I will be co-chairing the CRA Tax Administration Panel on the second day of the CTF Ontario Conference (on Tuesday, October 30). If you have any burning questions for the CRA that you’d like to have answered, please send them to me. I can’t promise that all of the questions will be submitted to CRA or answered by them, but I would welcome your questions anyway.
Hello,
Thanks for the opportunity to ask a question. There has been a few whispers in high level Canadian politics about the need to simplify the Income Tax Act and related legislation, also a recent Banking Committee report rated this development as part of their top ten necessary reforms to improve Canada’s financial efficiency. On the other hand I’ve also read a few industry professionals weighing in that a simplification would be essentially be impossible and create more problems than it solves. I am wondering if aside from the wishes of Politicians a rewriting of the Tax Laws would even be practically possible while retaining the integrity of the Taxation system, and if so where are we likely to see a simplification of Tax Law being?
Thank you.
Oliver, this is a very interesting question, but I doubt very much that the CRA would agree to address it. The panel that I am chairing is focused on tax administration, which means that it is more about the practical issues associated with tax practice. Moreover, in Canada, the CRA is responsible for the administration of the Act, while the Department of Finance deals with policy. Your question is really a policy question; I feel certain that the CRA would regard the answer as lying within the purview of Finance.
I can tell you that some of the complexity in the Act comes from the nature of an income tax, which requires answering questions about what is income and when income is earned for tax purposes. At the same time, a lot of the complexity comes from the policy choices made by our elected officials. For example, the $750,000 capital gains exemption provisions are quite complicated, and so are the rules relating to the small business deduction. You could easily simplify the Act, if not make it simple, by removing these preferences, but then small business owners would be adversely affected, which most would regard as a Bad Thing.