One Comment About Taxation – Taxation Myths….They’re Not Good For You and For Society

 

I’ve never been to Portugal, but I’ve heard good things – the culture, the towns, the history, the food and wine. My wife and I are planning a trip later this year.

 

When I mention it in conversation, a common reply is: “Make sure you do a bit of work while you’re there so you can write the trip off.” I laugh along. But I’m also cataloguing, in my head, yet another instance of a tax myth so embedded in Canadian conversation that otherwise-sensible people repeat it without a second thought.

 

The myth is that if you do a sliver of work on an otherwise personal trip, you can deduct it against your business income. It is not true. You cannot deduct personal expenditures against business income. An attempt to do so can earn you a reassessment, interest, possible penalties and – if the Canada Revenue Agency (CRA) concludes the line was crossed deliberately – a possible referral to its criminal investigations program in extreme cases.

 

I’ve spent decades listening to tax mythology – at cocktail parties, in airport lounges, from clients whose brother-in-law had a clever idea, and increasingly from people who really should know better. This past week, the genre acquired a remarkable new contributor:Jeff Bezos – the Amazon founder.

 

In a recent television interview, Mr. Bezos – currently the world’s fourth-richest person – made two confident claims about tax that, taken together, would not survive a first-year tax course.

 

Myth one: “There’s no truth to this buy, borrow, die thing.” Well, the strategy is straightforward. You buy an appreciating asset and hold it, because selling triggers capital gains tax. You borrow against the asset and live on the loan proceeds, because loans are not income. You die, and in the United States, your heirs inherit the asset at fair market value on the date of death – the so-called step-up in basis rule for U.S. tax purposes.

 

This strategy is routinely taught in American tax and estate planning circles. Bezos’s rebuttal – “I sell Amazon stock routinely” – is technically true but misses the point. Yes, he sells some stock and pays tax on those sales. But the vast majority of his appreciation has never been realized, and under current U.S. law, the unrealized portion held at death gets washed clean by the step-up with no income tax. The U.S. does impose an estate tax on death, but the planning industry around minimizing it – through trusts, life insurance, lifetime gifting, charitable structures, and valuation strategies – is mature, sophisticated, and well within reach for anyone with Bezos’s resources.

 

Canada is a different jurisdiction. We have neither a step-up in basis rule nor an estate tax. Instead, we have a deemed disposition at death: the CRA treats a deceased taxpayer as having sold all capital property at fair market value the moment before death, and the accrued gains are taxed on the terminal return. The third step of buy-borrow-die does not exist here.

 

Myth two: “The bottom half of earners should pay zero income tax.” This plays as bold reform but it is mostly already the case in both the U.S and Canada. The Tax Policy Center estimates that roughly 40 per cent of U.S. households pay no federal income tax in a given year. The Canadian picture is similar with the bottom 50 per cent of Canadian tax filers – roughly 15.5 million – who contributed five per cent of total income taxes paid. The interesting policy question is not whether to do what Bezos proposes – both countries have largely done it – but whether having a large share of the electorate with no direct stake in the cost of federal spending is healthy for a democracy.

 

Bezos’s tax mythology is the loud, televised variety, performed in a studio with an audience of millions and an army of advisers behind him to ensure nothing he says actually hurts him. But the more common variety is quieter. It happens in coffee shops, in airport lounges, in dinner-table conversations, and the people who repeat it have no one behind them to clean up the consequences.

 

This past week, I sat next to two younger people at a coffee shop. I couldn’t help but hear their conversation. One was in construction and the other in food service. “I just found out I owe CRA nine hundred and fifty bucks for 2024,” the construction worker said. “Ruined my day.” “Do you know what for?” the server asked. “No. I’ll just pay it.” The server replied that she had owed $3,500 the year before. Neither had any framework for understanding what had just happened to them.

 

They will each work for forty years. They will pay tax their whole working lives without ever quite understanding why their net position is what it is. The system around them will keep getting more complicated, not less.

 

That is what tax and financial illiteracy costs, in a Canadian coffee shop, in 2026. It compounds quietly across a working life. And it leaves politicians free to sell almost anything to a population without the framework to evaluate it.

 

The path forward runs on two tracks. The first is the slow, multigenerational work of building tax and financial literacy – in schools, in workplaces, in everyday conversation. The second is making the system itself simpler to understand, which is to say comprehensive tax reform of the kind this country has not undertaken in over fifty years. A tax system that ordinary working Canadians cannot understand is not a healthy system. Combined with improved financial literacy, Canada’s population would be able to make better decisions throughout their lives.

 

As for Portugal, I will go later this year and I’m confident I will enjoy it. And I will pay for every bit of it out of after-tax dollars, as the law requires. Tax myths are charming at cocktail parties. They are expensive everywhere else.

 

One Comment About Leadership – Details Matter

 

I go to a local landfill for my cottage property regularly. It has a speed limit sign with a typo. It also has misaligned posts. Both drive me crazy every time I drive by. I took a picture recently and posted it on LinkedIn.

 

Why does it bother me? Because if you can’t get the small stuff right, it says a lot about how you handle the big stuff.

 

There’s a popular book that tells us not to sweat the small stuff. Fine advice for personal peace of mind. Terrible advice for institutions – and terrible advice for leaders. A misspelled sign on a crooked post is a small thing on its own. But it’s also a tell. Somebody approved it. Somebody installed it. Nobody fixed it. That’s a chain of indifference, and it rarely stops at the sign.

 

We see the same impulse at higher altitudes. Budgets delivered late or not at all. Operating and capital expenses split apart to flatter the headline number. Temporary tax measures dressed up as reform. The details aren’t details – they’re the substance. When institutions and the leaders who run them stop caring about them, the rot is already underway.

 

The leaders I respect care about the small stuff. The ones who let it slide tend to let bigger things slide too. As I said in my LinkedIn post: “The small stuff signals how we treat the big stuff. And lately too many institutions seem to have given up on both.”

 

Sweat the small stuff. Details matter.

One Comment About Economics / Politics  – Government Funding of the FIFA World Cup

 

Are you aware how much the various levels of government in Canada fund various sporting events? It takes a bit of time and energy to figure it out. But a recent costing note by the Canadian Parliamentary Budget Officer highlights that the upcoming FIFA World Cup – with thirteen games to be played in Canada – will cost Canadians approximately $1.1 billion with the federal portion of that being $473 million.

 

My first reaction is that is a lot of money to hand out to support a sporting event. While part of a government’s role is to promote their community, I question the merits of this amount of money.

 

I find this comment from the PBO most telling:

 

“Based on federal budgets and documents, we estimate the amount of support for the 2026 FIFA Men’s World Cup that would be classified as capital expenditure under the new federal Capital Budgeting Framework used to calculate the government’s fiscal anchor respecting operational spending. Most of these capital expenditures are for stadium improvements and the creation of FIFA training sites. We estimate that capital expenditures provided by the federal government total $128.1 million. Of note, this amount will not be included in federal capital expenditures, as presented in the Public Accounts.”

 

Of course, the spending would be classified as capital. I mean, why not? I’ve been very critical of the government’s approach to budgeting with the “separation of the budget into capital and operating”. It’s an old deceptive accounting trick that masks overall government spending. Canadians shouldn’t fall for this deception.

 

And they should question the merits of such large spending on sporting events. Defenders of these subsidies inevitably reach for the economic-impact argument – tourism, jobs, GDP boost, civic pride. The academic literature has been picking apart that argument for thirty years and has reached a remarkably firm consensus that it doesn’t hold up. A 2023 Journal of Economic Surveys paper by Bradbury, Coates and Humphreys reviewed more than 130 studies and concluded that “the level of venue subsidies typically provided far exceeds any observed economic benefits.” An American Economic Association survey found 85 per cent of economists agreed governments should eliminate sports subsidies; a University of Chicago panel hit 80 per cent.

 

As for the World Cup specifically, a study of the 1994 U.S. tournament found the projected $4 billion impact never materialized and the event likely had a net negative effect on host cities. Sports economists call this “displacement” – Canadians who spend on World Cup tickets aren’t conjuring new money out of the air, they’re spending less on restaurants, movies, and other local entertainment.

 

None of this is to say public dollars should never touch a sporting facility. There’s a defensible case for replacing aging infrastructure – the Calgary, AB Saddledome, opened in 1983, is a reasonable example – where the choice is between modest public participation or watching an NHL franchise like the Flames decamp to a city willing to write the cheque, along with losing the concerts, conventions and other events such a venue anchors. Reasonable people can debate where the line sits. But “defensible” and “economically justified” are not the same thing.

 

Even in the strongest cases, the economic-impact math rarely pencils out the way boosters claim – which is exactly why Canadians deserve to know, in plain numbers and without accounting tricks, where their hard-earned tax dollars are going.

 

Bonus Comment – From Sanford I. Weill – American Financier and Philanthropist – About The  Importance of Details

 

“Details create the big picture.”

 

Totally agree. Leaders, are you paying attention to the details??

 

I hope today’s newsletter has been thought-provoking for you.

 

As many of you know, I’m passionate about helping people make better decisions – whether in tax, leadership, or business. If you’d like to go deeper on those topics, my recently released book, Making Life Less Taxing (Version 2), is now available and expands on many of the practical ideas I’ve written about over the years.

 

I’m also putting the finishing touches on my next book, Leadership Compounds: How Small Decisions Build Culture, Credibility, and Legacy. It explores a simple but powerful idea: leadership isn’t about grand gestures – it’s about the small, consistent decisions that compound over time.

 

For those interested in a more hands-on approach, I’ll soon be announcing a bespoke consulting initiative – The Acorn Growth Program – designed to help leaders and organizations grow intentionally, one small (but important) decision at a time. Feel free to reach out to me directly for more information.

 

And if you’re not already on my mailing list, feel free to sign up for my In the Mood Network newsletters to receive more content. No fluff – just practical insights on tax, leadership, and economic policy.

 

Thanks for reading. As always, I welcome your thoughts and feedback.

 

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