Sunday News Roundup 23.04.30: Tax Deadline Day to pass despite CRA strike and more Canadian accounting news
Wrapping up the odds and ends from the past week in Canadian accounting news
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TORONTO, April 30, 2023 – Today is the official Tax Deadline Day for personal tax returns (although Canadians have until May 1, 2023 to pay since April 30 is a Sunday). Today is also Day 12 of the national strike by the union that in part represents tax workers at the Canada Revenue Agency. Currently, it appears that the deadline will pass without extension, which will remove a significant bargaining chip from labour negotiations, which have continued through the weekend.
Many Canadian accountants lobbied for a tax deadline extension. Eric Saumure, whom the CBC described as a “chartered accountant” (not a chartered professional accountant), collected more than 30,000 signatures on a petition. In addition to the free advertising for his firm, Zenbooks, Saumure managed this zinger: Canadians, he said, “barely have enough to pay the taxes that the government is putting in place." And on Prince Edward Island, accountant Mike Fitzpatrick told the CBC “the ability to contact CRA is effectively gone,” and business support is “completely shut down.”
While the strike has certainly been an irritant to tax preparers, most practitioners have ridden out the storm. Audits and the Tax Court have mostly continued and practitioners were well-prepared. We predicted this back on April 9 when we said a CRA strike would be stressful but the impact would be limited. Hugh Neilson summed up the attitude of many CPAs on Video Tax News when he said, “it’s nice to have all those online services and not be as reliant on personal contact with CRA.”
As for negotiations, the Treasury Board tabled a “final offer” on Friday that includes wage increases, but the wedge issue appears to be remote work, according to the CBC. Here at Canadian Accountant, we are frankly in favour of remote work — any reduction in commuters is better for the environment and for the mental health of employees — but it’s a divisive issue for many employers, especially in the private sector. Regardless, PSAC workers won’t feel the economic pinch of picketing until after May 10th, which is almost two weeks away.
And now, on to the rest of the news and links from the past week in Canadian accounting.
How likely is a recession in 2023? CPAs says very likely
CPA Canada released its quarterly Business Monitor report this past week and most CPAs in business are pretty pessimistic about the economy. More than two-thirds of executive level CPAs believe there will be a mild recession in Canada this year, and only 18 per cent of respondents are optimistic about the Canadian economy, compared to 40 per cent in Q1 2022.
So what’s changed? Really, it’s just two things: inflation and wages. “Companies are continuing to adjust wages for higher costs of living, which is sustaining inflation,” says David-Alexandre Brassard, CPA Canada’s chief economist. “This means that the high interest rate environment may remain for longer than anticipated.”
Death & Taxes: Only one is inevitable in Alberta
If there’s one thing Albertans hate more than socialists it’s taxes. So it comes as no surprise that, with a provincial elections just weeks away, Premier Danielle Smith is posturing over personal taxes, pledging that her government will require a referendum on any new tax increases.
Critics have long pointed to Alberta’s lack of long-term financial planning. “No government in the history of Alberta [has been] fiscal stewards,” said Lindsay Tedds, an associate professor of economics at the University of Calgary. “All that they do is ride the royalty revenue roller coaster and we are still on it.”
The faculty lounge at UofC must be fun when Professor Tedds and Jack Mintz are in the room together.
Automatic filing: An idea whose time has come
Each year, CPA associations in every province (and in a lot of chapters) organize free tax clinics for low-income and senior Canadians, with accountants volunteering their free time to prepare returns free of charge. Much like the debate around food banks (a national embarrassment), perhaps it’s time we asked why it’s necessary to have free tax clinics in the first place.
Imagine a world where we didn’t need free tax clinics! Perhaps that might come to pass with the long-awaited plan to automate the annual tax filing process for low-income Canadians. According to the government, 12 per cent of Canadians don't file their taxes every year, missing out on more than $1.7 billion worth of government rebates and programs they were entitled to in the 2015 tax year alone, as reported by the CBC.
Elizabeth Mulholland, CEO of Prosper Canada, says it's an idea that's long overdue. It strikes us that this is an idea that CPA Canada and the provincial associations can also get behind, while nobly continuing to fill in the gaps until the policy is finally put in place for the benefit of all.
Accounting Dealbook: It’s all in for AI
Just one week after KPMG announced a global partnership with Canadian artificial intelligence company Mindbridge AI, another Big Four accounting firm has announced a stake in AI. PwC is investing $1 billion in the technology in order to automate parts of its audit, tax and consulting services in its US business over the next three years, according to the Financial Times.
PwC has chosen Microsoft-backed OpenAI, the creator of ChatGPT, to develop its AI tools. PwC expects its staff will work “faster and smarter” using artificial intelligence. With KPMG and PwC making big investments — and Deloitte already a leader in technology — what will cash-strapped Ernst and Young do now that it’s cutting costs to pay for its failed business split?
Quick Hits: Articles of Interest
CRA’s poorly promoted limits on debt relief (Globe and Mail)
Why CRA denied taxpayer's medical expense claims related to moving because of disability (Financial Post)
PwC boosts global nature and biodiversity capabilities with new Centre for Nature Positive Business (Press Release)
CRA typo causes a multimillion-dollar mistake for the Hewitt Foundation (Globe and Mail)
N.W.T. judge freezes Denesoline boss's assets amid fraud allegations (CBC)
UK Accounting Watchdog Fines KPMG, Former Partner Over Audit (Bloomberg Tax)
UK legal, accounting bodies 'weak' in policing money laundering -report (Reuters)
ChatGPT fails accounting class (CFO Dive)
By Canadian Accountant staff.