There's been a lot of rhetoric about the consultation period on these tax changes being a sham, and that the deal is done. Since positives aren't often shared, I wanted to share that Bardish Chagger and Justin To (leading policy in the PMO) just spent their Friday afternoon, up till 7pm, having a great discussion about the mechanics and how to avoid unintended consequences. Genuinely impressed with the open mindedness to feedback and adjustments. It's a genuine consultation. Be sure to share your anecdotes and feedback with your MP - they are actively listening and incorporating suggestions. ... See MoreSee Less
Elena YunusovCan they stop calling ppl tax cheats? Cause that'd be nice. And extend the completely arbitrary deadline?
5 hours ago
Joseph PuopoloI want to see people move from listening to calming down the rhetoric, extending consultation, and making some public acknowledgement that they are not going to ram it down our throats like a freight train.
Jennifer BouyoukosOur MP for Aurora is holding a "Listening" session Sunday for 3 hours and she's been very active in attracting an audience. I'm attending and I have confidence she's hosting the session with the best intentions. I only hope it's well attended.
I covered Manifold's exit from stealth and $15 million in seed funding from OMERS. Of course, group admin Jevon MacDonald is the founder of this startup. This group is probably well familiar with his last effort with GoInstant, which was acquired by Salesforce for $70 million in 2012. ... See MoreSee Less
Andrew Scheer told the Commons that Justin Trudeau’s personal wealth – inherited from his father’s family trust and now held in three separate numbered corporations – is not affected by the Liberals’ small-business tax proposals
Tim CapesThe key metric is how many people you actually hire. Applications can be misleading because of referral tactics used by sketchy recruiters or people applying without knowing many details of the job and comp package. It's been great to see some companies in Toronto bring in top tier talent from the US (this seems to be growing), but that's the effect we want to measure and capture not applications.
John Philip GreenOne of our star hires in the last year relocated from Microsoft/Seattle. It is happening
1 day ago · 3
Elena YunusovJust wanted to 👏 cause liking Axios format a lot, and I've seen good tech reporting from them, too.
1 day ago · 2
Varun MathurThis is bubble writing - it is feeding a narrative to folks who already want to believe that story "people moving here directly due to Trump's election". How many tech folks have ACTUALLY moved here as a direct influence/result of Trump's election - its been a year almost ? Anybody know anyone or is this all just talk and hyperbole ? Are we able to separate out folks who move invariably from those who moved due to the "direction of the country" ?
Prem Kalevar1. Rising living costs in the US tech hubs + 2. growing Toronto tech ecosystem increasing the availability of desirable jobs -- also likely major factors.
1 day ago
Michael LeeThis is great! I want nothing more than to see my country get more opportunities and fuel more growth for the people now and those who'll need the opportunities in the future. I hope more companies will continue to come over to Canadian cities, take a chance, and invest. You guys got tons of people here with heart and talent who'll make ventures a success. :D
1 day ago · 2
Esteban ContrerasI left NYC (working for Samsung) to move to Vancouver 5 years ago. While I have worked remotely for two American tech startups, I don’t really want to go back to NYC or SV. I’m Guatemalan and married to a Canadian. I know many immigrants in the U.S who are at least curious about Canada, and I know many more remote tech workers in Latin America who have no interest in moving to the U.S. now.
I appreciate the leaders who have started the public outcry over the proposed tax changes, but I haven’t seen enough concrete suggestions about what we’d like to see.
Let’s be careful not to conflate start-up asks with those of doctors. Doctors are pretty much guaranteed a decent income in this country. Entrepreneurs are not. I’m going to let the MDs lobbyists earn their money and suggest the startup community get our talking points gathered up. There was talk of several successful entrepreneurs forming a lobby group a few years ago, if that's still going, this is a perfect opportunity for them to help us get our points across.
Let’s begin by recognizing that most start-up entrepreneurs won’t cash out. Therefore, it’s not just about preparing to protect large wealth, it’s about making it easier for us to try.
The multiplier effect of start-ups is substantial. Vantage has developed world-leading AI for retailers and brands and along the way, we’ve generated dozens and dozens of person-years of work both hiring full-time employees and a lot of freelancers.
So here’s what I’m looking for (in no particular order), please feel free to contribute your own asks:
1) When someone gets laid off work and they take a severance package and stretch it to start a company, make it easy for them to get taxed for the severance over the appropriate future time period, instead of taking 50-75% of the severance cheque in immediate taxes.
2) When an entrepreneur hires a caregiver for their kids or for elder or infirm dependents, let them write it off… even if the startup doesn’t make enough money to pay the entrepreneur a salary for a few years.
3) Income sprinkling, or income splitting - I don’t care what you call it, but if an entrepreneur is able to startup because their spouse covers the bills, recognize that.
4) Create a way to recognize that we often risk our houses or other savings to finance the startup. Maybe something similar to the way that I can take a small amount money out of my RRSPs to finance a house.
5) hiring students - right now it seems to be all or nothing. Vantage waited until mid-July to be told that we didn’t get a summer student job position (which is foolishly late by the way), why weren’t there better incentives for us to do anything to hire summer students in February when they students were looking not July or even April when they were coming out of school?
6) Double the lifetime capital gains exemption. If I do cash out, I deserve to take a few years and not work while I figure out my next step. You know what I need to do that? A house. You know what a house costs in a lot of the startup parts of Canada? More than $700k.
7) Keep the lifetime caps but remove the annual limits on what I can contribute to my kids RESP.
8) Recognize when entrepreneurs cash out and don’t move to Barbados and forget about the rest of us, but actually invest in other start-ups. These folks are not doing it because they think it’s the easiest way to make money, they’re doing it to build our entrepreneurial ecosystem and foster more growth, more innovation, more startup jobs. Most of that angel/VC money isn’t invested in a sure thing like Vantage, there needs to be a better tax incentive for them. ... See MoreSee Less
Elena YunusovI agree we need to present united front on this, pinging Benjamin Bergen
2 weeks ago · 3
Daniel DebowYes, there is a group - CCI that Benjamin Bergen runs.
2 weeks ago · 2
Ben LucierThis was awesome and well-articulated Aran. Thanks for starting this.
2 weeks ago · 5
Daniel DebowThere are lots of challenges I've heard about with the tax proposals. The one that I think will long term impact incentives is the removal of the cap gain lifetime benefits for family. Today, by shared ownership in a company (or as beneficiaries of a trust) all family members can claim their lifetime capital gains exemption on exit. It is about $800k. So - for a family of four that has risked it all, dealt with all the stress, etc. - when an exit comes the tax free portion can be $2.4M. This is a huge difference for a family over a long period. My understanding is that the Feds propose to remove this ability - only one person can take advantage. To the extent after tax returns matter to decide to start and build a company - this will, imho, have a meaningful impact on the number of people trying to risk it all to start a biz in Canada.
2 weeks ago · 22
Chris HamoenCompletely agree with all of this and nice to see some real content in SUN.
2 weeks ago · 4
Debra ChandaThank you for detail overview. Advocate Jenkins Report - angel/VC tax credits - currently our investors in certain sectors invest in start-ups MN / MA / CA because those states and more provide this incentive even if investor residence is non U.S / OUS.
Parveen KalerToo complicated/clever for its own good. HST everything. Get rid of all of these deductions, incentives, subsidies that muck up the tax code.
The goal should be the simplest tax system reasonable.
2 weeks ago · 2
Debra ChandaAran Hamilton I like some of your critical thoughts; however, mixing socialism with capitalism ideologies "universal income." I get it b/c other capitalistic incentives are lacking and certain technology plays lack local demand here to invest in the innovation/pilots to fully productize. I do get why you presented this though.
2 weeks ago
Tobyn SowdenSome great (and seemingly reasonable) asks here, however definitely asking for more than we have now, meanwhile the government is proposing taking away the few benefits we have now.
2 weeks ago · 1
Debra ChandaMN Angel Tax Credit 101:
“Minnesota’s Angel Tax Credit provides a 25-percent credit to investors or investment funds that put money into startup companies focused on high technology, new proprietary technology, or a new proprietary product, process or service in specified fields. The maximum credit is $125,000 per person, per year ($250,000 if filing jointly). The credit is refundable. Residents of other states and 'foreign countries' are eligible” — MN DEED Yuri Navarro just added you to this string, as why are Canadian investors going start up investments OCAD?
Dan Tsipe50 plus percent of all new business fail. The proposed tax changes will increase this number significantly, decreasing number of good jobs available to all Canadians. How is that helping the middle class when more business start to fail because their founders are squeezed financially and have less incentives to take on financial risks and stress. I think the government is totally blindsided by populist agenda and losing touch with economical reality.
2 weeks ago · 3
Taylor MannI find myself agreeing with a lot of your points Aran. I would also say I am broadly in favour of the gov’t proposals, and don’t see much daylight between them. I would like to see policy proposals, like the ones above, that support business owners through periods of increased risk (aka maternity leave while you own/run a company, giving up income to start a company, etc).
I would genuinely like to learn more about this issue, because I haven’t seen any startup specific policy analysis pieces. The only compelling argument I have seen re: how these changes may affect founder risk analysis is the Cap Gains exemption that Dan mentioned above. Asking for that to be increased is a reasonable idea, even if I am personally of the mind that $800k before any taxes (and then the reduced capital gains rate thereafter) is at least within the ballpark of fair.
Lastly, and I have a feeling this may not be a popular view point… but I think it is important to note how many founders (myself included) have benefited gov’t programs, grants, investing funds, SR&ED credits, conferences, etc to build their businesses. This is obviously a personal political view, but I have no problem paying 20-25% of exit dollars (after the $800k exemption) in order to fund those systems (never mind actual infrastructure, eduction, and society more broadly). What we do is risky, and I think the ideas above may be good steps towards recognizing that. But without the programs these tax dollars fund, many people would not be in a position to take those risks in the first place, and I think there’s probably a balance to be found between rewarding/incentivizing risk and not allowing people to use CCPCs as a way to just reduce their overall tax burden without adding significant economic value (aka many outside this group).
2 weeks ago · 7
Scott BellGood points Aran. #3 and #6 are available via trusts today that you need to setup years before you know if you will need it... And 90%
Fail so no need. If fhe govt change sthe rules now,. We need a way to rearrange our startups. We analyzed where to startup and the combined corp/ personal was ok here vs US. If these rules go thru them the answer would be Brain drain. Start-up founders spend a bit of time in these overhead discussions but the govt is encouraging us to spend more time on it and take our startup risk south. We all need a good plan and then focus our displeasure on the local politicians. Trudeau and Morneau have their minds made up.
Saul ColtI had a conversation today with someone who is a subject matter expert on all of this. Would anyone want to do an AMA with him here in Startup North? If there is interest I can ask but pretty sure he would be up for it. cc: David Crow
2 weeks ago · 3
Richard RemillardThe government has opened an absolute Pandora's box by attempting to 'fix' one small part of the tax system without touching other parts. Consequently, it may have inadvertently opened up debate on the proper balance between small business and larger corporate tax levels, personal versus business taxes, taxing individuals or family units(however defined) and income taxes versus sales taxes(HST). Lower income tax levels overall, by increasing reliance on the HST, would reduce the tax incentives for incorporating,and stimulate economic growth via savings, while lower taxes on faster growing companies would promote scale ups versus our current system that favors SME's versus large corporates and, in fact, may even penalize company growth.
2 weeks ago · 3
Yuri NavarroThanks for looping me in Debra. To be clear, NACO is working on a response, but it would be good to coordinate with others like Benjamin Bergen at CCI.
My personal point of view is that this policy was not intended to affect startup entrepreneurs and investors (the potential for harm to investors seems even greater).
I am optimistic that if communicated to with clarity and facts, the government will listen.
Alex De BoldAgreed - solutions are better than complaining.
#1: Active Angels: If we want to build a pay it forward ecosystem like SF then we need to clarify what that looks like.
#2: Canada's Unicorns like Hootsuite, Shopify, Wealthsimple that are PR stops on the PM's media tour lend their use their voice to the debate. They're incubating the next generation of would be start-up entrepreneurs.
2 weeks ago
Navid Nathoo+1 on incentives for hiring students. Affordable, high quality, and can work with a timeline of a fast changing startup.