Jonah and Emily live on a leafy street dotted with stout detached brick homes in midtown Toronto. They live with their sons, aged 18 and 21. Both sons attend university full time.Jonah works out of his home, having incorporated a consulting business a decade ago that markets his expertise in time management to Canadian corporations. Emily does not work.The business — Be the Best You Can Be!! — earned $220,000 in 2016 before tax. BBB!! paid Jonah $100,000 in salary and “sprinkled” the remaining after-tax profits to Emily and the couples’ sons as dividends. (Emily and the boys paid $1 each for their shares in BBB!!) The contribution made by the two sons to the enterprise consists of mocking Jonah at the dinner table for his inappropriate acronymic social media terminology. The offspring have no meaningful involvement in the company, though Jonah sees them as “media advisers.” Jonah consults his sons when his computer misbehaves. The sons have been deployed from time to time to distribute BBB!! flyers, which Jonah refers to as “administrative assistance.”After all this shimmying, I mean sprinkling, the total tax paid on the $220,000 was about $44,000.Susan lives next door to Jonah, Emily and the two man-boys. Susan pulls down $220,000 a year as vice-president of human resources for a mid-sized company. On this, Susan pays income tax of $79,000. Susan is aware of the presence of BBB!! next door (Jonah keeps leaving fridge magnets in her mailbox, hoping for a corporate referral). She’s not aware that Jonah’s diligent income sprinkling translates into a tax burden that is $35,000 lighter than her own.The above example, slightly embroidered by me, is taken from the government’s July call for comment on its proposed tax changes. Is this not a case, as the government insists, of a high income earner gaining an unfair tax advantage?Yes it is. And it is an example of the ways in which the g ...
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