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Three accountants who transformed income tax in Canada

In the century since income tax was introduced in Canada, tax has transformed the accounting profession – while accountants have helped the tax system evolve. Learn about three accountants who made a difference.

From the Income Tax War Act’s inception in 1917, accountants have been instrumental in helping Canada’s tax system evolve and Canadian taxpayers comply. Kenneth LeMesurier Carter, the Honourable Edgar J. Benson and James R. Brown are three accounting professionals who have played a big role in helping shape the income tax system in place in Canada today.

Kenneth LeMesurier Carter: “A buck is a buck is a buck”

The Income Tax Act (ITA) replaced the original act in 1948, and it wasn’t long before businesses and other voices began clamouring for tax reform. In 1962, Prime Minister John Diefenbaker and his Conservative government appointed Carter – who started his accounting career in Montreal with McDonald Currie, a predecessor of PwC – to lead a royal commission to study taxation and recommend reforms.

Given extensive liberty, the Carter Commission laboured for more than four years, releasing a six-volume tome of proposals that many saw as revolutionary. Most students of taxation in Canada know the phrase “a buck is a buck is a buck,” which is famously associated with the report and its call for comprehensive taxation.

Carter did not see any of the recommendations enacted before his death in 1969, which may have spared him the disappointment of seeing many of the report’s original ideas watered down before some were ultimately enacted in 1971.

The Honourable Edgar J. Benson: From hot potato to raspberry book

Benson started his career with England, Leonard, Macpherson and Company in Kingston, Ontario. He also taught at Queen’s University, eventually entering politics as a Liberal and serving as Minister of Finance under Prime Ministers Lester B. Pearson and Pierre Trudeau from 1968 to 1972.

In the years following the Carter Report’s release, tax reform had become something of a political hot potato. Benson’s task was to turn the report’s recommendations into something more publicly palatable. Left largely to take the political heat on his own, Benson spearheaded two reports, Proposals for Tax Reform, the 1969 white paper setting out a road map for turning the Carter Report’s ideas into law, along with a summary report, Summary of 1971 Tax Reform Legislation, popularly known as the Raspberry Book because of its red cover.

Benson retired from politics shortly after the 1972 tax reform was complete. He passed away in 2011 at the age of 88.

James R. Brown: Preoccupied with the mechanics of tax reform

Least public of the three – at least initially – is Brown, though he certainly made his mark on the tax system behind the scenes. After starting his career at a Vancouver firm that merged with Peat Marwick in 1952, Brown was seconded to the Department of Finance in 1964 where he led the team of accountants, lawyers, government officials and others who were responsible for the mechanics of tax reform.

According to some team members, the legislative drafting process was intense and Brown was utterly preoccupied. In one story, Brown’s wife Ruth came to his office late one night and plunked herself on the couch while everyone was working, drawing attention to how little he was seeing of her.

The work was eventually completed, and Brown returned to Peat Marwick in 1971, the year Parliament passed the reform legislation. Post-government, Brown rose to become international chair of KPMG Peat Marwick, and he later served as commissioner of the Ontario Securities Commission. Brown even tried his hand at politics in 1984, running unsuccessfully as a Liberal candidate against the Honourable Michael H. Wilson, who served as Prime Minister Brian Mulroney’s finance minister and, in 1987, oversaw the largest tax reform since 1972 .

The ITA continually evolves, but among the many changes over its 100-year history, perhaps none are so momentous as the 1972 reform. As accountants reflect on how much the profession has been changed by the introduction of federal income taxation a century ago, it is worth remembering the important role that these and other professional accountants have played, and that CPAs continue to play, in helping build Canada’s tax system today.