Parliament resumed in Ottawa on September 19 with Members of Parliament coming back to the House of Commons to continue their work on legislation and for opposition political parties to keep the Liberal Government accountable. Surprisingly, Prime Minister Justin Trudeau did not come back to Ottawa to see his Parliament resume, but instead was in New York at the United Nations. One of his most important Cabinet Ministers was present though, Finance Minister Bill Morneau, who back in March stated that a review of federal tax breaks was coming, which includes corporate as well as personal deductions.
Every year, thousands of companies save money through tax breaks when they make their business expenses. Canadians for Tax Fairness pegs "unfair and ineffective" tax expenditures at about $10 billion annually, something the Liberals are keen to tap into because of their promised deficit spending. During the campaign in 2015 and in the budget released in early 2016, the Liberal Government promised to not exceed promised deficit spending. This is clearly one of the ways they plan on doing so, with Morneau stating back in the Spring that "...we're going to embark on looking at the tax expenditures in the code and making sure they are all consistent with our approach to tax fairness."
Over the summer, the Department of Finance brought together 6 distinguished professors from universities from across the country, as well as the former CEO of Chartered Professional Accountants of Canada.Over the course of the next few months, they plan on going through thousands of tax expenditures that can currently be used by every different kind of organization in Canada. This review is part of a broader Government commitment to eliminate poorly targeted and inefficient programs, wasteful spending, and ineffective and obsolete Government initiatives.
As the panel has only recently been put together, it’ll be some time before any recommendations come out of which tax expenditures or "boutique tax credits" should be cut. It’s important for organizations in Canada to be aware of this review though, as a tax credit by which they rely on or use annually may not exist the next time they file their taxes, causing them to have a greater financial burden. With that said, the Liberals are sure to be careful of which credits they target, as they weigh financial gain versus political loss. The months ahead will show how successful they are with that balance.
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