Sunday News Roundup 23.04.02: Fed Budget, CRA strike, EY showdown and more Canadian accounting news
Wrapping up the odds and ends from the past week in Canadian accounting news
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TORONTO, April 2, 2023 – Deputy Prime Minister and Minister of Finance Chrystia Freeland delivered the federal budget in the House of Commons this past week. As Rob Carrick pointed out in the Globe and Mail, pre-budget “concerns” about broader tax hikes — including the rumoured increase to the capital gains inclusion rate — proved unfounded, but there were a few noteworthy changes.
The Budget proposes to increase the Alternative Minimum Tax rate from 15 per cent to 20.5% for the taxation years after 2023 with an estimated $173,000 exemption for the 2024 tax year. Of course, the Liberals are up for reelection in 2025, and a new government could reverse that decision, especially if an early election is called.
In a similar vein, consultations will be held into a proposal to amend the General Anti-Avoidance Rule, through a number of measures that were signalled back in August by the Department of Finance. There’s the creation of a new succession planning tool called Employee Ownership Trusts. And the government intends to amend the rules surrounding intergenerational share transfers, the result of Bill C-208, which the CBC rightly defined as “the latest twist in a tale that has spanned years and crossed party lines.”
Back in 2021, Allan Lanthier called Bill C-208 “a legislative fiasco,” in a series of articles in Canadian Accountant. As stated by the CBC, “The legislation was adopted despite a warning from Department of Finance officials that the way it was drafted risked creating a loophole that could be exploited by tax planners to allow some people to avoid taxes.”
The amendments address the loophole despite the worries of the Canadian Federation of Independent Business, which says the proposed changes could be “too restrictive.” And now, on to the rest of the news from the past week in Canadian accounting.
Tax Preparers: Start bracing for a CRA union strike
We’ve been keeping a close eye on the war of words between workers and management at the Canada Revenue Agency. The federal public-service union's 35,000 Canada Revenue Agency workers will conclude their strike vote this Friday.
So far it’s been a remarkably quiet tax season with even a little good news — the CRA waiving penalties and interest for late-filed UHT returns filed by October 31, 2023, for instance, or a new automatic tax filing system pilot program for low-income Canadians next year — but that could all change in a flash. Apparently the Treasury Department is playing hardball.
Ernst & Young: Gunfight at the Palo Alto Corral
There’s a lot of Canadian accountants, working and retired, who are waiting for the winner to emerge from a splitup showdown this past week in Palo Alta in Silicon Valley. The Wall Street Journal describes the meeting in EY Breakup Plan’s Fate May Rest on Executive Showdown This Week.
If you don’t subscribe to the WSJ, you can read the hot take on the dispute in Going Concern, which points out the influence (but not the voting rights) that retired partners exercise in negotiations over the planned breakup of business lines at EY. In some ways, the Silicon Valley location seems perfect for the showdown, given how much the split is driven by dreams of lucrative consulting fees.
Accounting Software News
Xero recently announced a three-year global agreement with Allinial Global to become the preferred cloud accounting solution for Allinial Global member firms and their small to medium business clients. Allinial counts Canadian accounting firms Smythe LLP and Kraft Berger LLP as partners in global member-based association. You can read the press release here.
Quick Hits: Articles of Interest
Taxpayer takes CRA to court after it dings him for RRSP overcontribution tax due to a bank error (Financial Post)
China Tells Deloitte That Accounting Firm Regulations to Toughen (Bloomberg Tax)
What does accounting have to do with a banking crisis? (ICAEW Insights)
Accountants’ Salaries Are Rising, but It May Not Add Up to More Accountants (Wall Street Journal)
By Canadian Accountant staff.