By Justine Féron
A new corporate tax agreement allowing businesses to file one tax return rather than two is receiving mixed reviews from local businesspeople and organizations concerning whether the new law will actually save small businesses time or money.
The Oct. 6 agreement between the provincial and federal governments will make Ottawa responsible for collecting corporate taxes on behalf of the Ontario government.
According to Len Crispino, president and CEO of the Ontario Chamber of Commerce, the agreement will save Ontario businesses between $100 and $150 million each year.
This estimate, Crispino says, is based on the principle that, in the business world, time saved is money saved. “Under the old agreement, you’ve got two sets of auditors imposing on the owner, have to get your financial records in order twice, have to divert staff attention away from other jobs twice, and have twice as many questions to answer,” he says. “Since time is money, you’ll be saving a lot of both with this new agreement.”
Finance Minister Jim Flaherty estimated the cost savings to Ontario businesses at as much as $100 million each year.
However, Stephen Saslove, a chartered accountant and Centretown business owner, is skeptical that businesses will save any money.
“This new program will save the Ontario government money, certainly,” he says. “I just can’t see where the direct savings to the consumer is.”
Saslove also says the new agreement will do little to change the way in which corporate taxes are actually computed.
“Ontario tax return calculations are, and will remain, different than federal tax calculations,” he says.
“Businesses will still have to make both calculations and follow the same process. The only difference is the ultimate destination of the tax return.”
Cleo Hamel, senior tax associate and policy analyst at H&R Block, agrees that the new corporate tax regulations will not change much about the way in which returns are prepared.
However, she does envision the new agreement saving business owners money.
She says that the introduction of one set of taxation rules with a single department to contact will make tax preparation quicker, easier, and therefore less costly for business customers.
Ken Ginn, owner of Bank Street’s Ginn Photographic Co., says he is pleased to hear the recent announcement.
“The tax issue is so incredibly complicated and intertwined right now,” he says.“An agreement that makes the issue less complex is a positive for me.”
Shayne Anderssen of Hackett’s Shoemakers, also on Bank Street, agrees.
“There are two returns now, so it makes sense that doing just one would be easier, less of a hassle.”
According to Garth Whyte, executive vice-president of the Canadian Federation of Independent Business, Ginn and Anderssen are representative of many local businesspeople who are happy about the new corporate tax system. “Big cost savings at the provincial level might make local businesses think to themselves ‘So what?’” Whyte says.
“For small businesses, it’s the savings in time and energy that really make this agreement worthwhile.”
Gail Logan, president of the Ottawa Chamber of Commerce, says she has been receiving positive feedback from local businesses.
“This new agreement is good news for Ottawa business owners,” she says. “It will increase efficiencies and simplify the corporate tax process.”
The federal government has reached similar corporate tax collection agreements with the three territories and all provinces but Alberta and Quebec.
The agreement will be fully implemented by January 2009.