Recent Joint Tax Committee Submissions

Find out about the latest advice to the federal government from the Joint Tax Committee on proposed changes to the small business deduction and the repeal of billed-basis accounting for professionals.

The Joint Committee on Taxation of the Canadian Bar Association and CPA Canada regularly studies the details of recent tax proposals and presents technical advice to the Department of Finance Canada on how to best implement them.

Now you can read the committee’s detailed submissions to Finance Canada on two of the more complex measures announced in recent federal budgets: changes to the small business deduction and the repeal of billed-basis accounting for professionals.

Narrowing the scope of recent small business deduction changes

Budget 2016 included measures to prevent tax planning to multiply access to the small business deduction – techniques that allow the deduction to be claimed more than once for the same small business. The committee had concerns about the complexity and reach of these rules, and especially their impact on structures and transactions that are not motivated by tax planning. The committee’s recent submission to the Canada Revenue Agency and Finance Canada highlights the unintended consequences that could arise for small businesses across the country. The submission calls for legislative change to narrow the scope of these rules and provide more certainty.

Easing the impact of billed-basis accounting repeal

The committee also provided input on potential consequences of Budget 2017 proposals to eliminate the ability of professional accountants and some other professionals to exclude their year-end work-in-progress from current income.

The committee believes the billed-basis accounting proposals present uncertainties, complexities and compliance burdens. Its submission to Finance Canada points out how these problems could be mitigated by publishing more guidance, extending the transitional period and providing a de minimis exception for professionals with smaller practices.

If you have comments on the submissions made or on additional submissions that should be made, please contact Gabe Hayos, CPA Canada’s vice-president, Taxation.