Sunday News Roundup 23.07.23: US tax pressure, file those T2s, 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 23, 2023 – American critics ratcheted up the pressure this past week over two taxation initiatives of the Trudeau government. The first is the proposed digital services tax, which targets tech companies that earn online revenue from ad revenue, which would include Amazon, Facebook and Google.
Canada has been consistent in its position that it would hold off on the DST if the OECD multilateral trade agreement comes into effect. Ottawa already agreed to a delay in 2020 on implementing digital services tax but, last week, OECD countries agreed to delay any plans for unilateral taxes for one more year. So David Cohen, the US Ambassador to Canada, raised the spectre of “retaliatory trade tactics” this past week. Washington is moving into an election year and likely sees no upside in an OECD deal or a tax on its tech giants.
Meanwhile, the Liberals look like they may bend a little, acquiescing to the demands of Americans who own cottages in Canada. The Parliamentary Budget Office is taking a second look at Ottawa’s new tax on underused housing. Meanwhile, The Buffalo News is urging its readers in a homepage editorial to “Keep up the pressure as Canada reconsiders an unfair tax,” saying “Canadian officials may be coming to their senses.”
And now, on to the news from the past week in Canadian accounting.
Higher rates make strange bedfellows
CPAs working in corporate management have been obsessed with inflation and labour since the year began. When will rates fall and labour costs subside? The news this past week that Canada's inflation has fallen to a 27-month low brings a ray of hope. The annual rate, which has fallen to 2.8%, is within the Bank of Canada's one to three per cent control range for the first time since March 2021. But criticism of the Bank of Canada is widespread as food and housing inflation continue to rise.
On opposite sides of the political spectrum, David Rosenberg in the Financial Post and Lana Payne in the Toronto Star both agree that the BOC is misguided, though for somewhat different reasons. Rosenberg accuses the BOC of “causing the inflation it is so worried about,” while Payne accuses the BOC of engineering a recession to create job losses and suppress wage growth. Pretty much everyone, including the Globe and Mail, feels the rate hikes are not yet over.
Don’t blame the accountant, file your taxes on time
Jamie Golombek in the Financial Post brought up the case of a taxpayer who tried to blame his accountant for filing his corporate taxes late. The business owner, who represented himself in court, said that his accountant had moved offices, and failed to file the return on time. The court was sympathetic but drew on the CRA’s published administrative guidelines for cancelling or waiving penalties and interest.
There was not a lot of detail provided so we decided to look up the case. Hajar Properties Inc. v. Canada (Attorney General) is a Federal Court of Canada decision from earlier this month. Mr. Hajar, the sole proprietor of the business, was also dealing with ailing parents, and looking at a tax bill of almost $9k. In the end, however, “the taxpayer’s ultimate responsibility to ensure their tax returns are filed on time,” and one cannot blame one’s accountant for missing tax deadlines.
Survey: mid-size businesses outgrowing digital tools
Intuit, the maker of Quickbooks, commissioned an online survey in April 2023 of 3,000 mid-sized business owners throughout Canada. It polled key decision-makers of businesses with $500,000 or greater in annual revenue and 10-99 employees and found that the digital tools that mid-sized businesses started out with no longer make the cut.
Two in three respondents say their business is underserved by digital tools designed for small businesses, but would be overserved by tools designed for large enterprise businesses. The top three reported financial challenges? staffing costs (payroll, expenses); scaling financial management tools; and robust financial forecasting/reporting.
Quick Hits: Articles of Interest
The Biden Accounting Jobs Boom (Wall Street Journal)
Big Four Accounting Firms Pare Their Consultant Ranks in Postpandemic Reversal (Wall Street Journal)
Accounting firms accused of missing climate risks in company audits (Financial Times)
Should PCAOB be Consolidated into SEC? (Thomson Reuters)
New OECD Guidance Includes Transitional Safe Harbor for Pillar Two Top-Up Tax (Thomson Reuters)
60 percent of consumers prefer a fintech app to an accountant (BetaNews)
By Canadian Accountant staff.