Sunday News Roundup 24.05.19: Shambolic tenant tax crisis, Poilievre capital gains op-ed, and more Canadian accounting news

Wrapping up the odds and ends from the past week in Canadian accounting news

May 19, 2024 Author: Canadian Accountant

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TORONTO, May 19, 2024 – The federal revenue department was in full damage control late Friday afternoon when Minister Marie-Claude Bibeau said it had no intention of going after the tenants of non-resident landlords. The shambolic handling of a public relations crisis that should have been squelched months ago does not reflect well on the new minister or the Canada Revenue Agency during a housing crisis.

So what happened? Well, back in March, the Tax Court of Canada issued a rare decision against a tenant who — because his landlord was a non-resident — did not remit 25 per cent of his rent to tax authorities.

The details are interesting (and lengthy) but here’s a synopsis. The tenant owned a gym and had rented his home in Montreal for a quarter-century. He paid his rent through his company and the owners of the unit had the unit listed under their own company. At some point, the original landlord sold the unit to a family member, who the CRA said lived in Italy, of which the tenant was not aware.

Long story short, the Globe and Mail got hold of the decision, and published two stories, one news and one opinion, lambasting Ottawa for allowing the law to stay on the books. The gym owner was entirely sympathetic (anyone reading the decision would understand why he thought his landlord was living in Canada) and the revenue ministry looked tone deaf during a housing crisis that has impacted renters most of all. (Campbell Clark’s column put it succinctly: Do you know where your landlord lives?)

Suddenly, the government championing “tax fairness” looked like anything but, and Bibeau released a statement on Friday afternoon (never a good sign). Why it took the Liberals two months to wake up and smell the coffee is anyone’s guess. And one wonders whether a Tax Court judge decided to issue a rare decision in order to highlight an antiquated law. The minister had noted that “this law has existed for nearly a decade and there is not a single case of an assessment made to an individual tenant in the last decade.” But the emphasis in the subsequent statement on the phrase “individual tenant(s)” could leave one wondering whether the CRA pursued the the gym owner because he paid his rent through a numbered company. (For the record, the guy doesn't buy the minister’s statement.)

Just a communications mess all around. And now, on to the rest of the news from the past week in Canadian accounting.

Tax Fairness: In the eye of the beholder

There was more back and forth this past week over proposed changes to the capital gains inclusion rate. Nanos released results of a poll sponsored by Bloomberg purporting that “Canadians are split on the impact of the capital gains tax increase.” But the results were not widely shared by media outlets, perhaps because the question asked by the pollster was not a binary one, but rather one based on public statements by “some people.”

It brought to mind the CBC article reporting that the Canadian Chamber of Commerce had to retract a statement about how many “Canadians” (acutally, Canadian companies) would be affected by the proposed changes. Meanwhile, Canadians for Tax Fairness released a report on productivity and capital gains inclusion, which asserted that “numerous studies have shown that economic inequality has a destructive impact on labour productivity.”

Perhaps the most interesting development in the ongoing debate was Canadians finally heard from Pierre Poilievre on the matter through an Op-ed in the National Post. And boy, was the verbal ju-jistu fascinating. Poilievre basically blamed the business class — and said he refuses to meet with them and their perfidious lobbyists! — and told them instead to “make their case” with “the people.”

But don’t listen to us. We recommend reading instead Poilievre to business: stop sucking up to Liberals and start sucking up to me by Andrew Coyne in the Globe and Mail.

Software News: Sage for Accountants, Sage for Small Business

Sage has launched two new suites in Canada “to transform how SMBs and accounting practices operate and grow their business.” According to the global software solutions provider, the new suites “are purpose-built to meet the changing needs of accountants, bookkeepers and SMBs, helping them to get more done by freeing up time, whilst boosting efficiency and productivity.”

Sage for Accountants is an integrated experience. It will help practices to win and onboard more profitable clients; boost productivity with efficient compliance services; and deliver a trusted advisory service. And apparently it’s not necessary to use Sage ledger tools to use Sage for Accountants.

And, by the way, if you live in the Toronto area, you can attend the Sage for Accountants launch party on Thursday, May 30 at The Loft On King Street West in Toronto. Looks like fun!