter defines the author's perceived objectives for small business tax policy and identifies some impediments to tax reform. Finally, general and specific recommendations are detailed. The author proposes that the tax definition of "small" be narrowed and that "medium-sized" businesses be given recognition in tax policy. Small business tax policy should recognize as its prime purpose the providing of financial assistance to counteract the natural prejudices that small businesses encounter in the capital markets. To achieve this, the small business tax rate should be lowered and loss provisions should remain liberal. The concept of integration with the personal tax system should attain greater integrity by changing the calculation of Part Two Tax on distributions. Various small business tax measures extant should be scrapped because they are ineffective. Temporary or specific tax incentives should be used sparingly.

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