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Articles
Discover Kim's expertise in Canadian Tax as he shares his insights and analyses, contributing weekly to the Financial Post.
Welcome to Tax-mas, but it doesn't have to be that way
December 3, 2024
As the holiday spirit fills the air, the federal government has left a few so-called gifts under the tree, but before we unwrap them, we should ask: Are these truly presents to celebrate or merely expensive ornaments designed to dazzle while adding to our country’s burdens?
The sugar rush from ill-advised tax breaks is not healthy now nor for the future
November 26, 2024
It bears repeating that our tax system is filled with legislation and related administration that are motivated by simple, silly and, in most cases, awful politics, such as the federal government’s egregious and obnoxious stunt to temporarily eliminate the sales tax on certain items.
Canada's tax system needs a Big Bang and soon
November 19, 2024
Compared to other Organization for Economic Co-operation and Development countries, Canada relies more on personal taxation revenues, which generally account for about 50 per cent of overall government revenues — that’s a big number — though it varies annually.
Trump's win should force Trudeau to make Canada more tax competitive, but don't count on it
November 12, 2024
Like many Canadians, I was glued to the non-stop coverage of the election results in the United States last week, with my tax brain going into overdrive thinking about how Canada would respond to a high-tax-loving Kamala Harriswin versus a low-tax-high-tariff Donald Trump win, which ultimately came to pass...
Capital gains inclusion rate hike remains up in the air, but you still have to prepare for it
November 5, 2024
Most people know that capital gains are preferentially taxed in Canada, like most countries, and for good reason: prosperous countries realize that investors, including entrepreneurs, take significant risks that can have extended long-term benefits to society and the economy...
7 tax tales that should scare anyone at any time of the year
October 29, 2024
Boo!! Did I scare you? If not, sit back, take a sip of your favourite beverage and get ready for some spooky tax stories for Halloween. Halloween has an interesting history dating back hundreds of years. Income taxin Canada doesn’t have quite the same history — dating back to only 1917 — but the first known taxation took place in ancient Egypt around 3000–2800 BC...
Taking on more debt is not the solution to the housing crisis despite what the Liberals say
October 22, 2024
One of the newest measures the federal Liberal government has taken to increase housing supply is to change the mortgage insurance rules to enable existing homeowners to take on more debt in order to create rental unitswithin existing homes...
Another tax on properties isn't the answer to Canada's housing woes
October 15, 2024
What is a great solution to many of our country’s issues? Well, a tax, of course. After all, taxes solve everything, right? Climate change is an issue? Implement a carbon tax. Foreigners are buying too much Canadian real estate? A speculation tax, a purchase ban and underused housing taxes...
7 of the silliest and politically motivated tax policies recently introduced in Canada
October 8, 2024
Tax and politics are like wine and cheese: they are inextricably linked and impossible to do one without involving the other. During election times, this link becomes rather obvious. Promises here, promises there, with many of them being very silly...
Better tax treatment of capital gains will improve Canada's economy and productivity
October 1, 2024
Last week, I appeared as a witness before the House of Commons Finance Committee regarding the proposed capital gains inclusion rate increase, and it was not surprising to hear the Liberal and NDP committee members, and their witnesses, go on about how great the capital gains inclusion rate proposal is...
Families and businesses pay the price when new tax rules are proposed, but the details are delayed
September 24, 2024
A core principle of taxation is that taxpayers have the right to pay no more — and no less — than what is required by law. But what happens if the government proposes a new taxation law to be effective immediately (or at a later date) and the proposed law itself is in flux or, worse, hasn’t even been fully drafted?...
Time for this tax hit on the 'rich' to be put aside for the good of everyone
September 17, 2024
The Alternative Minimum Tax is an example of silly taxation policy creating complexity and it needs to be abolished — here’s why. The AMT was implemented in 1986 as an alternative and mandatory way to calculate your personal tax liability...
A new government is needed to unwind nine years of Liberal tax mistakes
September 10, 2024
I’ve been a long-time critic of Canada’s high personal tax rates. High personal tax rates are a drag on productivity during a time when we desperately need to course correct on that. It also is a large detriment to attracting the best and the brightest and retaining them...
Taxing wealthy people’s unrealized capital gains is not closing a 'loophole'
September 3, 2024
When should income be taxed? Put another way, especially in the context of business income, how is profit for tax purposes computed? It seems like a straightforward question, but it’s not. It’s been the subject of a number of textbooks, numerous court cases and Canada Revenue Agency administrative positions...
Sticking up for the CRA is getting harder and harder as ‘bad’ experiences proliferate
August 27, 2024
When I attend social events and introduce myself as a tax professional, the conversation often turns to the Canada Revenue Agency. When asked about it, I like to explain that the Canada Revenue Agency (CRA) simply administers the laws that politicians and the Department of Finance draft and ultimately bring to Parliament to enact...
Canadians are wasting money and losing productivity to deal with recent tax changes
August 20, 2024
Canadian tax practitioners awoke from their summertime slumber on Aug. 12 to a mountain of new draft tax legislation to review, a voluminous package of material containing complex technical amendments to implement many new tax proposals...
Details on capital gains changes finally released, but Canada is still in bad shape
August 13, 2024
The Parliamentary Budget Officer released a report last week that estimated the federal government will raise $17.4 billion in extra tax revenues over the next five years as a result of the proposed capital gains inclusion rate increase to two-thirds from 50 per cent...
Are Canadians getting enough value for their tax dollars? The emphatic answer is ‘no‘
August 6, 2024
Last week, The Fraser Institute released its 2024 edition of its publication Taxes versus the Necessities of Life: The Canadian Consumer Tax Index, which tracks the total tax bill of the average Canadian family from 1961 to 2023. It’s a fascinating read to see how much the average Canadian pays in taxes...
July 30, 2024
Despite an outlier report released by the International Monetary Fund earlier this month that suggested Canada will be a leader in economic growth next year — which had many Liberal MPs crowing that their “economic plans are working” — the overwhelming view of most suggests otherwise, especially when it comes to productivity...
Canadian politicians need better financial training
July 23, 2024
Not much has been done to ensure the average Canadian is well-informed and educated about financial matters. One of the most important bodies of knowledge and skills that people need to make basic life decisions is the material that encompasses financial literacy.What is financial literacy?...
It's time to stem the tide of successful people leaving Canada
July 16, 2024
There are many successful Canadians who are exploring or outright leaving this country. Reliable statistics are hard to come by, but tax practitioners such as myself have been kept very busy because economic and taxation policies matter, especially the messaging surrounding such policies...
Tax on home equity is latest proposal in Liberals' bogeyman approach to housing
July 09, 2024
There were a number of reports last week about the prime minister and finance minister meeting with a government-funded think tank to discuss a variety of issues involving “generational fairness,” one of which was the introduction of a home equity tax...
Canada's income tax regime is confusing even to experts and a review is long overdue
July 02, 2024
Recently, I had the good fortune to visit Juno Beach in Normandy, weeks before the 80th anniversary of D-Day. It was a haunting experience to think of the thousands of Canadian and Allied Forces who served and sacrificed their lives on that very spot so that we could preserve our freedoms...
Positives about the capital gains inclusion rate hike? Yep, here are three
June 25, 2024
June 25 is the day the capital gains inclusion rate increase comes into effect. Even though the particular legislation is not yet in a bill and thus not passed into law, it’s quite clear it will become so later this year with legal effect as of that day...
The Conservatives have proposed a complete taxation review — it's about time
June 19, 2024
Taxation policy is critically important since it intersects with the economic and social policies of the government, with the raised funds supporting programs such as social safety nets, pensions and income re-distribution, as well as critical infrastructure...
Liberals playing with inclusion rates is divisive politics at its worst
June 11, 2024
In a blaze of rhetoric that partisan politicians and their followers would be proud of, Finance Minister Chrystia Freeland finally released some of the legislative details about the proposed change to the capital gains inclusion rate from the current 50 per cent to two-thirds for corporations and most trusts as well as for individuals who have more than $250,000 of annual capital gains...
More and more people are discovering they are 'rich' in the eyes of Liberals
June 4, 2024
The capital gains inclusion rate increase impacts much more than the rich.I recently had a quick chat with a young friend of mine who works in the public sector and leans heavily left, so we often get into friendly but lively debates about tax and economic policy. The topic d’jour, of course, was the proposed capital gains inclusion rate increase...
Canadians need more time to digest new capital gains inclusion rules
May 28, 2024
The capital gains inclusion rate proposal is nothing more than a revenue-generating measure. Albert Einstein is credited with saying “the hardest thing in the world to understand is income tax.” One can debate the context of why he said that, but I tend to agree with good ol’ Albert...
Good taxation policies don't need slick videos to make a case for them
May 21, 2024
The capital gains inclusion rate proposal is nothing more than a revenue-generating measure. Albert Einstein is credited with saying “the hardest thing in the world to understand is income tax.” One can debate the context of why he said that, but I tend to agree with good ol’ Albert...
Capital gains tax hike proposal should be delayed, if not scrapped altogether
May 14, 2024
So many questions about the changes, Canadians are 'planning in the dark'. It’s been almost a month since the Canadian federal budget was released and the long tail on budget articles and comments is normally not that long — perhaps a few days or a week at best...
Bad government policy on capital gains leads to more distrust, more departures
May 7, 2024
There’s no shortage of studies, articles and papers on the deployment of public policy by government and the behavioural impact it has on citizens, so most governments say they are well advised by so-called public-policy experts when introducing new laws...
Taxing the rich is not a magic trick that will help younger Canadians
April 30, 2024
I’ve always been fascinated by magicians and how incredible some of their tricks are. A few years ago, my youngest son became fascinated as well. He aggressively took up the craft and let me in on some of the sleight-of-hand and distraction skills that are required to pull off an effective trick...
Taxes should not wag the tail of the investment dog, but that's what Trudeau wants
April 23, 2024
Ottawa is encouraging people to crystallize their gains and pay tax. That’s a hell of a fiscal plan. The Canadian federal budget has been out for a week, which is plenty of time to absorb just how terrible it is...
Corporate 'excess profits' tax? The federal budget could still hold some surprises
April 15, 2024
Over the years, it has become common for the Prime Minister’s Office — or some other connected government office — to strategically leak content to friendly journalists or, as on full display this year, have an extended period of announcements that are designed to try to make the government look good for political purposes...
A single act of courage is needed to fix Canada's tax system, but this government won't do it
April 9, 2024
Has the overall Canadian tax system hit a tipping point? I’ve been concerned about this for quite some time and while I try hard not to cry wolf, I try to shine some light on some very serious concerns. What are some of those concerns? There are many, but let’s highlight some of the bigger and most recent ones...
The bare trust debacle shows the CRA needs to learn to respect taxpayers
April 1, 2024
Taxpayers wasted money and tax professionals lost sleep only to be told the rules had changed. One of my favourite vocalists of all time is the Queen of Soul Aretha Franklin. I particularly loved her soulful style which was on great display during one of her greatest anthems Respect. The way she spelled out the words of “respect” during the song was classic...
Income averaging is an old idea that deserves another shot
March 26, 2024
Re-think criticisms of income averaging to restore fairness and equity. There are a lot of good things about getting older. One of them in my work life is that I recall the “good old days” with respect to certain taxation matters...
The CRA already has your info, so make automatic tax filing a reality already
March 19, 2024
An automatic tax filing system for low-income taxpayers and for those who have straight-forward tax situations is long overdue. Why? Well, tax is intimidating for most people, but particularly for those who are vulnerable, disabled, single parents, elderly or are simply trying...
New trust reporting rules are daunting and expensive if you fail to file on time
March 12, 2024
New trust reporting rules first proposed in the 2018 federal budget require most trusts to file a T3 tax and information return with expanded reporting on who the settlor(s), trustee(s) and beneficiaries of the trust...
Personal tax credits sound great, but they have a cost that quickly adds up
March 5, 2024
For tax geeks like me, the release of the annual Report on Federal Tax Expenditures is an exciting day, but I’m guessing most people don’t read this data-rich review that “reports on the estimated fiscal cost of federal tax expenditures, sets out the approach used in developing these estimates and projections, and provides detailed information on...
Silly taxation penalties, legislation can't fix Canada's housing shortage crisis
February 27, 2024
Measures play the blame game and will have almost zero impact on problem they're trying to fix. Whether you’re a federal, provincial or municipal government, using the tax system is all the rage to try to solve Canada’s housing supply shortage, which has resulted in no shortage of silly taxation measures and legislation over the past few years...
Ottawa's EV subsidies show tax-free fairy tales do come true for some
February 20, 2024
Lack of transparency, tax-free handouts and dollar amount taxpayers on the hook for shocking and staggering. Let’s pretend you see a newspaper ad for government grants. The federal government is offering $30,000 if you simply agree to be a nice person. You make the application and, voila, you’re approved...
Give your accountant a hug — you may not find another one
February 13, 2024
Incomprehensible new tax legislation combined with fewer accountants may crash in a horrible wreck. There’s a shortage of accountants. That’s not news if you’re an accountant like me. I’ve been recruiting and hiring accountants for almost 30 years and there’s been many ups and downs throughout that time...
Perhaps it's time some non-profits paid tax like everybody else
February 6, 2024
There should be brighter lines in an NPO's activities to determine whether a tax exemption is appropriate or not. Ever wonder what the difference is between a non-profit organization and a registered charity? The Canada Revenue Agency sums up the differences as follows...
It's time for the CRA to implement an automatic tax-filing system
January 30, 2024
People with straight-forward income shouldn't have to pay much, if anything, to annually prepare tax returns.The tax preparation industry in Canada, like many countries, is big business, bringing in about $23.6 billion, according to some estimates. Not all of that is to prepare personal income tax returns, but it would certainly make up a significant chunk of...
Big CRA funding increases could be better spent elsewhere
January 23, 2024
I’m not one to regularly bash the Canada Revenue Agency. It has a very important job to do which is to administer the country’s very complex taxation laws and those of most provinces and territories. If a country has income tax laws, it had better properly administer them...
'Bad guys' go free while compliant Canadians get burdened with new trust rules
January 16, 2024
Countries around the world have been racing to introduce transparency requirements in many different areas of the law. Examples include corporate shareholder registries, required disclosure when implementing certain tax transactions and trust beneficiary reporting requirements...
Thinking of leaving Canada? There's more than just personal tax rates to consider
January 9, 2024
Canadian personal tax rates may be too high, don’t compare favourably with those in the United States and are driving many of our successful people out of the country, but to be fair, there are many considerations other than high taxes that go into a decision to leave...
Canada's high tax rates are driving talented workers to leave the country
January 3, 2024
Canada’s personal tax rates are too high, as many of us realize. There are numerous data sources that consistently put this country’s personal tax rates amongst the highest on Earth. Yes, there are countries with higher marginal personal rates, but there are many more that are lower...
These 5 Income Tax Act provisions need to be amended or eliminated altogether
December 27, 2023
Canadians deserve better than an income tax system filled with simple and silly political gestures. The Department of Finance on Dec. 20, 2023, released the short-term rental draft legislation as part of a small package of taxation proposals...
9 tax-related wishes to Santa to put more money in your pocket
December 19, 2023
What does a tax practitioner ask Santa for Christmas? Well, every year, I have a private session with Santa (longevity in the profession gets you some special hearings). I make the long, but special trek to the North Pole and have some hot cocoa with the jolly fellow and talk tax wishes...
Beware myths around capital gains tax exemption for a principal residence
December 12, 2023
Exemption is one of the most misunderstood tax provisions in the Income Tax Act. Once upon a time, capital gains were not taxable in Canada. But the federal government instituted a tax on capital gains when major tax reform was introduced on Jan. 1, 1972, yet only 50 per cent of the resulting capital gain was included in income...
Canada's housing woes won't be solved by attacking perceived evils through the tax system
December 5, 2023
A super tax won't cause short-term rental owners to put their properties into the long-term rental arena. There was a lot of reaction to the federal government’s horribly thought-out proposal to super-tax short-term rental owners by denying expense deductions if they are renting out in an area that prohibits it...
Trudeau's attack on short-term rental owners will encourage them to not report income
November 28, 2023
Poorly thought out proposal sets dangerous precedent of taxing business owners on gross income. Housing affordability and availability is a complex public policy issue. It is unlikely there is one expert who knows it all since it involves — at a minimum — a great understanding of many disciplines...
If you have American connections, you may owe the IRS some tax money
November 21, 2023
Welcome to a world of onerous tax filing requirements for U.S. tax purposes. Were you born in the United States? Was one of your parents born there? If you answered “yes” to either question, then there’s a good chance you are a U.S. citizen and have been since the moment you took your first breath...
Does your tax adviser know the rules? Probably not, which is why reform is needed
November 14, 2023
The vast majority of Canadian accountants only have a very basic understanding of income tax law. Practising taxation is not for the faint of heart. The Income Tax Act is, by far, the largest statute (and likely the most complex) in Canadian law. It’s fair to say many Canadians believe that most accountants understand tax...
Taxes are Canadians' biggest expense — you need to tax plan all year long
November 7, 2023
Tax planning shouldn’t occur just before the deadlines; it needs to happen at least monthly. At this time of year, there’s no shortage of “year-end tax-planning tips” that show up in articles, social media feeds and your email. It’s like clockwork: such articles magically appear from about Nov. 1 until Dec. 31 every year...
Canadian charities should be worried if alternative minimum tax changes are passed
October 31, 2023
Decades and decades ago, Canada made a deliberate policy choice to use our taxation system to help encourage philanthropy. Such a choice included providing tax-exempt status for registered charities — and tax incentives for donors to make gifts to such organizations — and non-profits...
13 questions to ask for a complete and proper overhaul of Canada's tax system
October 24, 2023
It's time for a comprehensive tax review, not just one to look good. Adam Smith, the Scottish economist and philosopher, laid out his thoughts on what the four basic tenets of a good taxation system are in The Wealth of Nations, his 1776 landmark writing, as follows...
Tax the rich? It would be far better to improve the whole taxation system
October 18, 2023
“Tax the rich” has been a popular rallying cry for many people who feel victimized, entitled or have a weak understanding of how Canada and other countries tax their residents and redistribute income. The phrase has for decades been good politics for many left-leaning politicians and political parties who use it, or something similar, to capitalize on the above group of people for their votes...
Why Canada should adopt the family as the basic taxing unit instead of the individual
October 10, 2023
Canada’s top-end personal income tax rates are too high and they must come down, but there are many other tools that governments have to tax you in ways that chip away at your ability to minimize taxation...
Canada's top-end personal tax rates need to come down
October 4, 2023
Canada needs to take a hard look at lowering personal tax rates and ensure people keep at least half of all gains. Before 2015, Alberta had, by far, the lowest federal-provincial combined top marginal tax rate in Canada at 39 per cent. This comparative advantage contributed greatly to large amounts of investment and people going into Alberta...