The topic of "tax reform" has been in the news lately, with many groups calling on the government to conduct a comprehensive review of the Canadian income tax system. The Liberal Platform promised an "expert review of the corporate tax system based on the principles of fairness, transparency, simplicity, sustainability, and competitiveness".
CPA Canada has long advocated for a review of the Canadian tax system. Over the years, we have published three papers urging a comprehensive examination of Canada's tax system: International Trends in Tax Reform: Canada is Losing Ground (2018), Canada's Tax System: What's So Wrong and Why It Matters (2018) and The Best Way Forward: Designing a Tax Review for Canada (2019).
Last week, we published a fourth paper in the series titled The Road Back to Principles: Modernizing Canada's Tax Policy Development Process. While this paper calls for a more focused, strategic review of Canada's tax system to identify priority areas for improvement, the focus of the paper is primarily on the tax policy process - to align the future development of tax policy, legislation and administration with the principles of a well-designed tax system.
The paper highlights the challenges that accountants and taxpayers have faced over the past decade, including burdensome legislation (bare trusts, UHT), incoherent provisions (e.g., the definition of "financial service" in the Excise Tax Act) and the lack of timely legislation in advance of important financial decisions (e.g., to trigger a capital gain ahead of the rate increase). We offer constructive recommendations to strengthen the tax-policy making process and ensure that Canada's tax system remains aligned with sound tax principles.
We wish to thank the members of our Tax Advisory Committee and the Tax Reform Working Group for providing valuable input into our paper.
The paper can be found at the following link:
The Road Back to Principles: Modernizing Canada's Tax Policy Development Process
------------------------------
Ryan Minor
Chartered Professional Accountants of Canada
------------------------------