Controversy Surrounds Canadian Tax Reform Proposals


By Global Tax Weekly

While the US Government is attempting to reduce the tax burden on small businesses, Canada seems to want to go the other way. At least its Government does.

Governments these days are fond of claiming their openness, and their willingness to listen to taxpayers. In Canada’s case, the Government says it will ”act on what it has heard” during a consultation on controversial reform of tax planning rules surrounding the use by middle- and high-income taxpayers of corporate entities as tax planning vehicles.

But even without an official consultation exercise, the Government would have been hard-pressed not to have noticed the stir these proposals caused within Canada’s business community. Barely a week has gone by since the draft legislation was published that somebody hasn’t spoken out in vociferous tones against the reforms. Indeed, the small business community’s “spontaneous, grassroots response,” as Dan Kelly, President of the Canadian Federation of Independent Business, put it, has been somewhat unprecedented.

We know this type of individual tax planning is a very grey area, and it can be difficult to find the line delineating the territory between “acceptable” and “abusive” behavior. Yet governments and lawmakers will insist on setting business taxes much lower than individual taxes, and instead of trying to level the two up, they often prefer to crack down with a legislative sledgehammer. This appears to be the case in Canada, where the Government has badly misjudged the situation, judging by the reaction its proposals. We’ll find out soon enough though if it is truly in tune with taxpayers or has selective hearing.


For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look





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