Michael Badham

If the federal government wants to cut taxes, it can do so in a major way without cutting back services. How? By putting tax simplification on the front burner. With 52,499 employees, the Canada Revenue Agency is the largest federal department or agency. Its employment is up by a hefty 31 per cent this past decade. In 2023-24, CRA spent almost $6.3 billion on operations, capital expenses and pension benefits to collect $332 billion in revenues and distribute $11 billion in rebate cheques. Administrative costs that are less than two per cent of revenues seem reasonable. On the other hand, salaries, benefits and other operating costs average $120,000 per employee, which is not peanuts. Compliance costs for taxpayers are even more onerous. Based on World Bank estimates of the cost of doing business, the average business takes 131 hours per year to comply with federal and provincial taxes, with total compliance costs ranging between $15 billion and $21 billion in 2024. That would be equivalent to raising the corporate income tax rate by three to four percentage points from 26 per cent today. Tax complexity not only costs money, it makes government policy less effective. An Austrian paper published this April found that when tax structures are complex and uncertain, corporate tax policies have less impact in encouraging investment and hiring, especially by domestic companies. Thresholds are a common way to reduce both compliance and administrative costs. For example, small traders earning less than $30,000 annually (or US$24,000) from the sale of goods and services do not need to register to collect GST/HST on their supplies. This threshold has not changed since 1991 when the GST was introduced so its real value is now half what it was then. Most countries with value-added taxes (VATs) have similar small-trader thresholds though many are substantially higher than ours: Australia (US$52,817), France (US$131,286), Japan (US$102,459), Switzerland (US$95,238) and the U.K. (US$125,000). Of course, thresholds introduce unfairness and distortions as smaller companies are tax-advantaged and may also hold back production to stay below a threshold. But there’s a trade-off: an exemption for smaller taxpayers enables governments to reduce administrative costs for the public sector and compliance costs for the private sector. In a 2004 paper, former IMF tax economist Michael Keen and I found that a much higher threshold for small traders, more like that in Japan or the U.K., would strike a better balance. It would also help slim down the CRA. Thresholds exempting small businesses from reporting requirements should also be restored, indexed and maybe even increased. If the federal Liberals want to cut public spending, they should put some focus on tax simplification. Tax complexity is an economic growth killer that we could reverse if we put our minds to it.

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The Canada–U.S. trade landscape continues to evolve, bringing both complexity and opportunity for Canadian businesses. In our recent webcast, KPMG leaders from tax, legal, and advisory shared timely updates on the latest trade developments and offered actionable strategies to help organizations navigate tariff changes with confidence. ⏯️ Watch the replay now to gain the critical insights to refine your trade strategy and stay ahead: https://lnkd.in/g2NhXPaf

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“The biggest hurdle is still access to capital. Without that, even the best opportunities can’t move forward.” - Scott Alanen, CPA, CBV, CFM, ICD.D, AIOC VP of Investment In the latest episode of the Forward Together Podcast, from the team at Forward Summit, Scott joins host Rod Miller MBA FCPHR to discuss how AIOC works with Indigenous Nations and groups to overcome barriers to accessing capital for investments. While AIOC is not a direct lender, we act as a safety net: when banks view an investment as high risk due to the lack of traditional collateral, we can provide a government-backed loan guarantee to reduce that perceived risk. Tune in to learn more around how this approach makes generational, revenue-producing investments possible—projects that strengthen economic sovereignty and generate impact. Listen to the full conversation: https://lnkd.in/gqu2SVcr

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Tune into Moneris’ Just Good Business podcast to hear our own Kerry Smith, National Leader of Family Office Services, talk about the ins and outs of succession planning for Canada’s small businesses. And in the face of the silver tsunami of retiring business owners, planning for this transition has never been more critical. Find out how succession planning (or lack thereof) can impact your employees and family, and why the earlier you start planning, the better. You don’t want to miss this one: https://shr.link/cmn0x

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Reion Accounting Professional Corporation joins Crowe MacKay LLP. We’re excited to announce that Reion Accounting Professional Corporation has joined Crowe MacKay’s Calgary Office. This collaboration enhances and strengthens our ability to deliver tailored accounting, tax, and advisory solutions to businesses across Canada.   Reion Accounting Professional Corporation brings a team of trusted professionals serving private companies, partnerships, and owner-managed businesses in various industries.   Join us in welcoming the Reion team to Crowe MacKay.   Read more → https://lnkd.in/ggdxMmj8   #CroweMacKay #Crowe #WeAreCrowe #CroweCanada #GrowWithCrowe

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