CPA Canada recently convened a conference call with members of its tax committees and other stakeholders to obtain input on Finance Canada’s follow-up measures – announced mid-October – regarding the proposals to address tax planning using private corporations. While the follow-up measures appear to represent some steps forward, these proposals continue to raise many questions and concerns. As a result, CPA Canada has written to the deputy minister of Finance Canada to share member views and concerns, seek clarification on the proposals, and advance some key recommendations. The key recommendations are:
Recommendation 1: Undertake a comprehensive tax review
There has not been a thorough review of Canada’s tax system in 50 years. Such a review is long overdue. CPA Canada continues to recommend that the private corporation proposals should be set aside and reconsidered when a comprehensive tax review is undertaken.
Recommendation 2: Provide certainty on which proposals will proceed
In the absence of draft legislation, CPA Canada recommends that the government should prepare and publish a measure-by-measure explanation of the status and its intentions regarding each of the original proposals, including their effective dates and transitional measures as soon as possible.
Recommendation 3: Adopt a formal and more expansive, transparent, two-way approach to consultations
In the interests of pursuing best practices, CPA Canada recommends that Finance Canada introduce a formal process for designing new tax legislation that adheres to principles of procedural fairness, transparency and consultation. This includes open analysis and discussion with businesses, the tax community and other stakeholders, together with an appropriate implementation timetable and transitional rules that would give affected taxpayers a reasonable amount of time to bring their affairs in line with the new policy.
Recommendation 4: Delay the effective dates of the proposals until 2019
If the government does not wish to delay the proposals pending a comprehensive tax review, CPA Canada believes the public interest would be served by delaying the effective date of the proposals to 2019 at the earliest.
For the latest news related to the proposed tax changes and the CPA profession’s response, visit the CPA Canada website.