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Accounting Business Federal Court of Canada Rulings

Federal Court of Appeal allows use of mark-to-market tax accounting

Taxpayers are entitled to use the mark-to-market method to compute income for federal tax purposes if it provides a more accurate picture of a taxpayer’s income, ruled the Federal Court of Appeal.

The federal appeal court decision bolsters the possibility for taxpayers to use methods to compute income that are not forbidden by the Income Tax Act (Act), affirms Canada Revenue Agency’s administrative position that allows regulated financial institutions to tax derivatives on a mark-to-market basis, and may open the door to allow financial accounting to become more influential in determining what constitutes an acceptable method of computing income from business, according to tax experts.…

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Accounting Business Financial services

OSFI delays implementation of new disclosure requirements

The federal financial watchdog has given Canada’s big banks an extension to implement global reforms that establish more consistent disclosure rules to allow them to focus and devote the “significant level of effort required” to implement new international accounting standards for financial instruments.

The Office of the Superintendent of Financial Institutions (OSFI), globally renown as a dominant and strong regulator, originally adopted an aggressive timeline for the implementation of the revised Pillar 3 standards issued by the Basel Committee on Banking Supervision, an international banking regulator – and an equally aggressive stance towards the adoption of the International Financial Reporting Standard (IFRS) 9 Financial instruments accounting standard, according to financial services experts.

But the federal banking regulator recently softened its stance, and granted so-called domestic systemically important banks (D-SIBs) a year-long extension, until fiscal year ending October 31, 2018, to implement the revised Pillar 3 disclosure requirements.…

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Accounting Business Quebec

Revenue Quebec intends to improve dealings with taxpayers

An action plan unveiled by Revenue Quebec to improve its dealings with taxpayers after the Quebec ombudsman accused the provincial tax department of becoming more intractable and less respectful is viewed with cautious optimism by business and tax professionals.

The action plan was ordered by Quebec Finance Minister Carlos Leitão to remedy an “unacceptable situation” following a scathing report by Quebec ombudsman Raymonde Saint-Germain who for the second year in a row found that Revenue Quebec frequently failed to apply the principles of natural justice or fundamental rules of procedural fairness, rigidly interpreted fiscal legislation despite being aware of jurisprudence contrary to its position, and provoked needless court action to resolve tax disputes with taxpayers. …

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Accounting Business Quebec Quebec Court of Appeal Rulings Tax

Revenue Quebec ordered to pay $2.4 million

Revenue Quebec was ordered to pay $2.4 million, including $1 million in punitive damages, to a Montreal business after the Quebec Court of Appeal found that the provincial fiscal authority abused its powers and acted maliciously and in bad faith.

In a decision that sternly rebukes the provincial tax authority for abusing its “extraordinary powers,” the appeal court ruling held that Revenue Quebec owes a general duty of care and good faith to taxpayers as well as an “obligation to compensate” taxpayers who were the victims of wrongful conduct, according to tax lawyers.…

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Accounting Charter of Rights and Freedoms Court of Quebec Quebec Rulings Supreme Court of Canada Tax

Revenue Canada investigation highly reprehensible, says court

A “highly reprehensible” and illegal probe by the Canada Revenue Agency that failed to draw the distinction between a civil tax audit and a criminal tax investigation has put into jeopardy several tax evasion criminal cases involving Quebec construction companies and corruption charges against former federal civil servants, according to tax experts.

In a precedent-setting ruling that appears to bring more clarity to the leading Supreme Court of Canada decision in R. v. Jarvis , [2002] 3 SCR 757, Court of Quebec Justice Dominique Larochelle held that the evidence produced to charge the owner and three other company officials of a Montreal company, B.T. Céramiques, was obtained illegally because federal tax officials crossed the “Rubicon” and failed to inform the taxpayers that the inquiry had turned into a criminal investigation, thereby breaching their right to freedom from self-incrimination and right to reasonable expectation of privacy guaranteed under s.7 and s.8 of the Charter of Rights and Freedoms.…

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Accounting Business Quebec Tax

“Head of Quebec accounting firm calls for elimination of small business tax

The Quebec provincial government should follow Manitoba’s lead and eliminate the business tax for small and medium-sized business with net taxable earnings under $500,000 so long as they invest the amounts saved in employment, innovation, and production, suggested the head of a Montreal accounting firm at a tax conference.

The latest Quebec budget has put the province in a better position to grow and prosper by gradually lowering the general corporate tax rate but the provincial government should contemplate abolishing income tax for small businesses to stimulate the economy even more, said Emilio Imbriglio, the president and chief executive officer of Raymond Chabot Grant Thornton.…

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Accounting Business Corporate law Tax

OECD hopes reforms will end era of tax avoidance

An unprecedented international collaboration on tax reform that recently unveiled sweeping plans to crack down on aggressive tax planning by multinational companies has the potential of becoming the biggest shake-up in international tax rules in nearly a century, according to tax professionals.

Endorsed by G20 finance ministers and leaders, the ambitious proposals by the Paris-based Organisation for Economic Co-operation and Development (OECD) aims to close loopholes, increase transparency to assist tax authorities in risk assessments, and restrict the use of tax havens to curb many international tax planning strategies.

The plan, known as the Base Erosion and Profit Shifting (BEPS) project, lists 15 specific actions intended to establish coherent rules for corporate income taxation, prevent tax treaty abuse, tackle the tax challenged posed by the digital economy, and amend the world’s 3,000 bilateral tax treaties through a multilateral instrument.…

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Accounting Business Tax

Tax competition stirs controversy

Barely a month after the European Commission ruled that Starbucks Corp. and Fiat Chrysler Automobiles NV benefited from illegal tax deals from the Dutch and Luxembourg governments, cross-border tax avoidance will be the subject of yet more intense scrutiny after European Union lawmakers decided recently to quiz 11 multinational corporations over sweet-heart tax deals with governments.

While multinationals are under growing public criticism for using tax avoidance strategies such as assigning valuable patent rights to shell companies based in tax havens or receiving interest deductions for payments made to their own subsidiaries, tax competition too is responsible for the dire situation, said Peter Dietsch, author “Catching Capital – The Ethics of Tax Competition.”…

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Accounting Business Quebec Tax

Ombudsman comes down hard on Revenue Quebec

A blistering report by Quebec ombudsman recently accused Revenue Quebec of becoming more intransigent and less respectful report towards taxpayers, prompting an immediate reaction from the provincial finance minister who ordered the tax department to come up with a “concrete action plan” to remedy the “unacceptable” situation.

Revenue Quebec “frequently failed” to apply the principles of natural justice or the fundamental rules of procedural fairness while recovering tax dollars, rigidly interpreted fiscal laws which often resulted in needless court action to resolve tax disputes with taxpayers, and “employed inadequate, and even abusive,” auditing methods, according to the latest report by the Protecteur du citoyen, the second year in a row that the taxman was castigated by the ombudsman.…

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Accounting Business Tax

OECD report recommends giving tax authorities access to suspicious transaction reports

An international think tank is calling for tax administrations to have the fullest possible access to suspicious transaction reports received by financial intelligence units to ensure tax compliance and to tackle serious crimes as tax evasion, bribery, corruption, money laundering and terrorism financing.

The Paris-based Organisation for Economic Co-operation and Development (OECD) is calling on jurisdictions to provide the legislative framework to allow tax administrations to suspicious transaction reports (STRs) and to ensure that operational structures and procedures are put in place to facilitate the “maximum effectiveness” in the use of STRs.…

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