Sunday News Roundup 24.03.31 Bare trusts laid bare and more Canadian accounting news

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TORONTO, March 31, 2024 – First it was Bill Morneau and the infamous debacle over income sprinkling. Then it was the pandemic and the whiplash changes made to payouts and paybacks. More recently it was changes to the Underused Housing Tax, which has taken in less money than it costs to administer the program. And now comes the climbdown from bare trusts. 

The fight against the new rules began as a steady drumbeat through articles like Allan Lanthier’s Opinion: New CRA reporting rules for trusts are a disaster, or reports of small business owners like Calgarian Duane Smith, complaining about the accounting fees caused by the new rules. Finally, just before the Good Friday holiday, came news that the CRA had reversed course, “in recognition that the new reporting requirements for bare trusts have had an unintended impact on Canadians.” 

Funny thing about reversals. They tend to leave more than a few bad feelings. A Toronto tax lawyer (and former Conservative Party candidate) laid the blame for the “debacle” on the Department of Finance and the minister in charge (Chrystia Freeland). Mr. Lanthier, in the Globe and Mail, was more conciliatory, saying “The Minister of Finance should take a hard look at this fiasco.” 

In the same article, Kevin Burkett, a CPA and firm principal, had an interesting take — the late notice would punish conscientious taxpayers and tax professionals who had already submitted bare-trust returns. “Your most honest, ethical taxpayers and practitioners have probably made their bare trust filings already,” Burkett told the Globe and Mail. 

We think Clearline Consulting (sister firm to Clearline CPA) put it best in an email to its subscribers. Clearline praised the rallying of the tax community through various platforms such as LinkedIn.

“The announcement by (CRA) has brought a mix of relief and frustration for all professionals. On one hand, the exemption simplifies immediate compliance concerns. On the other, there's a significant amount of work and resources that have already been invested in preparation for these now-exempt filings — efforts that, while necessary at the time, now feel wasted.” 

And now, on to the rest of the news from the past week in Canadian accounting. 

CPA salary source website acquires AI tech tool

Who makes more? A Big Four senior analyst in Toronto or a Big Four senior analyst in Montreal? What about a tax manager at Ernst and Young versus a tax manager at KPMG? Comparing CPA salaries is like trying to stick the proverbial jello to the wall. How do you get a handle on information with so many variables? No wonder the most popular accounting topic on Reddit is how much money do you make? 

But there’s an Ottawa-based tech startup called Big4Transparency that is trying to answer those questions and more by allowing CPAs to submit data about their salaries anonymously. According to the Ottawa Business Journal, Big4Transparency is acquiring a new, online AI-run algorithm that will enable Big4Transparency to tap into “more than 15,000 data submissions and generate accurate salary predictions for CPAs.” 

Ontario Court of Appeal allows Al Rosen to testify

For fans of bizarre court cases — especially ones involving accountants — look no further than the Ontario Court of Appeal and the legendary Al Rosen. In a unanimous decision, the Court ordered a new trial in the case of two property companies suing each other, and a statement of claim for alleged fraud and negligence against the accountant for one of the companies. 

One of the companies hired “Dr. Lawrence Rosen” as its forensic accounting expert to testify in the case but the Superior Court justice dismissed the case. The justice would not allow Rosen to testify because “he had not opined on the requisite standard of care of a certified general accountant in his reports.” 

It took the Toronto Star (three cheers for investigative reporting) to figure it all out. According to the Star, “Ontario’s top court slammed a Toronto judge twice this month for dismissing cases without explaining why.” The first case involved a family suing St. Michael’s Hospital for allegedly causing a severe brain injury during the birth of their son. 

The second involved the Rosen case. The Appeal Court wrote that the “premature and erroneous dismissal of the action trial judge” — a former lawyer with McCarthy Tetrault — “amounts to a miscarriage of justice and cannot be permitted to stand.”

The Court ordered a new trial before a different justice of the Superior Court. Ouch. Presumably, Rosen will be allowed to testify at the new trial. 

Quick Hits: Articles of Interest 

Canadian

KPMG accused of misconduct that cost First Nation millions (Cabin Radio)
Fugitive Brampton tax fraudster who fled Canada after $34M charity scheme finally jailed (Toronto Star) 

International

Making accounting sexy again (The Economist)
‘Big Four’ accounting firm under fire over sexual harassment (Stuff NZ)
Anonymous Audit Firm Sues PCAOB to Block ‘Excessively Intrusive and Burdensome’ Investigative Demand (Reuters)
UK accounting watchdog warns he is ‘sheriff for only half the county’ (Financial Times)
Deloitte undergoes major restructuring to streamline operations and weather market slowdown (Accountancy Age)
China Scrutinizes PwC Role in $78 Billion Evergrande Fraud Case (BNN Bloomberg) 

By Canadian Accountant staff.