Sunday News Roundup 23.01.01: Happy New Year tax changes 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. 1, 2023 – Happy New Year from Canadian Accountant! If 2023 is anything like 2022, there will be lots to talk about each week in our Sunday News Roundup. Make sure you subscribe to our weekly newsletter (if you haven’t already) to read all the posts from any given week. And now, since we took a week off during the holidays, it’s on to the odds and ends from the past two weeks in Canadian accounting.
Happy New Year to more (or different) taxes
There are two kinds of “new year tax change articles.” The first kind is just a strict reporting of tax changes and how they might affect personal finances. The second kind is more politically partisan and often features sensational headlines. As we close out 2022, there were plenty of examples of both types, running in media of all spectrums.
In just the past two weeks, type one articles included 11 tax changes and new rules that will affect your finances in 2023 (Financial Post); Sharpen your pencil: tax changes to tackle inflation are coming into effect (CBC); New year, new taxes: how taxation changes in 2023 could affect you (also from the CBC); and Your New Year’s resolutions should include the five pillars of tax planning (Globe and Mail).
In terms of type two, there was the Canadian Federation of Independent Business, arguing that federal increases to Employment Insurance (EI) and Canada Pension Plan (CPP) are too much of a burden to small business owners: New year, more taxes: Canadians’ take-home income to drop by up to $305 on January 1 due to EI, CPP hikes. And the Canadian Taxpayers Federation dropped its annual New Year’s Tax Changes report, which provided media outlets with articles like Weary taxpayers to be hit with five federal tax hikes in 2023 or Trudeau bingeing on alcohol tax hikes in 2023.
Canadians for Tax Fairness, the flip side of the same “tax coin,” released Year in Review: Top 10 Tax Fairness Stories of 2022. But we wonder if the C4TF couldn’t be a little more media savvy, like the CTF, by releasing something like an annual “Christmas wish list for tax fairness” that focuses on inequalities.
Provincial, municipal budget and accounting practices criticized
The CD Howe Institute says that the current state of municipal budgets is an affront to democracy because many cities in Canada will start the new year with no fiscal plans. It’s disgraceful, says the Institute, that Canadian municipalities run on a calendar year but are sluggish to approve budgets.
And if you live in Montreal, critics say “accounting gymnastics” turn projected deficit into surpluses. Meanwhile, the entire province of Manitoba is struggling with accounting deficiencies and “a lack of adequate accounting knowledge in departments,” according to the province’s auditor general.
Resistance rising to the newly vigilant US audit watchdog
As we noted in our last news roundup, the Public Company Accounting Oversight Board in the United States, under the leadership of Erica Williams, has not only returned to the pre-Trump era vigilance but has also recorded some significant regulatory victories. (And, as the Financial Times reported today, the US regulator’s scholarship programme is a beneficiary of the wave of scandals, as the PCAOB plans to expand the programme this year, using the fines it has collected.)
But this kind of success tends to breed resistance as the stakeholders begin to feel the heat. As Thomson Reuters reported, in With a New Sheriff in Town, Experts Weigh in on Strengthened PCAOB Enforcement, critics are calling for more “balance,” while supporters point to “lax enforcement” in the past. Meanwhile, Hester Peirce, who was appointed as one of four commissioners of the US Securities and Exchange Commission by Donald Trump in 2018, issued a statement this past week criticizing the PCAOB’s “ballooning” budget.
Peirce has long-standing ties with the Republican Party, of course, and her criticism came ironically in the same week that the former president’s tax returns were released, to some concerns about the inaction of the IRS. Watch for more of these kind of stories in 2023 as the accounting profession kicks back against increased oversight.
European Union approves Global Minimum Tax
It came as some surprise, after so much spilled ink in recent years, to hear that the European Union has finally approved a plan (“Pillar Two”) for a global minimum tax on corporations. Negotiations were acrimonious to the very end, as Poland had earlier blocked approval, but eventually passed with the backing in principle of the OECD, Washington, and major European economies.
According to the Financial Times, the EU deal will trigger a domino effect, as other countries begin implementation, while Bloomberg argued that the deal, which mostly targets digital companies, could swipe revenue from the US. Canada has already confirmed its commitment to both tax pillars.
Fare thee well, Tax & Spend
Patrick Brethour is moving on to a new position at the Globe and Mail and will no longer be writing the Tax & Spend newsletter and column. As his final farewell, Brethour wrote some satirical Christmas song lyrics in Tax & Spend: The holiday musical edition. No word yet on whether the actual column will continue but it was fun while it lasted.
Quick Hits: Articles of Interest
Regulatory body suspends membership of P.E.I. accountant for 2 years (CBC)
The Home Ownership Tax Shelter is unfair to Prairies, Quebec and Atlantic Canada (Globe and Mail)
The tax system is stacked against low-income parents (Globe and Mail)
Banks charge more than 6% on loans, but give less than 2% on savings accounts. Are we being gouged? (Toronto Star)
How workers are being sacrificed to a doctrine that intentionally keeps unemployment high (Toronto Star)
Why So Many Accountants Are Quitting (Wall Street Journal)
Deloitte fined £900,000 by watchdog over SIG audit failures (The Guardian)
UK watchdog finds 'instances of cheating' in accounting exams (Financial Post)
EY’s Auditing Has Reverted Back to Being Bad, 2021 PCAOB Inspection Report Shows (Going Concern)
This isn’t Southwest Airlines’ first meltdown — and it might not be the last (The Hill)
By Canadian Accountant staff.