Sunday News Roundup 23.01.29: Consultants criticized, Deloitte deal, and more Canadian accounting news
Wrapping up the odds and ends from the past week in Canadian accounting news
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TORONTO, Jan. 29, 2023 – On Wednesday, the Bank of Canada raised its benchmark rate by a quarter of a percentage point, bringing the policy rate to 4.5 per cent, the highest level since 2007. A day later, banks raised their prime lending rates to almost seven per cent. Bank of Canada Governor Tiff Macklem has indicated the BOC will take a pause in its hikes but the moves to date have been criticized.
Canadians for Tax Fairness have called for a windfall profits tax – not more rate hikes – as hiking rates won't slow soaring corporate profits, a key driver for inflation according to C4TF. Unions, meanwhile, say the central bank is waging war on the working class, while others say the Bank of Canada’s ‘resolute’ fight against inflation could threaten its credibility. “Part of rebalancing demand and supply in the economy is rebalancing the labour market,” rebuts Governor Tiff Macklem.
And now, on to the rest of the news from the past week in Canadian accounting.
TVO: Five Things You Should Know About Canadian Tax Policy
It’s a pretty rare occasion when a thoughtful discussion of Canadian tax policy shows up on TV. But TV Ontario (TVO) host Steve Paikin had Bhuvana Rai, a tax lawyer at Mors & Tribute Tax Law, on for a balanced and wry chat about interesting points on Canadian tax policy. We carried a column back in 2020 from Bhuvana so we may be a little biased but we highly recommend watching all sixteen minutes.
The interview touches on some fascinating issues, such as the incoporation status given to doctors (but not accountants or lawyers) by the provinces, why so many Canadian businesses try to stay small (and then move to the States), and why you really shouldn’t trust the help line at the CRA.
Globe and Mail: Cut corporate taxes with carbon tax money, Ontario
This past Tuesday, the Globe and Mail published an editorial pointing out two tax-related issues in Ontario, and a proposed solution. Premier Doug Ford promised corporate tax cuts on the campaign trail but has failed to deliver. At the same time, Ontario is collecting revenue from the federally imposed carbon tax, which they have yet to allocate.
The Globe’s solution is to use the carbon tax revenue to cut small business corporate taxes. It’s a conservative solution that would make many Canadian accountants happy. It would also distinguish Ontario from the federal government’s targeted spending on using carbon tax revenue for clean technology investment.
Accounting Dealbook: Consultants jabbed, can Deloitte Canada innoculate itself?
Deloitte Canada announced this past week that it had acquired a Montreal consulting firm called Synergyx. Deloitte wants to become a leader in “health economics,” which, in layman’s terms, is about using technology and other tools when choosing how to spend healthcare dollars. Synergyx specializes in “market access and pharmacoeconomics for the health industry.”
The Deloitte acquisition comes amidst public scrutiny of consulting contracts and a “shadow public service.” Quebec Premier Francois Legault was under fire for lucrative contracts to consulting giant McKinsey and Pierre Poilievre has called for a parliamentary probe into the Trudeau government’s links with McKinsey. Seven cabinet ministers have been called to testify.
Deloitte Canada made over $3 billion in revenue last year, half of which came from consulting, building on the services it provided to governments during the pandemic. With Canadian healthcare in crisis, opportunities will continue provide advisory services to governments and healthcare organizations.
And speaking of Deloitte and Montreal, the Big Four firm launched The Smart Factory @ Montreal, in an industrial park out by the PET Airport. It’s an interesting idea and has caught the attention of manufacturers: “a first-of-its-kind facility showcasing an interconnected ecosystem of more than 20 cutting-edge solutions and technologies and intent on transforming manufacturing and warehousing through digital transformation.”
Quick Hits: Articles of Interest
N.W.T. town drops fraud lawsuit against former SAO, mayor (CBC)
Will IFRS 17 make insurers’ results harder to compare? (Canadian Underwriter)
CRA taken to court after denying spousal support payments as tax deductible (Financial Post)
Opinion: Don’t trust the Canada Revenue Agency to file your taxes (Troy Media)
Former PwC partner banned for 2 years in Australia for leaking information (Financial Times)
EY Germany to make structural changes in cost-reduction push (Reuters)
KPMG primes shrinking CFO, CPA pipeline (CFO Dive)
U.S. watchdog should step up oversight of crypto auditors, say Democratic senators (Yahoo Finance)
GOP national sales tax talk backfires, as Dems see political gold (Politico)
PwC tax leak ‘once-in-a-lifetime’ chance for crackdown: former ATO exec (Australian Financial Review)
By Canadian Accountant staff.