Pub Date : 2023-04-01DOI: 10.32721/ctj.2023.71.1.berger
L. Berger, Jonathan Farrar, Ruth Pogacar, Lu Y. Zhang
The authors investigate whether and, if so, the extent to which a heuristic cue, the term "tax-free," contained in the name of one of the two primary tax-sheltered savings plans in Canada—the tax-free savings account (TFSA)—biases individuals' saving preferences relative to the registered retirement savings plan. On the basis of the heuristic-systematic model of information processing, the authors predict that the term "tax-free" is a favourable heuristic cue that will suppress systematic processing and bias individuals toward selecting a savings plan with this term in its name. They conduct three experiments to test this proposition. Overall, the results suggest that individuals have a clear preference for a tax-sheltered savings plan with "tax-free" in its name—regardless of the content of accompanying explanatory information. The preference for savings plans with "tax-free" in the name may suggest the need for more education and financial advice to reduce the use of heuristics.
{"title":"\"Tax-Free\": The Effect of a Heuristic Cue on the Choice Between a TFSA and an RRSP","authors":"L. Berger, Jonathan Farrar, Ruth Pogacar, Lu Y. Zhang","doi":"10.32721/ctj.2023.71.1.berger","DOIUrl":"https://doi.org/10.32721/ctj.2023.71.1.berger","url":null,"abstract":"The authors investigate whether and, if so, the extent to which a heuristic cue, the term \"tax-free,\" contained in the name of one of the two primary tax-sheltered savings plans in Canada—the tax-free savings account (TFSA)—biases individuals' saving preferences relative to the registered retirement savings plan. On the basis of the heuristic-systematic model of information processing, the authors predict that the term \"tax-free\" is a favourable heuristic cue that will suppress systematic processing and bias individuals toward selecting a savings plan with this term in its name. They conduct three experiments to test this proposition. Overall, the results suggest that individuals have a clear preference for a tax-sheltered savings plan with \"tax-free\" in its name—regardless of the content of accompanying explanatory information. The preference for savings plans with \"tax-free\" in the name may suggest the need for more education and financial advice to reduce the use of heuristics.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125991962","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-01DOI: 10.32721/ctj.2023.71.1.pf.romano
Colin Romano
Current Canada Revenue Agency (CRA) guidance suggests that cryptoassets (such as bitcoin) should generally be taxed as commodities for the purposes of the Income Tax Act. However, recent changes in the regulation of entities that facilitate the purchase and sale of cryptoassets (crypto trading platforms) under securities law have introduced new ways of understanding transactions involving cryptoassets. Many crypto trading platforms hold cryptoassets on behalf of users rather than delivering the cryptoassets directly to them, and the Canadian Securities Administrators has taken the position that this relationship among crypto trading platforms and their users itself constitutes a security. To date, there has been no guidance from the CRA relating to the taxation of these securities, which are known as "crypto contracts." This article considers potential income tax implications arising from the existence of crypto contracts by exploring how income taxation would differ for users of crypto trading platforms if they were taxed on crypto contracts rather than cryptoassets. Specifically, the article considers the treatment of transactions as being on income or capital account, the availability of elections to treat transactions on capital account, the applicability of section 49.1 of the Income Tax Act, and the income taxation of staking rewards earned through crypto trading platforms. Rather than offering conclusions on these topics, this article aims to provide a framework for thinking about crypto contracts from a Canadian income tax perspective and to provoke further thought from Canadian tax professionals.
{"title":"Policy Forum: The Income Taxation of Crypto Contracts","authors":"Colin Romano","doi":"10.32721/ctj.2023.71.1.pf.romano","DOIUrl":"https://doi.org/10.32721/ctj.2023.71.1.pf.romano","url":null,"abstract":"Current Canada Revenue Agency (CRA) guidance suggests that cryptoassets (such as bitcoin) should generally be taxed as commodities for the purposes of the Income Tax Act. However, recent changes in the regulation of entities that facilitate the purchase and sale of cryptoassets (crypto trading platforms) under securities law have introduced new ways of understanding transactions involving cryptoassets. Many crypto trading platforms hold cryptoassets on behalf of users rather than delivering the cryptoassets directly to them, and the Canadian Securities Administrators has taken the position that this relationship among crypto trading platforms and their users itself constitutes a security. To date, there has been no guidance from the CRA relating to the taxation of these securities, which are known as \"crypto contracts.\" This article considers potential income tax implications arising from the existence of crypto contracts by exploring how income taxation would differ for users of crypto trading platforms if they were taxed on crypto contracts rather than cryptoassets. Specifically, the article considers the treatment of transactions as being on income or capital account, the availability of elections to treat transactions on capital account, the applicability of section 49.1 of the Income Tax Act, and the income taxation of staking rewards earned through crypto trading platforms. Rather than offering conclusions on these topics, this article aims to provide a framework for thinking about crypto contracts from a Canadian income tax perspective and to provoke further thought from Canadian tax professionals.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114936583","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-01DOI: 10.32721/ctj.2023.71.1.pfp
Lee Mi, Shivani Joshi
Les crédits pour impôt étranger sont un mécanisme important pour éviter la double imposition des revenus gagnés à l'étranger. Dans le cas du revenu d'emploi transfrontalier gagné par un contribuable canadien, plusieurs aspects peuvent être très complexes et limiter l'accès aux crédits pour impôt étranger. Dans cet article, les auteurs donnent un aperçu des mécanismes de demande de crédits pour impôt étranger en vertu de la Loi canadienne de l'impôt sur le revenu et des dispositions pertinentes de certaines conventions fiscales bilatérales. Ils examinent également certaines interprétations techniques pertinentes publiées par l'Agence du revenu du Canada ainsi que la jurisprudence législative au Canada traitant de la détermination de la source du revenu d'emploi transfrontalier et de la possibilité d'obtenir des crédits pour impôt étranger sur ce revenu.
{"title":"Planification fiscale personnelle : Les crédits pour impôt étranger pour les contribuables ayant un revenu d'emploi transfrontalier","authors":"Lee Mi, Shivani Joshi","doi":"10.32721/ctj.2023.71.1.pfp","DOIUrl":"https://doi.org/10.32721/ctj.2023.71.1.pfp","url":null,"abstract":"Les crédits pour impôt étranger sont un mécanisme important pour éviter la double imposition des revenus gagnés à l'étranger. Dans le cas du revenu d'emploi transfrontalier gagné par un contribuable canadien, plusieurs aspects peuvent être très complexes et limiter l'accès aux crédits pour impôt étranger. Dans cet article, les auteurs donnent un aperçu des mécanismes de demande de crédits pour impôt étranger en vertu de la Loi canadienne de l'impôt sur le revenu et des dispositions pertinentes de certaines conventions fiscales bilatérales. Ils examinent également certaines interprétations techniques pertinentes publiées par l'Agence du revenu du Canada ainsi que la jurisprudence législative au Canada traitant de la détermination de la source du revenu d'emploi transfrontalier et de la possibilité d'obtenir des crédits pour impôt étranger sur ce revenu.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114512614","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-01DOI: 10.32721/ctj.2023.71.1.pf.kreklewetz
Robert G. Kreklewetz, Laura J. Burlock
Cryptoasset miners verify and record transactions, maintaining the integrity and security of the blockchain network. The Department of Finance ("Finance") has recently proposed new Excise Tax Act (ETA) provisions regarding the goods and services tax (GST)/harmonized sales tax (HST) treatment of crypto mining. Under these proposed provisions, crypto mining activities provided to anonymous recipients will not be subject to GST/HST, but the crypto miners performing these activities will also not be eligible to recover any GST/HST paid on their business inputs (and thus will be forced to bear the brunt of the tax themselves). We believe that Finance's decision to tax what it can identify—the business inputs of Canadian crypto miners—is a roughly balanced but reasonable approach. Although Finance might be legitimately criticized as departing from Canada's decision to eliminate the cascading of tax found in the former origin-based federal sales tax, it seems impossible to administer a destination-based transactional tax such as the GST/HST when faced with "anonymous" recipients (the users of the crypto miner's services). Finance appears to have minimized the cascading of tax by including a carve-out for identifiable recipients of a crypto miner's services, allowing the regular zero-rating rules in the ETA to apply in limited circumstances. In the face of utter uncertainty, Finance's reactive approach is likely the best that it can do. Given the rapid evolution and inherent decentralization of the crypto space, a more broadly based proactive approach would seem imprudent at this time.
{"title":"Policy Forum: Canada's Proposed Cryptoasset Legislation","authors":"Robert G. Kreklewetz, Laura J. Burlock","doi":"10.32721/ctj.2023.71.1.pf.kreklewetz","DOIUrl":"https://doi.org/10.32721/ctj.2023.71.1.pf.kreklewetz","url":null,"abstract":"Cryptoasset miners verify and record transactions, maintaining the integrity and security of the blockchain network. The Department of Finance (\"Finance\") has recently proposed new Excise Tax Act (ETA) provisions regarding the goods and services tax (GST)/harmonized sales tax (HST) treatment of crypto mining. Under these proposed provisions, crypto mining activities provided to anonymous recipients will not be subject to GST/HST, but the crypto miners performing these activities will also not be eligible to recover any GST/HST paid on their business inputs (and thus will be forced to bear the brunt of the tax themselves). We believe that Finance's decision to tax what it can identify—the business inputs of Canadian crypto miners—is a roughly balanced but reasonable approach. Although Finance might be legitimately criticized as departing from Canada's decision to eliminate the cascading of tax found in the former origin-based federal sales tax, it seems impossible to administer a destination-based transactional tax such as the GST/HST when faced with \"anonymous\" recipients (the users of the crypto miner's services). Finance appears to have minimized the cascading of tax by including a carve-out for identifiable recipients of a crypto miner's services, allowing the regular zero-rating rules in the ETA to apply in limited circumstances. In the face of utter uncertainty, Finance's reactive approach is likely the best that it can do. Given the rapid evolution and inherent decentralization of the crypto space, a more broadly based proactive approach would seem imprudent at this time.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123743995","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-01DOI: 10.32721/ctj.2023.71.1.sym.brown
Catherine A. Brown, E. Whitsitt
A key objective of pillar two is to coordinate a minimum 15 percent tax on the GloBE income of certain in-scope multinational enterprises. This objective has been driven by the Organisation for Economic Co-operation and Development and focuses on global cooperation and model rules to calculate and collect the proposed tax. Tax is also a key driver in investment decisions. By design or default, the pillar two rules will clash with the typical tax incentives offered by countries to attract foreign direct investment, including tax holidays, lower tax rates, exemptions, and accelerated depreciation regimes. Often these tax incentives are offered in investment treaties. These agreements offer a win-win solution in that they set out the minimum protections that investors may rely on when making an investment in the host state, backed up by the direct remedy of binding international arbitration if those protections are not provided. For the host state, the protections provided by an investment treaty encourage inbound cash flows, and for the investor's home state, they offer the hope of repatriated profits. Although no precise numbers can be offered, clearly the tax benefits provided by investment treaties will be affected by the pillar two rules. This paper outlines some of the potential conflicts between pillar two requirements and the protections provided in investment treaties. It also offers some preliminary solutions.
{"title":"Implementing Pillar Two: Potential Conflicts with Investment Treaties","authors":"Catherine A. Brown, E. Whitsitt","doi":"10.32721/ctj.2023.71.1.sym.brown","DOIUrl":"https://doi.org/10.32721/ctj.2023.71.1.sym.brown","url":null,"abstract":"A key objective of pillar two is to coordinate a minimum 15 percent tax on the GloBE income of certain in-scope multinational enterprises. This objective has been driven by the Organisation for Economic Co-operation and Development and focuses on global cooperation and model rules to calculate and collect the proposed tax. Tax is also a key driver in investment decisions. By design or default, the pillar two rules will clash with the typical tax incentives offered by countries to attract foreign direct investment, including tax holidays, lower tax rates, exemptions, and accelerated depreciation regimes. Often these tax incentives are offered in investment treaties. These agreements offer a win-win solution in that they set out the minimum protections that investors may rely on when making an investment in the host state, backed up by the direct remedy of binding international arbitration if those protections are not provided. For the host state, the protections provided by an investment treaty encourage inbound cash flows, and for the investor's home state, they offer the hope of repatriated profits. Although no precise numbers can be offered, clearly the tax benefits provided by investment treaties will be affected by the pillar two rules. This paper outlines some of the potential conflicts between pillar two requirements and the protections provided in investment treaties. It also offers some preliminary solutions.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127800715","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-01DOI: 10.32721/ctj.2023.71.1.sym.li.etal
Jinyan Li, Angelo Nikolakakis, Jean-Pierre Vidal
Nobody believes that Canada is a tax haven. The fact remains that the effective tax rate of certain entities could be less than 15 percent. If nothing is done, pillar two could therefore apply, and taxes that naturally accrue to Canada could end up in foreign hands. We must therefore find a solution, and the most obvious is that of adopting a qualified domestic minimum top-up tax (QDMTT). Other solutions are possible, but they seem less attractive. A QDMTT still presents some challenges. These challenges include sharing with the provinces, determining the priority to be given to certain foreign taxes relating to Canadian income (that is, whether those foreign taxes take priority over the QDMTT or vice versa), and estimating certain foreign taxes.
{"title":"Canadian QDMTT Challenges","authors":"Jinyan Li, Angelo Nikolakakis, Jean-Pierre Vidal","doi":"10.32721/ctj.2023.71.1.sym.li.etal","DOIUrl":"https://doi.org/10.32721/ctj.2023.71.1.sym.li.etal","url":null,"abstract":"Nobody believes that Canada is a tax haven. The fact remains that the effective tax rate of certain entities could be less than 15 percent. If nothing is done, pillar two could therefore apply, and taxes that naturally accrue to Canada could end up in foreign hands. We must therefore find a solution, and the most obvious is that of adopting a qualified domestic minimum top-up tax (QDMTT). Other solutions are possible, but they seem less attractive. A QDMTT still presents some challenges. These challenges include sharing with the provinces, determining the priority to be given to certain foreign taxes relating to Canadian income (that is, whether those foreign taxes take priority over the QDMTT or vice versa), and estimating certain foreign taxes.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122601552","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-01DOI: 10.32721/ctj.2023.71.1.fon
D. Lin
This article surveys the 2022-23 provincial and territorial budgets.
本文调查了2022-23年各省和地区的预算。
{"title":"Finances of the Nation: Survey of Provincial and Territorial Budgets, 2022-23","authors":"D. Lin","doi":"10.32721/ctj.2023.71.1.fon","DOIUrl":"https://doi.org/10.32721/ctj.2023.71.1.fon","url":null,"abstract":"This article surveys the 2022-23 provincial and territorial budgets.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128593988","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-01DOI: 10.32721/ctj.2023.71.1.ctp
Katerina Ignatova, Christopher J. Steeves
Environmental, social, and governance (ESG) is a framework for considering certain risks and opportunities applicable to a company. Investors, and increasingly regulators, are requiring disclosure of certain ESG-related metrics and data. Some of these data reflect the externalities that a company creates with respect to the environment and to society. Investors, and potentially regulators and governments, can use these data to evaluate the company and price negative externalities. Being prepared and proactive will allow a company to develop a tax strategy that is consistent with its larger ESG goals. Globally, there is an increasing obligation for companies to publish a tax strategy, as well as to disclose uncertain tax positions and aggressive tax planning to the tax authorities and the public. This trend is also making its way into Canada, albeit at a slower pace. As the Canadian government and investors move toward pricing negative externalities using ESG metrics, it is crucial that Canadian companies start to consider the role of ESG with regard to tax planning, if they have not done so already. Canadian companies should also consider how their tax strategy will be perceived by the company's stakeholders, including the public, clients, and employees.
{"title":"Corporate Tax Planning: ESG and Corporate Tax Planning","authors":"Katerina Ignatova, Christopher J. Steeves","doi":"10.32721/ctj.2023.71.1.ctp","DOIUrl":"https://doi.org/10.32721/ctj.2023.71.1.ctp","url":null,"abstract":"Environmental, social, and governance (ESG) is a framework for considering certain risks and opportunities applicable to a company. Investors, and increasingly regulators, are requiring disclosure of certain ESG-related metrics and data. Some of these data reflect the externalities that a company creates with respect to the environment and to society. Investors, and potentially regulators and governments, can use these data to evaluate the company and price negative externalities. Being prepared and proactive will allow a company to develop a tax strategy that is consistent with its larger ESG goals. Globally, there is an increasing obligation for companies to publish a tax strategy, as well as to disclose uncertain tax positions and aggressive tax planning to the tax authorities and the public. This trend is also making its way into Canada, albeit at a slower pace. As the Canadian government and investors move toward pricing negative externalities using ESG metrics, it is crucial that Canadian companies start to consider the role of ESG with regard to tax planning, if they have not done so already. Canadian companies should also consider how their tax strategy will be perceived by the company's stakeholders, including the public, clients, and employees.","PeriodicalId":375948,"journal":{"name":"Canadian Tax Journal/Revue fiscale canadienne","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130913682","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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