TAXES.CA - The Canadian Tax and RRSP Homepage TAXES.CA - Your source for tax information in Canada
Canadian Tax BlogDirectory of Canadian Tax ProfessionalsCanada Tax and RRSP Information
Canadian Tax Blog

January 2006 Archives

January 29, 2006

Looking for a tax job at tax time?

Looking for tax jobs in Canada or abroad? Try searching for accounting and tax related jobs in Canada, the U.S., the U.K., and other areas including Eurpoe and Australasia using an affiliate site, eTaxJobs. TAXES.CA is an affiliate of eTaxJobs, a global job portal advertising tax jobs on behalf of employers and tax recruitment firms.

Job Seekers

- Search Canadian tax jobs
- Search international jobs

Employers

Employers wishing to advertise available positions in the tax industry can register with the site as a recruiter to post available positions. Just visit eTaxJobs - the World's largest tax jobs portal.

- Register as an accounting and tax recruiter

Posted by Taxes.ca Editorial Team [permalink]



January 24, 2006

Pension & Severance Calculations for Departing MPs

Resigned or Defeated MPs to Collect $72-million in Cumulative Pension Entitlements from Taxpayers

CTF Releases Pension & Severance Calculations for Departing MPs

Ottawa: The Canadian Taxpayers Federation (CTF) today released a list of projected pension and severance payments to be paid to 67 MPs who were either defeated in the January 23rd general election or resigned prior to the vote. Defeated or retiring MPs will collect a grand total of over $72-million in cumulative pension payments. (Annual pension payments total approximately $3.3-million in today’s dollars.) In addition, another $2.6-million in severance cheques will be issued to former MPs. The pension and severance calculations for individual MPs are available at:

http://www.taxpayer.com/pdf/MP_Pensions_2006.pdf

“Defeated and retiring members will win financially thanks to a gold-plated pension plan and rich severance payments for parliamentarians,” said CTF federal director John Williamson. “Shed no tears for retiring or defeated MPs. They are being well looked after by Canadian taxpayers.”

The biggest annual pension winners – the $100,000-plus club – include Liberal MPs Ethel Blondin-Andrew at $137,820; Don Boudria at $135,906; David Anderson at $114,600; Marlene Catterall at $109,408; Beth Phinney at $102,308; and Anne McLellan at $100,132. Independent David Kilgour rings in at $128,228. Cumulative pensions that will exceed $3-million will be paid to Liberals Ethel Blondin-Andrew, Don Boudria, Tony Valeri, and Paddy Torsney. Please see CTF calculations for the list of those MPs that will receive cumulative pensions in excess of $2-million and $1-million.

The CTF does not oppose the principle of a pension plan for MPs. However, the organization has long advocated for the introduction of a matching dollar-for-dollar defined contribution pension arrangement – as the CTF successfully campaigned for in B.C., Alberta, Manitoba, and Ontario – as opposed to the current defined benefit plan where taxpayers contribute approximately $4.00 for each dollar a MP contributes.

Defeated or retiring MPs are eligible to collect a pension at age 55 if they have served at least 6 years in the House of Commons. MPs who have not served the minimum years and receive no pension collect a severance equal to 50 per cent of 2005 member indemnity. Former MPs who are eligible for a pension but have not reached the age of 55 are also entitled to a severance. If a member turns 55 years old within 6 months of being eligible for a pension, a reduced severance cheque is paid to them. Lump sum severance payments range from a low of $34,012 and a high of $106,750.

“With the election of a new government it is time to bring MP pay and pensions in line with public expectations,” concluded Williamson. “The CTF will continue to call for the replacement of the current pension plan for MPs with a matching RRSP plan for all lawmakers.”

John Williamson
Canadian Taxpayers Federation

Posted by John Williamson, Canadian Taxpayers Federation [permalink]

January 18, 2006

No Sunshine Here: Ottawa Stonewalling on Gomery Legal Costs

Ottawa: In light of recent government stonewalling on Gomery-related legal expenses, the Canadian Taxpayers Federation (CTF) is calling on the next federal government to end Ottawa’s “culture of secrecy” and remove political interference from the access to information process.

On November 7th, 2005, and November 16th, 2005, the CTF submitted two access to information requests asking for the total amount taxpayers paid for lawyers fees at the Gomery Inquiry into the Sponsorship Program. These requests went to two government bodies – the Privy Council Office and the Department of Public Works and Government Services Canada. On December 5th, 2005, both the Privy Council Office and the Department of Public Works replied saying an additional 60 days was needed for one request and an additional 100 days was needed for the other. (The letters can be accessed here: http://www.taxpayer.com/pdf/FOI_Letter_Jan_2006.pdf) Coincidentally, the election will be over by the time this information sees the light of day.

“While some requests legitimately require additional time, these particular extensions seem politically motivated,” said CTF federal director John Williamson. “Again the public’s right to government information has taken a backseat to politics.”

“It is no secret that Gomery’s revelations of corruption have outraged Canadians and no doubt taxpayers will be further angered when they realize that millions more of taxpayers’ money has been spent on defending the likes of Alphonso Gagliano and Chuck Guité,” added Williamson.

A May, 2005, study by the Canadian Newspaper Association (CAN) found that access to information laws are riddled with “red tape, poor disclosure, prohibitive fees, and incompliance with statutory time limits.”

“The federal government is the only stakeholder that benefits from ensuring this information is not promptly disclosed,” said Williamson. “That potentially embarrassing information is so easily kept under wraps for political reasons shows that the current laws need reform.”

Information Commissioner John Reid has publicly berated Ottawa for its “pro-secrecy” culture. His office receives approximately 1,500 complains per year about non-compliance. The CTF calls on the next federal government to reform Canada’s outdated access to information law and remove political meddling. Taxpayers, voters, and citizens deserve no less.

John Williamson
Canadian Taxpayers Federation

Posted by John Williamson, Canadian Taxpayers Federation [permalink]

Canada's "closed shop" election campaign

Many Canadians have come to realize that changes to Ottawa’s political structures and institutions are as important – and perhaps even more so – than the representatives that will be elected to Parliament on January 23rd. The Canadian Taxpayers Federation (CTF) will release seven commentaries during this campaign that focus on broad themes of accountability and democratic reform measures. This final commentary in the series is written by CTF Manitoba director Adrienne Batra on the subject of Canada’s “closed shop” election campaigns that limit citizen participation. Adrienne is available for media interviews or comment on this subject by calling (204) 227-5561 or e-mailing her at abatra@shawbiz.ca.


January 17, 2006

Restricting Citizens from Participating in Election Debate Unhealthy for Democracy

“Of the parties, for the parties, by the parties.” Okay … it is not exactly the perfect fit for a bumper sticker, but when it comes to describing Canada’s election laws this slogan fits perfectly.

Imagine designing an electoral system from scratch. Principles such as citizen participation, open debate, fair and transparent regulations among others would be paramount. To be sure, Canada’s Election Act contains many important rules and regulations that are central to any proper functioning democracy. However, at 250 plus pages and years of political parties writing their own rules, elections in Canada are increasingly becoming the purview of established parties and their battery of lawyers and accountants.

Consider the 1993 case – ironically – brought forward by the Communist Party of Canada. In the 1993 general election, the Communist Party of Canada lost its party status because it failed to nominate at least 50 candidates. The consequence? Deregistration, liquidation of its assets, payment of debts, and a surrender of any outstanding balance to the Chief Electoral Officer. Thankfully, the Supreme Court ruled in Figueroa v. Canada that the 50 candidate threshold "undermines the right of citizens to meaningful participation in the electoral process."

No kidding. But it is not just new political entrants – like the Green Party – the established parties seek to inhibit; it is citizens too.

Gag laws restrict – and even prohibit – the right of citizens and citizen groups from advertising during election campaigns. Failure to comply with such anti-democratic statism results in fines ranging from $1,000 and three months in prison to $5,000 and five years in prison.

Gag laws imposed by the federal government in 1984, 1994, by the B.C. government in 1996, and Quebec government in 1997 were all struck down by the courts as Charter violations against free speech. Unfortunately, Ottawa never gave up and in 2004 the Supreme Court of Canada ruled in Harper v. Canada that spending restrictions by citizens of $3,000 in each riding was acceptable. Of course, while citizens are limited to $150,000 for a national campaign, political parties can spend upwards of $18-million. And it does not end there.

Even a citizen – or citizens’ group – that spends $501 or more must file an "election advertising report" with the Chief Electoral Officer, listing the names and addresses of every individual who donated more than $200. If a group is unable to identify which donations were made "for election advertising purposes" it must report the names and addresses of every person who donated over $200 during the six months prior to the election call.

Imposing bureaucracy on grassroots activism of concerned citizens (from veterans groups to unions and taxpayers associations) with harsh penalties for non-compliance is a cold, wet blanket that stifles freedom of speech and freedom of association. Rather than risk breaking the law or even getting tangled in a bureaucratic web, most Canadians limit their participation in our democracy to quietly contemplating their vote. And of course paying taxes to fund the campaign activities of politicians.

There used to be a time when a political party would go out and earn its keep. They would develop policy and seek voluntary donations to advance their cause. Today, the established parties have become all but case-loads of the welfare state. Donate a $100 to the local United Way and you will receive a $15 tax credit. Donate $100 to “a registered political party” and you will get $75 back. Politicians should be ashamed of themselves.

Now, new rules grant political parties annual subsidies of $1.75 per vote received in the previous general election. This is on top of candidates being reimbursed 60 per cent of their election expenses if they get over 10 per cent of the vote. Add it all up and parties can expect to receive $94-million in taxpayers’ money, plus an additional $33-million in candidate reimbursements over the next four years.

Aside from the ethical issue of being forced to pay for political views you may find abhorrent, handing out tax dollars to political parties and candidates further distances them from an increasingly cynical public by removing that old-fashioned idea of having to earn support. But it appears election laws are more about entrenchment of the current players than accountability for the concepts of citizen participation, open debate, fairness and transparency. “Of the parties, for the parties, by the parties.” Indeed.

Adrienne Batra is the Canadian Taxpayers Federation’s Manitoba director based in Winnipeg.

John Williamson
Canadian Taxpayers Federation

Posted by John Williamson, Canadian Taxpayers Federation [permalink]

January 18, 2006

Email scams and taxes on lottery winnings

The Canada Revenue Agency (CRA) has issued a Taxpayer Alert to be aware of email scams (generally originating in a foreign country) stating that you have won a lottery or sweepstake but to receive the prizeyou must first pay part of the taxes owed on the prize amount. The CRA reminds Canadians that no taxes are owed on lottery or sweepstake winnings in Canada:

No taxes or fees of any kind have to be paid on lottery winnings in Canada. Any unsolicited email, letter, or telephone call telling you otherwise is a scam. Do not, under any circumstances, send money to someone making such a pitch to you. Instead, immediately contact your local police department or the Royal Canadian Mounted Police.

For more information on this Taxpayer Alert, see the CRA web site:
http://www.cra-arc.gc.ca/newsroom/alerts/2006/a060118-e.html

Posted by Taxes.ca Editorial Team [permalink]

January 17, 2006

Liberal Party Misquotes CTF Federal Director

Ottawa: The Canadian Taxpayers Federation (CTF) today responded to a news release issued by the Liberal Party of Canada that misrepresents statements made by its federal director John Williamson on the subject of the Conservative proposal to defer capital gains taxes when savings are re-invested. Mr. Williamson is erroneously cited as stating investments will never be taxed.

“We wish the Conservative Party capital gains tax plan meant a $6-billion tax cut and the outright elimination of Canada’s capital gains tax. But it does not,” stated Mr. Williamson. “For the Liberals to suggest I said anything to that affect is absolutely false.”

The Liberal press office issued a news release on Jan. 16th entitled, Conservative Finance Critic Contradicts Platform on Capital Gains. It states the Conservatives “are back-pedalling on their tax cut” because Finance Critic Monte Solberg “said the Conservatives are not planning the ‘elimination’ of the capital gains tax: ‘We’re talking about a deferral.’ Fellow Conservative MP Jason Kenny (sic) also told Don Newman on CBC’s Politics today that the Conservative proposal is only a deferral.”

The governing Liberals attempt to bolster their case by inaccurately referencing Canada’s foremost taxpayer advocacy group. The release continues: “[Kenney] in turn was contradicted by John Williamson, the federal director of the Canadian Taxpayers Federation, who said the plan features untaxed inter-generational transfers. ‘With our demographic changes, as assets are passed off from one generation to the next, individuals will have the chance to sell them and re-invest them for their retirement rather than these assets being taxed,’ said Williamson.”

This is only half the story, and just the first half of Mr. Williamson’s quote.

Canadian Press journalist Tara Perkins reported on January 13, “But he [Williamson] pointed out that the move only defers the payments of capital gains tax. Those taxes will still be paid at the point when the assets are sold without being reinvested. ‘At some point people need to check out, the need to take out those investments and live off them,’ Williamson said. ‘There's nothing here that will help individuals who are checking out.’” This significant qualifying remark appeared nowhere in the Liberal news release.

Williamson concluded today: “Notwithstanding the Liberal spin, the bottom line is the capital gains deferral is the most pro-growth tax policy to emerge in this campaign. It will encourage Canadians to save more, expand Canada’s capital markets and improve the nation’s productivity. But Ottawa still needs to bring down marginal tax rates. Whichever party forms government on January 23rd, the CTF will continue to press for lower rates so Canadians are taxed less on their income and retirement savings.”

John Williamson
Canadian Taxpayers Federation

Posted by John Williamson, Canadian Taxpayers Federation [permalink]

January 9, 2006

The Party that Cried Wolf!

Liberal’s fiscal forecasting lacks credibility

Ottawa: The Canadian Taxpayers Federation (CTF) today responded to concerns raised by the Liberal Party that campaign promises made by the Conservative Party will result in chronic deficits. Over the weekend, Prime Minister Paul Martin said, “I know these numbers and I know that we’ve got a very strong economy because we stayed out of deficit and I will be very, very interested in how all [the Conservative] numbers add up.” The Liberals say the Conservative plan will produce deficits “of at least $12.4-billion over five years.”

“The Liberal government has so poorly predicted past surpluses that its credibility to calculate future deficits or surpluses is simply not believable today,” said CTF federal director John Williamson. “It is like the boy who cried wolf, only Mr. Martin is crying ‘deficits, deficits’ and taxpayers, fooled before, should not be duped again.”

Following the November, 2005, pre-election mini-budget the CBC online news reported, “[Finance Minister Ralph] Goodale’s last [2004] economic and fiscal update projected that the surplus for 2005/06 would be $500-million, followed by $900-million in 2006/07. Monday's document revised those figures to $8.2-billion and $9.2-billion, respectively.”

“In other words, the Martin government was off by ‘only’ $16-billion, $7.7-billion in year one and $8.3-billion in year two,” noted Williamson. “And let’s not forget that when the 2004 budget was tabled the Liberal government said program spending would increase by 3.1 per cent. When the fiscal year ended, however, it had increased by an astounding 15.1 per cent. I think that’s all we need to say about Mr. Martin’s knowledge of the numbers and his ability, as prime minister anyway, to budget responsibly.”

John Williamson
Canadian Taxpayers Federation

Posted by Taxes.ca Editorial Team [permalink]

January 6, 2006

Minority governments achieve progress for people

With only two weeks to go before the next federal election, the Canadian Centre for Policy Development has released the Alternative Federal Budget report stating "Minority governments achieve progress for people".

From the CCPA:


OTTAWA—Today the Alternative Federal Budget released a detailed report card on the achievements of the 2004-05 Minority Parliament and awarded the Martin Minority an overall C grade for “some progress.”

Minority Report: A Report Card on the 2004-05 Minority Government outlines the problems, grades the efforts, and outlines an unfinished People’s Agenda for the next government. The report, published by the Canadian Centre for Policy Alternatives, was put together with input from numerous civil society organizations representing millions of Canadians.

“One of Canada’s most persistent political myths is that only majority governments are able to make meaningful change. The reality is frequently the reverse,” explains AFB Coordinator Judy Randall. “Minority Parliaments have often been the most effective in terms of achieving real progress for people.”

Two decades of back-to-back majorities under successive Conservative and Liberal governments delivered largely on the demands of corporate Canada, not the broader electorate. That agenda was stalled, at least temporarily, under the minority Parliament of 2004-05.

The report can be found on the CCPA web site.

Posted by Taxes.ca Editorial Team [permalink]

Shining the Light on Government

Many Canadians have come to realize that changes to Ottawa’s political structures and institutions are as important – and perhaps even more so – than the representatives that will be elected to Parliament on January 23rd. The Canadian Taxpayers Federation will release seven commentaries during this campaign that focus on broad themes of accountability and democratic reform measures. This fifth commentary in the series is written by CTF federal director John Williamson on the subject of Canada’s freedom of information law. John is available for media interviews or comment on this subject by calling 613-234-6554.

January 5, 2006

Shining the Light on Government

Many Canadians want government to lower taxes. Others would like more spent on social programs, roads or the military. All are adamant that public officials – be they elected or career civil servants – waste fewer tax dollars and be publicly accountable for their decisions. But this is not happening in Ottawa because Canada’s Access to Information Act, which is the primary tool for citizens to review how money is spent, is broken.

This type of “sunshine” or “freedom of information” (FOI) law mandates that government records, administrative decisions and minutes be made available to the public. They balance the public’s right to be informed of government decisions with respect for the privacy of individuals.

Canada’s federal FOI law came into effect on July 1st, 1983, with the promise of greater government transparency. Testifying before the Justice and Legal Affairs Committee, then-Communications Minister Francis Fox said the bill “will create opportunities for a more informed dialogue between public leaders and citizens…improve the nature of government decision-making by allowing greater input from the private sector. Finally, it will impose on ministers and officials a greater degree of accountability and of responsibility for their actions and their decisions.” For a $5 fee, Canadians may request government documents and officials have a 30-day limit to provide a response.

Yet the dream of greater transparency does not fit with reality. The law is littered with loopholes and administrative barriers to keep prying eyes out. Canadians submit approximately 25,000 requests each year. Many are stonewalled when questions hit a government nerve, resulting in the Act’s Information Commissioner – who serves as Canada’s official FOI watchdog – receiving approximately 1,500 annual complaints about non-compliance. For keeping taxpayers in the dark Information Commissioner John Reid has publicly berated Ottawa for its “pro-secrecy” culture.

To determine how well government officials follow FOI laws, 45 newspapers tested the system last year. The audit – which reviewed federal, provincial and local procedures – revealed government data was released in only 1 out of 3 requests. Journalists discovered a hodgepodge of excuses and, at times, intransigent bureaucrats. Another separate study found the refusal rate for media requests was more than twice that of requests from the general public. It has been discovered that officials “red flag” politically sensitive requests made by journalists, parliamentarians, and groups like the Canadian Taxpayers Federation. Red flags are used to safeguard lawmakers from public embarrassment: There is no better way to kill a story than by withholding the release of information that backs it up.

With a single exception, Ottawa’s access law has not been updated since its inception. In 1999 it became a criminal offense to alter, destroy or conceal a record to frustrate an access request. It is disappointing that such a change was necessary. And yet bureaucrats continue to thwart requests today. Although files are no longer destroyed, Commissioner Reid has found they are, instead, just not being created in the first place. To guarantee compliance penalties must be in place to punish officials that fail to create and maintain proper records.

It is time to expose every government agency, organization, foundation and Crown corporation that spends public money to effective sunshine laws. Of Ottawa’s 246 Crown corporations and agencies only 49 are subject to the Access to Information Act. And under existing law, the numerous foundations tasked with spending $9-billion of tax money cannot be inspected by Canadians, the auditor-general or even elected parliamentarians.

The law should also include Officers of Parliament so taxpayers can assess their operation records (but not their adjudicative or case files). This would have permitted a review of former privacy commissioner George Radwanski’s lavish spending, which resulted in his dismissal.

The public interest should trump a government’s culture of secrecy. To ensure open government, departments and agencies should, for instance, disclose broader information on a webpage and in annual reports. Why are the repayment records of companies that accept government loans not publicly reported? A reformed FOI law should establish a “public interest override” for a narrow scope of exemptions and give the information commissioner powers to order government to release information.

Parliament must also ensure the FOI system is adequately funded. It currently costs Ottawa $30-million a year to administer. Meanwhile, the federal government spends $400-million on its communications efforts. A rebalancing of priorities is in order.

So long as individuals within government have the ability to hide their malfeasance, they will do so. So long as rules permit bureaucrats – working on their own behalf or that of their political masters – to delay or deny the release of embarrassing information, cronyism and poor management of tax dollars will continue.

FOI laws are a cornerstone of democracy. Rather than resist sunshine laws, governments should embrace them. Reforms to topple Ottawa’s cult of secrecy are indispensable to a well functioning government. They work to ensure greater accountability and are a tool to reduce scandals. They help build trust between citizens and lawmakers. Moreover, they are critical to ensure rules are adhered to and tax dollars are well spent. Such a change might mean fewer complaints from taxpayers when it comes to paying taxes.

John Williamson
Canadian Taxpayers Federation

Posted by John Williamson, Canadian Taxpayers Federation [permalink]

January 2, 2006

Don’t Trust the Rascals to Lower Taxes Without Seeing a Plan

When the federal election began Canadians were told it would not change a thing. Voters would return a minority government – likely a Liberal one – and the new Parliament would continue on just like the old. It remains too early to guess the results, yet some are now predicting a Conservative government. But even if voters opt for the status quo and more of the same, the campaign has still forced an adjustment in one important portfolio – tax policy.

Paul Martin had been saying for the last two years it was not his priority to cut taxes. Moreover, he did not believe lower taxes were a priority for Canadians. With an election underway the prime minister’s tune has changed. In November, the governing Liberals announced $30-billion in tax relief, with middle class income tax cuts kicking in only in 2010. What is immediate is retroactive personal tax relief of $323 in 2005 for average taxpayers. Because taxes have been collected for the ’05 tax year, the tax reduction will be refunded to taxpayers in the spring – coincidently the period when Mr. Martin had wanted to hold the election.

Canadians have the ongoing campaign to thank for these small tax savings. (Canadians will pocket them regardless of the election outcome.) And because the ’05 tax cuts are now built into the tax code, they will rollover to the New Year. As a result, net tax savings in ’06 will total $385, a bit higher due to lower Employment Insurance payroll taxes.

More can – and should – be done to lower the taxes paid by hardworking Canadians. Ottawa’s six-year cumulative surplus – including the annual $3-billion contingency reserve – is expected to be $72.5-billion, an average of $12-billion a year. And thanks again to the campaign, the two major political parties – the Liberals and Conservatives – are promising more help if they are elected to govern Canada. Are they serious or paying lip service to win votes?


Mr. Martin has said he will lower income taxes on the middle class – although has yet to provide any details. Conservative leader Stephen Harper will reduce the 7 per cent GST to 5 per cent, and has hinted at additional income tax relief. There are few votes to be won by way of higher taxes: Even New Democrat leader Jack Layton says his party will not raise taxes! All this is mainstream recognition Canadians are suffering under an unnecessarily high tax burden. But can taxpayers trust any of these rascals?

“I believe we should cut personal income taxes,” Mr. Martin said following the Conservative announcement to cut the GST. “Canadians should keep more of their paycheque.” This is happy news. Yet voters are all too familiarly with politicians saying one thing during a campaign and doing the exact opposite after all the votes are counted. Mr. Martin has made too many empty promises in office. Before Election Day, the Liberals need to layout their tax relief proposals for Canadians to judge.

The Conservative Party, which has long advocated taxing Canadians a little less, must also provide more details. Or is the sum of Mr. Harper’s tax plan to cut the GST by 1 point in 2006 and another point over the next 3 or 4 years? A GST reduction is welcome, but not enough to really excite taxpayers. A bolder tax plan is expected from the supposed government-in-waiting.

The federal government offered Canadians broadly-based business and personal tax cuts prior to the 2000 election. With politicians out searching for votes for another three weeks, Canadians should consider the 2005 and 2006 tax savings a down payment and press for more. Ottawa is recording multi-year and multi-billion dollars surpluses. A surplus is nothing more than over-taxation by government. It is time to return surplus money back where it belongs, to Canadians taxpayers. But before Canadians vote, they will want to compare the Grit and Tory tax plans.

John Williamson
Canadian Taxpayers Federation

Posted by John Williamson, Canadian Taxpayers Federation [permalink]