Following Tuesday’s Federal Budget, the organisation representing Canada’s chartered accountants says there should be an independent and comprehensive review of the tax system to ensure it is world-leading.
"We operate in a global economy and uncertainty lingers, especially when faced by actions such as tax reform in the United States," says Bruce Ball, vice-president, tax, CPA Canada. "An independent, comprehensive tax review would greatly assist in creating a best-in-class tax system to generate jobs, attract investment and foster inclusive growth for the benefit of all Canadians."
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Ball says more details are needed on the pledge by Finance Canada to review the US federal tax reforms and assess any impacts on Canada.
Addressing the changes proposed by the government to the rules in passive investment income for private corporations, Ball notes that there has been an improvement.
"The new plan is much simpler than what was originally proposed, and the government deserves credit for listening to Canadians," says Ball. "We still firmly believe that the best approach to deal with Canada's tax system is not to assess proposals in isolation, but as part of a comprehensive review.”
Will small businesses see the benefit?
The improvements to the passive investment rules have been welcomed by the Canadian Federation of Independent Businesses, but it remains skeptical.
“While we compliment the government for rethinking its plans for taxing passive investments, it remains to be seen how significant this improvement will be,” said CFIB President Dan Kelly. “The new rules appear to be simpler and may improve things for some business owners from the earlier proposals, but others will lose the benefit of the lower small business rate due to past investments.”
He added that with rising costs for small businesses; including five years of CPP/QPP hikes, five years of carbon tax/pricing increases, and higher minimum wages in several provinces; tax hikes to pay down the deficit are likely later.
“The lack of a plan to get Canada out of deficit spending is deeply troubling,” he said.
He welcomed support for female entrepreneurs and improving the CRA and other regulatory issues.
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