Does your Canadian company do business in the US? If so, recent tax reforms may affect how you plan and execute your business activities.

Part of the reform includes temporary tax cuts for some Americans and permanent cuts for corporations. It appears to benefit the wealthy, and only have short term benefits for the majority working class.

In previous years, Canada’s lower tax rate attracted US businesses to set-up shop in Canada. However, this tax reform brings the US tax rate down to be par with the Canadian federal-provincial rates (~27%). This could make Canada less attractive for US investors. To add fuel to the fire, Canada is imposing more regulations, whereas the US is starting to reduce their regulations.

Historically, lower corporate taxes stimulate economic spending and activity. With this trend, we can expect the US economy to grow, leaving Canada to consider implementing policy changes and competitive tax measures to encourage business growth in Canada.

As the new US tax reforms roll out, it’s important that Canadian business owners monitor the situation to see how it affects their business and make changes needed. Canadian Provincial and Federal policy makers may introduce their own legislation and tax benefits in response, so consult to a financial adviser like Dayna Holland and Associates to see how your business may need to adapt.