There have been two interesting articles in the past few days in the Globe and Mail about taxes in Canada. The tone of both of these is so completely different from the tone we’ve seen from IRS. I think this is a reflection of the greater respect CRA gives to its taxpayers–although neither article was written by CRA.
One article, written by Barry McKenna, reports Canada placed first among G8 nations for ease of filing income tax and 11th globally, according to to a report released Monday by accounting firm PwC, the World Bank and International Finance Corp.
The next best G8 perfomer is Britain in 18th spot. France was 55th and United States was 69th. Do you think that could have anything to do with 72,000 (or is it 76,000–I’ve lost track) page IRS Tax Code? Brazil was dead last among 183 countries. (Sorry Geez!)
“Canada must compete with other nations for global business investment,” says Lincoln Schreiner, a PwC tax services partner. “A competitive business environment needs an aggressive and efficient tax system which includes competitive tax rates, tax rules that recognize modern business structures and practices, and reduced compliance burdens.”
Here’s a link to the article.
canada tops among g8 for ease of filing business tax
The second article is by two University of Victoria professors about the implications of both tax cheats and about tax overpayers. A disappointment is that it uses IRS stats to determine how many tax cheats there may be in Canada.
Despite that, one of the things I liked about this is, while recognizing there are tax cheats in Canada, it does not label any one group as tax cheats. Especially fascinating is the perspective about people who overpay–something we don’t often hear about. The article says: Just as with tax evasion, tax overpayment threatens the fairness of our tax system by leaving those who lack sufficient knowledge bearing more than their fair share of the tax burden.
Here’s a link to that article:
If Canada’s ease of paying taxes does in fact help it to attract more jobs from its bellicose southern neighbour, imagine how Congress and the IRS will respond. Canada is already the fourth-largest location of unrepatriated overseas profits of US multinational corporations (source).
Around the time of the GST(Canada’s equivilent of a VAT) being introduced in the early 90s there was a big push to make the CRA’s predicessor Revenue Canada more “user friendly.” This was further accelerated in the late 1990s when Revenue Canada was transformed into CCRA(The C as in Customs was dropped after 9/11 when Customs and Border Control was shifted to a dedicated agency) which was setup as a more autonomous agency of the federal government accountable not just to the Feds but the 12 provinces and territorries that have it collect their provincial personal and corporate income taxes.
At the same time as Jim Flaherty was writing to the US media and criticising the IRS’s enforcement of the FBAR requirements against US citizens residing in Canada, Revenue Canada was assessing draconian penalties against Canadian citizens for the late filing of Foreign Income Verification Statements (T1135) in situations where there was no tax owing, no history of non-compliance and the delays being due to misleading information being given by Revenue Canada.
To argue whether the IRS or Revenue Canada is better is about as useful as trying to differentiate between the evils of Adolf Hitler and Joseph Stalin
I know someone who used to work as an editor at CRA. They actually employ English lit grads to review and edit their manuals and announcements. And it shows — CRA’s documents are models of clear English (and French) prose compared with the unintelligible orc-speak that comes from IRS.
I used to file IRS returns (in fact, I actually was tax-compliant for the years I was in Canada before I became Canadian, relinquished my US citizenship and stopped filing to the IRS). Never had to pay them a penny, thanks to the overseas earned income exemption, but every year I had to slog through their tedious paperwork and read their awful manuals.
My Canadian tax returns I’ve always done myself and they’re a breeze. Mind you, I’ve only ever been a salaried employee or a pensioner, so I’ve never had to grapple with business returns, and my only investments are RRSPs, so they aren’t complicated. But from what I recall of my days in the 1970s filing IRS returns, doing a CRA return afterwards was like a refreshing walk in a spring forest after a few hours of wallowing in a mud bath.