Subscribe to our weekly newsletter and get all the week’s stories. Click here to sign up.
TORONTO, July 24, 2022 – In a week in which no single business or economic story dominated the headlines, there were several stories of interest to Canadian accountants. Take, for example, the Globe and Mail series on Amazon and the retail giant’s strategy to avoid Canadian taxes. Typical transfer pricing tactics to most accounting professionals, including David Rotfleisch (a frequent contributor to Canadian Accountant), as outlined in Inside Amazon’s strategy to shield its profits from Canadian taxes.
The Globe followed that article up with reaction from business groups and the Tories, who say the tax system should be changed, and an editorial titled Why are Amazon and other multinationals able to shield some of their profits from taxes? Blame Canada. Amazon was also mentioned in What Can Be Done About Rising Inflation and Taxes in Canada?, an article in Bloomberg Tax, which makes the case that large multinationals (like Amazon and Enbridge) likely pay lower tax rates than their own workers, and inflation will seriously hinder the government’s tax revenue.
Canada’s national (business) newspaper appears to support the federal government’s proposed digital services tax, if the OECD cannot follow through on its corporate minimum tax plan. And now, on to the rest of the news from the past week in Canadian accounting.
Portapique mass murderer showed a clear pattern of money misdealing
One of the mysteries surrounding Gabriel Wortman, the Nova Scotia man who killed 22 people in April 2020, was where he got the money to support his lavish lifestyle. A foundational document prepared by the Financial Accounting Management Group (FAMG), found the killer used “illegitimate or suspicious means” to amass funds. From a forensic accounting perspective, the sums of money and schemes make for an interesting read.
The FAMG is a government agency created in 1998 following the implementation of the Proceeds of Crime Act to support both the Royal Canadian Mounted Police and the prosecution service in relation to proceeds of crime or money laundering investigations. Wortman was rumoured to be working as informant or a drug dealer. According to the FAMG, “while there are no definitive answers about the sources of all of his income, there is a clear pattern of misdealing.”
Going Concern questions CPA Canada hiring trends article
The US accounting website Going Concern is noteworthy for its blunt language and mocking tone. It also does some fine reporting — including commenting on stories from Canadian Accountant. This week it questioned the assertions of Work-life balance preferred over big salaries, CPAs say in a story it called Canadian Accounting Firms Are Getting Rid of Bonuses So They Can Pay More?.
Apparently base salary is still important but candidates want work flexibility. But base salary is being raised by cutting annual bonuses. Going Concern reminds CPAs that you don’t have to take a pay cut for the privilege of working remotely. All the accounting firms are competing for talent these days on both sides of the border — and, in our little contribution to the conversation, the Canadian jobless rate is at an all-time low. Unlike the real estate sector, it’s a seller’s market.
Hands off corporations when it comes to CEWS
The Breach, one of many new journalism digital platforms to pop up over the last few years, reports that the CRA penalized just 185 companies for misusing COVID money, while targeting 1M Canadians. The CRA refused to disclose to The Breach how much money has to date been repaid, and by whom. The Breach also points out that benefits were paid to companies that laid off workers and hiked dividends during the pandemic.
Canadian accountants would be unsympathetic. As we reported in 2021, CPAs view businesses as far more deserving of government largesse than individuals. Seven out of 10 CPAs said the government was too generous to individuals during the pandemic, while almost seven of 10 CPAs (67%) said support was either reasonable or not generous enough to Canadian companies.
Technology: Corporate tax departments at risk of falling behind
Thomson Reuters released its annual State of the Corporate Tax Department Report this past week, which found that tax reform remains the top strategic challenge in 2022, with a particular focus on government legislative activity across the board. Apparently departments are feeling even less prepared technologically to deal with coming regulatory changes than they did last year.
Who is to blame for the mess at Pearson Airport?
Finally, the Toronto Star had a good article on delays at Pearson Airport, which have earned the Toronto airline hub the reputation as one of the worst aiports in the world. Their conclusion? In the rush to recover from the pandemic, Air Canada sold more tickets than either it or the airport could handle, even though it should have known that workers would not return to Pearson quickly — for a variety of reasons. We only mention this because the President and CEO of Air Canada is a CPA.
Articles of Interest
Why older CEOs hate letting employees work from home (Financial Post)
UK Audit Reform Facing Five-Year Delay, Regulator Says (Bloomberg Tax)
EY suffers payroll problem (Accounting Today)
Tesla’s Bitcoin Dump Leaves Accounting Mystery in Its Wake (Bloomberg Tax)
PC Bank wins appeal in part related to reassessments made under Excise Tax Act (The Lawyer’s Daily)
By Canadian Accountant staff.