Sunday News Roundup 24.04.28: More capital gains, more audit powers, and more Canadian accounting news

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TORONTO, April 28, 2024 – The debate over Liberal changes to the capital gains tax regime continued this past week with plenty of commentary from all sides. David Olive in the Toronto Star argued that the “firestorm of criticism” is “uncalled for” in a well-argued article, while the CBC pointed out that, in 2021, contributors to the Canadian Tax Journal were in favour on balance of raising the inclusion rate for capital gains. 

Paul Kershaw in the Globe and Mail got boomers’ blood boiling (read the comments section) by asserting that boomers’ property wealth should be taxed at a higher rate precisely for the purpose of generational fairness. Meanwhile, Allan Lanthier in the Financial Post argued that the measures have little to do with fairness, and more to do with deficit projections and politics. Andrew Coyne makes a similar argument in the Globe, while his Globe colleague, Tony Keller made another, naming similar “third rails” of taxation policy that should be reviewed. 

The debate looks far from over, even as pundits have mused as to why Pierre Poilievre is “noticeably quiet” on the issue, perhaps fearful of losing his “populist” reputation. Instead, various business interests took the lead in voicing their opposition, with lobby groups for the medical profession followed up, expressing their concern over the ramifications for doctors in particular. 

It was David Reevely in Postmedia’s Ottawa Citizen, however, who let It slip that doctors already enjoy favourable tax rates through incorporation. In lieu of compensation increases, “the Ontario government deliberately opened incorporation as a tax shelter for doctors not all that long ago [2001, actually; we checked] … It’s a federal loophole, in other words, that the province aimed doctors at.” 

Bill Morneau knew this well and tried to close related loopholes in 2017, which made his surprise appearance last week all the more ironic, if only because Chrystia Freeland may accomplish something that the severely compromised Morneau could not. The inclusion rate has always gone up and down (it stayed at 75% during the 1990s) but the jury is still out on whether the changes will stick. As Althia Raj pointed out on CBC’s At Issue this past week, it took months for organized, grassroots opposition to develop against Morneau in 2017. 

And now, on to the rest of the news from the past week in Canadian accounting. 

Budget 2024 gives CRA expanded audit powers

With all the commentary devoted to capital gains, much of the media has overlooked another Budget 2024 tax change — a proposal to expand the audit powers of the Canada Revenue Agency. BNN Bloomberg said the proposal was “hidden away” in Budget 2024. Investment Executive provides more detail as to the information-gathering amendments and proposed penalties. 

Trump social media accountant has history in Canada

How's this for six degrees of separation? We couldn’t help notice a rather odd coincidence between Donald Trump and Canadian audit regulators. The Financial Times reported this past week that the head of BF Borgers, the accounting firm that audits Trump’s social media group, has filed PCAOB forms using 10 different names — and some of them are rather amusing. 

As some of you may recall, the Canadian Public Accountability Board banned BF Borgers in 2023 from accepting new audit clients in Canada.

We first reported on BF Borgers back in May 2023 and cracked its mystery in February 2024. We’ve always said that the PCAOB, for all its positives, is susceptible to political interference, and apparently the Financial Times agrees: “The PCAOB, which was gutted under Trump …” 

Deloitte retains top brand status among commercial services firms

Brand Finance, a valuation and strategy consultancy based in London, has just released its annual report on the top 100 brands in commercial services and Deloitte has retained its title of the world’s most valuable and strongest commercial services brand. Ernst and Young flipped places with Visa to capture third place from Visa, while PwC (#5) and KPMG (#8) retained their 2023 rankings.

Just one Canadian commercial services company, WSP Global, made the top 100, which was filled out by the usual assortment of credit card companies, consulting firms and payment processors. Deloitte was praised for its record revenues and strategic collaborations with companies such as NVIDIA and Google Cloud. While EY increased its brand value by 20 per cent, PWC and KPMG brand values fell short, recording a three percent and four per cent dip in brand values, respectively. According to the report, "KPMG maintains its position as the trailing member of the Big Four, demonstrating the slowest growth in global sales among accountancy and consulting firms in the latest financial year."

Quick Hits: Articles of Interest 

Canadian

Sentencing submissions begin for Calgary accountant accused of fraud, theft (CTV News)

CRA's tax deadline is just days away — and more Canadians are going to miss it (Financial Post)

Liberals swoop on Pierre Poilievre's visit to carbon tax protest (Canada’s National Observer)

Trudeau says Sask. premier is fighting CRA on carbon tax, wishes him 'good luck with that' (CBC)

International

Accounting watchdog quizzes Big Four on AI exam cheating (The Telegraph)

KPMG’s Mystery Inspection Flaw Tied to Auditing Income Taxes (Bloomberg Tax)

The Dawn Of A New Era: AI's Revolutionary Role In Accounting (Forbes)

The Accounting Expert's Role In Addressing A Cyberattack's Financial Aftermath (Forbes)

Sweden: Proposal to abolish requirement to keep accounting materials in hard copy (Compliance News) 

By Canadian Accountant staff.