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Email this3:55 pm
April 6, 2013
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Doug said
That's a technicality. The Conservatives weren't ideologically opposed to it, so they went through with it (that is to say, they didn't abandon the plan already put in motion by the Liberals). We need to be careful with assigning 'blame' though as things like this often happen. It was, practically speaking, the Liberals and Ralph Goodale that implemented it. (Note the mention of the advance tax ruling from the article I mentioned.)…
Not sure where all that comes from. That was not what happened.
It was a Conservative campaign promise to not change the tax treatment of income trusts: Globe & Mail (Nov 1, 2006): Tories break key election promise on income trusts.
The Conservative government broke that promise once they realize what that promise was going to cost the government. BCE was musing about reorganizing as an income trust. The gravity of the issue really hit when one of the Big Banks starting musing about reorganizing too:
Ottawa was prompted to act after telecommunications giants Telus and BCE announced their conversion plans, according to a source familiar with the deliberations. The Tories also worried that those moves could pave the way for financial institutions such as banks, or portions of bank assets, to be converted to trusts.
4:12 pm
December 12, 2009
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That's all fine, Norman, I don't dispute that. The Conservatives aren't necessarily "in the clear" on this file, but ultimately, the surprise Halloween massacre of the income trust sector (the biggest stock market drop occurred then) was at the hands of Ralph Goodale and Liberals. Maybe the Conservatives said they wouldn't go ahead with it, but who let the cat out of the bag? It was Ralph Goodale and the Liberals. That's all well documented. 😉
Cheers,
Doug
5:05 pm
February 27, 2018
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Dear Norm.
I’ve obviously hit a nerve. You have point blankly directed insults my way twice in this thread. First, in post #10, “Those kind of statements come from a position of ignorance” and then again in post #20, “to the ignorant.” Norm, not only are my eyes open, I also have the ability to see.
Tax avoidance by the use of loop holes in the tax laws may not be unlawful but it does show the ethics of our Canadian Banks. Do I fault the banks or corporate Canada for finding a way NOT to pay tax? NO, I do not fault them. Are those means of avoiding paying tax available to me? NO, they are not. And here’s the reason why.
Our politicians either lack the will to fix the tax loop holes, or they are themselves using the tax loop holes. The foundation of Government was based upon “BY” the people “FOR” the people and sadly that hasn’t been the case for decades. It’s now, BUY the vote, CHEAT and STEAL if need be, DO whatever it takes to get re-elected and this is the new Norm.
Norm, you came to the Canadian banks defence by lobbing insults at me and from that I gather… you were a part in some way of that no ethical bunch.
I have clearly stated many times in this blog… that I am/was a blue collar working stiff and I that hate the liberal belief that everything should be FREE, FREE, FREE. (which means I help pay for it)
Norm my posts in this thread have shown your true colour. In irritation your face is Liberal RED and you now have my pity.
To those wishing to voice an opinion on this topic, feel free to do so BUT please… first watch the TVO video in post #13 and read the posts which have lead up to this point. Those being, #7, #10, #11, #13 and #20.
6:45 pm
September 11, 2013
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Great thread, lovin' it!
Kidd, I generally agree with you but you lose me when you talk about ethics (and when you cite propaganda sources like CBC & TVO!) because what if I happen to believe what the banks are doing IS "ethical", that they ARE an "ethical bunch"? So now we disagree, we're at stalemate, ethics is of no help. So that's why we have the written law, i.e. it's either legal or it's not, based on the statute and the power we've given to the judiciary to interpret it. And if most of society wants to change the law presumably it elects those who will.
Many politicians (or their offspring, buddies, etc) get nice directorships or other positions in corporate Canada after their political days, so it's pretty obvious why they go easy on big corps, never mind that many voters' jobs depend on a happy large corporate sector in the economy. This situation is certainly not limited to our time and place in history, to Conservatives vs Liberals, been going on forever all over.
7:10 pm
February 27, 2018
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Working in the auto industry at GM for 30 years, you were not required BUT you were expected to buy a GM car. Ethics
The big 5 Canadian banks get a very large percentage of the profits from us Canadians, yet they are doing everything in their power to avoid paying taxes in Canada. Ethics.
In that tvo video they state how RBC and Canada Trust worked together to devise a means of borrowing money from each other to create a tax write off for both parties. Ethics
7:30 pm
April 6, 2013
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Kidd said
Dear Norm.I’ve obviously hit a nerve. You have point blankly directed insults my way twice in this thread. First, in post #10, “Those kind of statements come from a position of ignorance” and then again in post #20, “to the ignorant.” Norm, not only are my eyes open, I also have the ability to see.
…
Sorry, Kidd. Those insults are intended to land on those sources you quoted and not on you.
Ignorance is actually the more polite of the two accusations that came to mind. The other is deliberately deception. Sort of like sending a recently-engaged woman a brown envelope with a compromising photo of her fiancé with another woman, leaving out the highly relevant fact that the photo was taken six months before she even started dating him!
The media has learned it isn't possible to get away with spreading false information. Very easy to lose the subsequent libel suit. However, spreading half the facts is different. Technically, it is not lying.
I know that the insinuation that Canadian banks don't pay much income taxes is false.
A corporation cannot pay billions of dollars of eligible dividends each quarter without having a pool with billions of dollars of matching income that regular corporate taxes has been paid on. The pool is a corporation's general rate income pool (GRIP). This was discussed this previously when we looked into why "dividends" from credit union shares were just regular income and didn't come with a dividend tax credit.
The fact that those $1.52 billion of dividends Royal Bank pays out each quarter are eligible dividends means Royal Bank has a GRIP of billions dollars of income that full corporate taxes has been paid on.
Are we to believe that those sources don't know about that basic corporate income tax fact or that the sources do know, but have decided not to mention it?
Tax avoidance by the use of loop holes in the tax laws may not be unlawful but it does show the ethics of our Canadian Banks. Do I fault the banks or corporate Canada for finding a way NOT to pay tax? NO, I do not fault them. Are those means of avoiding paying tax available to me? NO, they are not. And here’s the reason why.
Our politicians either lack the will to fix the tax loop holes, or they are themselves using the tax loop holes. The foundation of Government was based upon “BY” the people “FOR” the people and sadly that hasn’t been the case for decades. …
Those means are available to anyone who runs a business or invests in businesses.
Government is not only for people who are employees but also for the people who wish to become employers or investors.
9:06 pm
April 6, 2013
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Kidd said
…
In that tvo video they state how RBC and Canada Trust worked together to devise a means of borrowing money from each other to create a tax write off for both parties. Ethics
The segment is at -23:18 mark. SILO = Sale In Lease Out.
The Supreme Court of Canada appeal is Canada Trustco Mortgage Co. v. Canada, [2005] 2 SCR 601, 2005 SCC 54.
Contrary to the video, Canada Trustco Mortgage Company actually did take possession and became legal owner of the $120 million of trucks. As owner, it was entitled to claim the $33 million depreciation on those trucks, regardless that it borrowed $100 million of the $120 million from the Royal Bank.
CRA appealed that because Canada Trust didn't have the $120 million cost at risk, CRA should be allowed to deem the cost for depreciation purposes be $0, using the nuclear General Anti-Avoidance Rule (GAAR). Cost of $0 means $0 for depreciation!
Supreme Court ruled GAAR could not be used to override tax benefits that were "consistent with the object, spirit and purpose of the CCA provisions [in the Income Tax Act for depreciation]":
73 We are of the view that the appellant’s [Government of Canada's] arguments do not reflect a proper interpretation of the GAAR and that the respondent’s position should prevail. We are led to this conclusion by a textual, contextual and purposive interpretation of the relevant provisions of the Income Tax Act.
…75 The appellant suggests that the usual result of the CCA provisions of the Act should be overridden in the absence of real financial risk or “economic cost” in the transaction. However, this suggestion distorts the purpose of the CCA provisions by reducing them to apply only when sums of money are at economic risk. The applicable CCA provisions of the Act do not refer to economic risk. They refer only to “cost”. Where Parliament wanted to introduce economic risk into the meaning of cost related to CCA provisions, it did so expressly, as, for instance, in s. 13(7.1) and (7.2) of the Act, which makes adjustments to the cost of depreciable property when a taxpayer receives government assistance. “Cost” in the context of CCA is a well-understood legal concept. It has been carefully defined by the Act and the jurisprudence. Like the Tax Court judge, we see nothing in the GAAR or the object of the CCA provisions that permits us to rewrite them to interpret “cost” to mean “amount economically at risk” in the applicable provisions. To do so would be to invite inconsistent results. The result would vary with the degree of risk in each case. This would offend the goal of the Act to provide sufficient certainty and predictability to permit taxpayers to intelligently order their affairs. For all these reasons, we agree with the Tax Court judge’s conclusion that the “cost” was $120 million, not zero as argued by the appellant.
…
80 … In the end, he [The Tax Court judge] concluded that a tax benefit was consistent with the object, spirit and purpose of the CCA provisions and held that the GAAR could not apply to disallow the tax benefit. These conclusions were based on a correct view of the law and were grounded in the evidence. They should be confirmed.
An example of shoddy journalism by TVO and overreach by CRA.
In similar spirit, I add my insinuation: TVO didn't provide any reference to the Tax Court case or Supreme Court appeal. Afraid of what someone would find if he or she got and read the actual court decisions?
10:14 pm
April 6, 2013
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Doug said
That's all fine, Norman, I don't dispute that. The Conservatives aren't necessarily "in the clear" on this file, but ultimately, the surprise Halloween massacre of the income trust sector (the biggest stock market drop occurred then) was at the hands of Ralph Goodale and Liberals. Maybe the Conservatives said they wouldn't go ahead with it, but who let the cat out of the bag? It was Ralph Goodale and the Liberals. That's all well documented. 😉
But, that cat (new tax on income trusts) wasn't even conceived when Ralph Goodale and the Liberals were in power.
According to that December 2005 CBC article RCMP to investigate allegations of income trust leak, the leaked information was that the taxes on corporate dividends would be cut and there would be no changes to the tax on income trusts:
On Nov. 23, the federal government announced just before 6 p.m. EST, it would cut the tax on corporate dividends and would make no changes to the tax on income trusts. That's the type of news that is always announced after stock markets close at 4 p.m. EST because it would give a boost to those types of securities.
But there have been allegations since that time that information about the changes was leaked early, allowing some in the know to profit from the information.
The Liberal government fell days later on a motion of non-confidence.
Conservatives campaigned that they too would keep the status quo on income trusts should they get elected.
Conservative got elected the following January.
6:54 am
September 11, 2013
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Kidd, you missed my point. Ethics are not what Kidd decrees they are, they are subject to differences of opinion and I disagree, for example, that buying a GM car because you personally benefit (i.e. you support your own job) is "ethics". Sounds more like self-interest to me, but again that's an opinion. And so on. So ethics are useless in practice, is my point. That's why I said we need to look to the laws, and you seem to agree (as does Norman1, I think, with his regular references to jurisprudence instead of ethics in sorting out these matters) as your last two examples are really about LEGALLY arranging financial affairs to take advantage of tax laws. Which, by the way, pretty well every Canadian does, i.e. take advantage of every tax benefit they can get - indeed many on this forum over the years have made that point about their LEGAL approach to their own tax affairs.
9:25 am
April 6, 2013
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Bill said
… That's why I said we need to look to the laws, and you seem to agree (as does Norman1, I think, with his regular references to jurisprudence instead of ethics in sorting out these matters) as your last two examples are really about LEGALLY arranging financial affairs to take advantage of tax laws. Which, by the way, pretty well every Canadian does, …
Tax planning is recognized by the courts and Parliament as part of the tax law. Paragraph 31 of the Supreme Court decision mentions what is known as the Duke of Westminster principle, along with some other important considerations:
31 According to the Explanatory Notes, Parliament recognized the Duke of Westminster principle “that tax planning — arranging one’s affairs so as to attract the least amount of tax — is a legitimate and accepted part of Canadian tax law” (p. 464). Despite Parliament’s intention to address abusive tax avoidance by enacting the GAAR, Parliament nonetheless intended to preserve predictability, certainty and fairness in Canadian tax law. Parliament intends taxpayers to take full advantage of the provisions of the Income Tax Act that confer tax benefits. Indeed, achieving the various policies that the Income Tax Act seeks to promote is dependent on taxpayers doing so.
12:58 pm
October 21, 2013
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Laws are based on ethics and are not independent of them.
We may not all agree, and that's why Parliament has debates, at least in theory, to iron out what the nation considers ethical and write it into law.
Thus, a debate based on ethics is both valid and necessary outside of Parliament.
There are, in addition, many other ethical considerations such as what sort of car one buys, which are not normally the concern of government. The reason they are not, however, is because we, as a nation, don't think it would be ethical to regulate car purchases in this way. We have left it as a personal decision which may involve ethics.
We could, however, at another time, decide otherwise. Indeed, many tariffs have existed for the purpose of persuading us to buy or not buy one thing or another.
6:06 am
March 30, 2017
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Last time I checked, cad banks do pay a good $$$ amount each year on tax. Having satellite offices set up in some low tax jurisdiction has nothing to do with ethics or not. No different than someone claiming a tax credit on their own tax return if its allowed and legal.
For those who hates big 6, you dont have to buy their shares or use their products. There are other alternatives. And if you must use their products, buy their shares too so you become a owner too, the dividend has been consistent. Owning Enbridge or TC has risks too, it is a question of how thick your stomach linings are.
6:02 pm
April 6, 2013
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Also, some of the Canadian banks have substantial operations outside of Canada that are more than two-person offices.
Scotiabank, for example, earns about 8% of its income in the Caribbean and 21% in Pacific Alliance countries, including Mexico, Peru, and Colombia. If those earnings are left in those countries and reinvested there, then those earnings will be taxed at the tax rates of those countries and not at the corporate tax rate in Canada.
Having a gap between the overall tax rate paid on the earnings and the standard Canadian corporate tax rate doesn't mean there even any avoidance. Some of those earnings may not even make their way to the Canadian parent.
6:36 pm
September 11, 2013
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Exactly, savemoresaveoften, to me it's unethical to deal with, work for, have anything to do with (especially when there are options) entities you feel are unethical. My opinion. But many folks like the benefits (e.g. convenience of accounts that have no fees if a certain balance is maintained, or free cheques, as some have noted on here), their ethics apparently are for sale and often for relatively insignificant sums.
And, sure , debate ethics all you want, 24/7, go for it. But businesses, as they are fictional, legal entities, cannot "debate" like humans and thus these entities need only adhere to the current laws that bind them, whatever they may be.
11:48 pm
October 21, 2013
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Businesses have never limited themselves to passively following the law. I imagine they would find that notion laughable.
Some large corporations have argued that they are in fact "persons" under the law. And some continue to argue for this. As I recall, some have had some success with this absurdity in some jurisdictions.
In Canada, big businesses and their industry associations have well paid lobbyists, lots of them. That's how they conduct their "debates" with the lawmakers, plying them with food and drink. And it's real human beings who are at the helm.
My MPP says there are lobbyists entertaining MPPs at the Legislature every day of the week. They also hold endless meetings with lawmakers, to get their wishes known and try to get them enacted. This is known as "consultations".
I expect those lobbyists are "business expenses", as are the food and drink, room rentals etc., and thus tax deductible. Perhaps this is reasonable; perhaps not. However, it is money that won't be paid out to depositors.
5:45 am
February 20, 2018
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Loonie said
They also hold endless meetings with lawmakers, to get their wishes known and try to get them enacted. This is known as "consultations".
Ur right hadn't thought of that word as code. These consultations are bogus.
Please write your comments in the forum.