Sunday News Roundup 22.07.10: Rogers outage, Paletta FCA tax case and more Canadian accounting news
Wrapping up the odds and ends from the past week in Canadian accounting news
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TORONTO, July 10, 2022 – The big story of the week was the Rogers Communications service disruption that interrupted internet connections for hundreds of thousands of Canadians, businesses and services, including accountants and accounting firms and even the payment of property taxes. Coming so soon after the messy takeover of Shaw Communications by Rogers, this second service outage in 15 months looks very bad for Rogers, as well as Canadian internet security as a whole.
York University Professor Richard Leblanc, a governance expert and Canadian Accountant contributor, told Canadian Press “the outage presents a learning opportunity for threat actors such as Russian state-sponsored hackers.” Rogers blamed the outage on a “maintenance upgrade” although many online commenters expressed scepticism. And now, on to the rest of the news from the past week in Canadian accounting.
Paletta court loss will cost a pretty penny. Will the case go to the Supreme Court?
The wealthy Paletta family of Burlington, Ontario are no strangers to tax litigation. The Tax Court of Canada ruled their Hollywood investment strategy was a sham in 2019. Now, a recent decision by the Federal Court of Appeal may wind up costing them a pretty penny, unless they choose to fight the decision all the way to the Supreme Court of Canada.
The case involves a foreign currency trading scheme that, as we reported in 2020, was also used by former members of the Toronto Maple Leafs. While David Rotfleisch provides an analysis of the case in Canadian Accountant, we were interested in some of its more curious aspects. For example, the Paletta estate initially won the case in Tax Court before Justice David E. Spiro, who was the subject of a controversial incident involving the University of Toronto.
Spiro ruled that the foreign currency trading activities gave rise to a business. Incidentally, among the precedents cited in the case was Friedberg v Canada, 1993, an appeal of an FCA decision in which one of the lawyers involved was David E. Spiro.
The unanimous decision in the Paletta case is particularly harsh: “The Tax Court’s reasons … are not only incorrect, they are implausible” and “The Crown has succeeded in demonstrating that Mr. Paletta was grossly negligent in portraying his trading losses as business losses even though they were not.” The FCA essentially ruled that the whole scheme was intended to create tax losses, not in “the pursuit of profit.”
With millions of dollars at stake, will the case go to the Supreme Court? The tax community, which celebrated the Tax Court’s initial decision, seems dismayed at the “surprising result” in the FCA. For media outlets, however, Paletta tax cases are the gift that keeps on giving.
Go East, young accountant
Mylene Lapierre is the president and CEO of CPA New Brunswick earned some media this week with a report on how the accounting profession contributes to the provincial economy. She used the opportunity to tout the province as an attractive location for accountants — especially young accountants and the internationally trained — as the current workforce moves toward retirement.
Accounting firms shifting into post-pandemic world
Business in Vancouver, the trade publication published by Glacier Media, spoke to several accounting firms recently about work in the post-pandemic world. Among the issues discussed were hybrid work models and legislation regarding disconnecting from email after hours. Among the reveals is that firms are cutting back on their travel budgets as they learned during the pandemic that work can be done capably through video conferencing.
CRA windfall confuses PEI residents
Anne of Green Gables would be kicking up her heels. But PEI residents were just confused this week by a windfall from the Canada Revenue Agency, which combined a whole bunch of tax rebates into one cheque, and labelled them all as "Prince Edward Island sales tax credit." According to the CBC, maritimers were less than impressed, and had to do some investigating to find out why they were so lucky.
CRA loses fight with construction foreman over drive-to-work expenses (Financial Post)
NDP calls for action to make the rich and powerful pay their fair share (NDP.ca)
CEOs at Canada’s largest companies saw 23-per-cent pay increase in 2021 (Globe and Mail)
Edmonton realtors push back against councillor's mansion tax idea (CBC)
Will Pillar Two Block Multinationals’ Real Estate Rollovers?—Part 1 (Bloomberg Tax)
Why the U.S. dollar will be replaced as the dominant global currency — sooner than you think (Toronto Star)
The stock market is plunging. What should you do to protect your investments? (Toronto Star)
Wirecard’s former top accountant admits forging documents for KPMG special audit (Financial Times)
EY boosts accountancy title inflation by dubbing senior staff ‘partner’ (Financial Times)
By Canadian Accountant staff.