New luxury and pop sales taxes and more Canadian accounting news
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TORONTO, September 04, 2022 – The past week has seen the introduction of two new sales taxes — one national, one provincial — and significant kickbacks from retailers. Nationally, the Select Luxury Items Tax Act took effect on September 1, driving up the price of luxury cars, planes and boats. If you plan to buy a Beamer or a Benz or the nautical or air equivalents, expect to pay 10% of the total taxable amount or 20% of the amount above the price threshold, whichever is lower.
In a CBC interview, Don Drummond called the tax a “loaded approach” that could spawn “cottage industries” around people who try to circumvent it. And indeed, in 2017, the International Consortium of Investigative Journalists arrested both Appleby, a Bermuda-based law firm, and the Big Four accounting firm Ernst & Young for some clever tax avoidance strategies for wealthy plane owners.
And in Newfoundland and Labrador, anyone drinking sugary drinks (soda, iced tea, energy drinks) will pay 20 cents more per pop per liter… of pop. According to the National Post, Newfoundlanders are the highest consumers of sugary drinks in the country and also drink the least amount of water. Small business owners and bottlers are unconvinced, according to the CBC, by the confusion surrounding the tax.
While one tax is national and the other provincial, the national tax has received much more attention, with Sun Media calling the luxury tax another example of “class warfare”, when the same argument could be advanced against the sugar tax. And now, on to the rest of last week’s news in Canadian accounting.
BC auditor general criticizes provincial surplus
It must have been a slow news week because BC Auditor General Michael Pickup got a lot of coverage for questioning a provincial government surplus…because it was too low. Pickup has had a 10-year battle with the province over how it does its accounting and, of course, British Columbia is unusual in its deviations from Canadian public sector accounting standards. (Alberta, Ontario and Quebec all follow generally accepted accounting principles, as do many smaller provinces.)
Pickup says the $1.3 billion surplus announced by the government should have been about six times larger. Opposition critics allege the province is bolstering its record while ignoring much-needed social services.
And speaking of public sector accounting standards, the Public Sector Accounting Board (PSAB) is seeking your input in determining priorities for projects it should undertake with its remaining resources. They released a consultation document outlining future projects that PSAB might consider.
CRA class action lawsuit launched over 2020 hack
Canadian Lawyer magazine reported last week that a class action lawsuit has been certified by the Federal Court of Canada against the Canada Revenue Agency for its data breach. Canadian accountants may remember the two cyberattacks that caused headaches about locked accounts and lost hours trying to contact the CRA.
The National Post also covered the class action lawsuit, led by Rice Harbut Elliott LLP, and reported the CRA’s response: “No organization is immune to cyber incidents or fraudulent activity. That’s why the CRA has robust systems and tools to quickly monitor, detect, investigate and neutralize potential threats. As scammers adapt their practices, so does the CRA. We regularly adjust and improve our security measures in response to this ever-changing threat environment and ongoing intrusion attempts.
CPA PD podcast platform secures $5 million in funding
Betakit, the Canadian startup news platform, announced this week that LumiQ plans to expand its PD podcast platform into the United States. LumiQ was formerly known as Luminari and was launched in 2016 as a sort of career management and online job site for Canadian accountants. (Full disclosure: Canadian Accountant and Luminari discussed cross-promotional activities when Canadian Accountant launched in 2017.) Its professional development courses on venture capital investing were popular with CPAs.
LumiQ has “pivoted” to a podcast platform that provides mandatory professional development opportunities (“compliance learning”) to more than 200,000 chartered professional accountants in Canada. Its financing of $5 million, apparently coming from private investors, will be used to fund its subscription growth strategy south of the border.
Quick Hits: Articles of Interest
CRA doesn’t have to tell people how to run their business, judge in corporate tax case says (Financial Post)
Most doctors took a financial hit in first year of COVID, but top earners did very well (CBC)
Taxes and spending: The fight against carbon pricing heads east (Globe and Mail)
Friday footnotes: EY Split lags; A consulting firm defrauds clients; Student loan forgiveness and taxes (continuity)
By Canadian accounting staff.