Federal budget earns a B grade: CPA Canada

OTTAWA, April 21, 2015 /CNW/ - Chartered Professional Accountants of Canada (CPA Canada) gives the federal budget a B grade as the government attempts to address the challenges of today and to better prepare Canadians for the future.

Growing the economy works best from a strong fiscal base and the projected surplus is $1.4 billion for 2015-16. The government will have little wiggle room in managing its finances with the contingency fund being trimmed to $1 billion from $3 billion.

The budget calls for the small business tax rate to be reduced to 9 per cent from its current rate of 11 per cent by 2019. The government says this will put an estimated $2.7 billion back into the pockets of small businesses and their owners.

To help Canada's manufacturing sector, the budget introduces a 10-year investment incentive that will allow a faster write-off for machinery and equipment.

"Clearly, support for Canada's businesses community helps with today's unsettled economy," says Gabe Hayos, vice-president, tax, CPA Canada, but he is disappointed the government did not look at the broader picture and indicate its intention to address significant tax reform.    

"It is time for a comprehensive review of the country's tax system to reduce its complexities and inefficiencies," explains Hayos. "Tax reform and simplification would help improve Canada's international competitiveness, productivity and economic growth."

CPA Canada applauds funding for the Canada Revenue Agency to strengthen tax compliance and protect the country's tax base. The budget proposes funding to combat the underground economy along with international tax evasion and aggressive tax avoidance.

"We are pleased the government has indicated it will balance its efforts to reduce international tax evasion and avoidance while ensuring it does not adversely affect Canada's international competitiveness," says Hayos.

Additional items proposed in the federal budget:

• Simplifying the foreign property reporting system for taxation years that begin after 2014. This affects taxpayers with specified foreign property of less than $250,000. CPA Canada applauds the measure but believes greater simplification was possible.
• Providing $35 million over five years to make permanent the Foreign Credential Recognition Loans pilot project.
• Supporting charities by exempting donations involving private shares and real estate from capital gains tax.
• Supporting seniors and persons with disabilities by introducing the Home Accessibility Tax Credit to help with renovation costs to make their homes safer and more accessible, so they can live independently and remain in their home

Saving for the future and helping seniors

The budget's announced increase in contribution limits for Tax Free Savings Accounts (TFSAs) is supported by CPA Canada. The accounting body firmly believes that incentives, such as TFSAs, are required to help Canadians save money for their retirement.

"Incenting people to save now and having them look to the future is essential if Canadians are to be well positioned financially in their golden years," says Hayos.

CPA Canada stresses that the TFSA program will have to be monitored over the long-term, especially in terms of lost tax revenue. The organization also embraces the easing of the rules associated with registered retirement income funds to make it easier for seniors to manage their savings during retirement.

In addition, the budget promotes that in 2015-16, the federal government will release a national strategy to strengthen the financial literacy for Canadians of all ages.

Note: Look for CPA Canada's more detailed analysis of the federal budget online later today at cpacanada.ca/Budget2015.

About CPA Canada

Canada's accounting profession is uniting under a new single designation, Chartered Professional Accountant (CPA). The profession's national body, Chartered Professional Accountants of Canada (CPA Canada), represents and supports more than 190,000 members across the country. CPAs are valued for their financial and tax expertise, strategic thinking, business insight, management skills and leadership. CPA Canada has consolidated the operations of three national accounting bodies: The Canadian Institute of Chartered Accountants, the Certified General Accountants Association of Canada and The Society of Management Accountants of Canada. CPA Canada conducts research into current and emerging business issues and supports the setting of accounting, auditing and assurance standards for business, not-for-profit organizations and government. It also issues guidance on control and governance, publishes professional literature and develops certification and continuing education programs.

SOURCE CPA Canada

Related Links

www.cpacanada.ca