Friday News Roundup 21.04.09: A capital (gains) idea, corporate tax, bashing bloggers, grumpy accountants and more

TORONTO, April 9, 2021 – Surprise, surprise. The first full news cycle of April kicked off with a robust debate over taxation — corporate tax rates and the capital gains exemption on principal residences in Canada, to be specific. Before we get to the odds and ends of news from the past week in Canadian accounting, let’s outline the punditry on these headline debates: 

Yellen floats the idea of a global minimum tax

With the vaccination rollout ahead of schedule in the U.S., the bill for COVID-19 relief is coming due, and the Democrats are looking at corporations to help foot the bill. In her first major address as U.S. Treasury secretary, Janet Yellen pitched the idea of a global minimum corporate tax rate, claiming it would end a “30-year race to the bottom.” 

Tons of punditry followed but we’re only interested in the Canadian reaction. Colby Cosh in the Financial Post pointed out that what Yellen really meant was “not really a global minimum: it’s a system of interlocking accounting rules designed to take away all the benefits of enticing a multinational to your country by lowering corporate taxes.” Andrew Coyne in the Globe and Mail called it a “global tax cartel,” while The Canadian Press quoted a Canadian law firm in outlining the benefits to Canada. 

Taxing the sale of principal residences. A capital idea?

Three weeks ago, the Globe and Mail kicked off a fiery debate on cooling Canada’s hot housing market, by taxing capital gains on the sale of principal residences. In the past week, the punditry has gone into overdrive, with the real estate industry vowing it will “shut this idea down before it goes any further.”

While Allan Lanthier, writing in the Financial Post, and G&M columnist Rob Carrick agreed with the idea, the banking industry and the CD Howe Institute argued against it. Coincidentally, by the end of the week, OSFI and the big banks were pitching tougher mortgage rules and stress tests. 

Bloggers bash MNP Consumer Debt Index

The 2021 Q1 MNP Consumer Debt Index indicated this week “Over Half (53%) of Canadians Within $200 of Not Being Able to Cover Their Bills and Debt Payments, Up 10 Points Since December Reaching a Five-Year High.” But the headline got some blowback from blogger Robb Engen, who runs the immensely popular personal finance site Boomer and Echo and has 12.8k followers on Twitter. Kerry K. Taylor @squawkfox, who has 13.1k followers, agreed with the criticism. 

It would be interesting to read Robb’s criticisms explained in more detail, perhaps in a blog post on Boomer and Echo. We note that, while 53% is indeed a five-year high (one percentage point removed from a past high in March 2017), the Index indicates that, over the last five years, four to five Canadians have consistently claimed to be $200 or less away from financial insolvency at month-end. That’s a lot of Canadians who have spent the last five years on the edge of bankruptcy. 

Big job creation numbers point to underlying trend

Canada posted extraordinary job creation of 303,000 in March but, according to the Toronto Star, markets dismissed the numbers. What’s become clear, however, is that every time lockdown restrictions are lifted, the economy comes roaring back. 

Stories from the previous week

There weren’t enough substantial stories to do a News Roundup last week, but here are some odds and ends that still caught our attention (which we didn't report on at the time):

Neal Winokur, CPA, CA and author of The Grumpy Accountant, wrote an Op-ed in the Financial Post, critical of the digital news subscription expenses tax credit.

Arfa Ata, CPA and tax associate at PwC is lucky to be alive after a saw blade used for cutting stone flew off a truck and sliced into her Mercedes while driving through Caledon. 

The Charities Directorate, a federal agency that sits within the Canada Revenue Agency and oversees compliance with income tax laws, has been accused of anti-Muslim bias in a recent report. 

By Canadian Accountant staff.