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Amanjit Lidder
View Amanjit Lidder Profile
Amanjit Lidder
2020-05-21 16:34
Thank you, Mr. Chair.
It's an honour for Kim and me to address you in the House of Commons finance committee on the government's response to the COVID-19 pandemic. We appreciate the opportunity to be back and to see familiar faces despite the circumstances that we find ourselves in.
Thank you for your continued leadership. The quick response by the government has been welcomed. The steps that lie ahead are just as important as those already taken. MNP is the leading national accounting, tax and business consulting firm. As the largest professional services firm headquartered in Canada, we have a unique vantage point from which to see the challenges facing Canadians and Canadian businesses.
In our capacity as trusted advisers to 180,000 private enterprises and small business clients, and 19,000 farms from coast to coast to coast, we have seen first-hand how challenging the last two and a half months have been and the difficult road that still lies ahead of all of us.
Inspired by the concept in disaster recovery of “build back better”, we are here today to discuss tangible measures to kick-start Canada's economic recovery and get people back to work. While build back better is technically referenced in the context of critical infrastructure like bridges and dams, there is little more critical than the economic well-being and confidence of every Canadian.
Every aspect of Canadian life has been impacted by COVID-19. As Canadians begin venturing out from the last 60 days spent under public health orders, everyday actions as simple as turning a doorknob are looked at with suspicion and nervousness. According to a recent poll, over 50% of Canadians find it stressful to even leave the house.
In our submission, we outline an action plan for today and for the future. The first phase includes steps that will tackle the crisis of confidence facing Canadian businesses, while ensuring that Canadians can return to work safely and that the economic environment is one that they can trust and believe in.
Many businesses will have to retrofit their spaces to adapt to the evolving circumstances. As well, families will have to modify their homes to care for aging parents and adapt to working from home. Introducing a refundable tax credit for costs associated with commercial, industrial and residential modifications will help create safer, more efficient building infrastructure and will also stimulate consumer spending.
Families that are already saddled with significant personal debt and the reduction of available jobs have students and their parents wondering whether they can still afford post-secondary studies. We recommend that the annual tuition transfer cap be eliminated, allowing supporting parents to claim full tuition costs. This will increase access to post-secondary studies for cash-strapped families.
As our economy stabilizes, we recommend creating a temporary system modelled after the homebuyers' plan, where Canadians can access some of the funds in their RRSPs like a rainy-day fund without facing immediate and punitive tax consequences.
Governments across Canada acted quickly to help Canadians, and for that we are all grateful. From St. Patrick's Day to May long weekend we saw 300 programs, grants, deferrals, subsidies, loans and other measures announced by the federal, provincial and territorial governments with the express purpose of stabilizing the economy in the face of the public health crisis.
There are still some items to clarify with respect to the Canada emergency wage subsidy program. Take, for example, a flower shop in Ottawa that has decided to purchase a second location in Cornwall. If the Ottawa location had bought the shares of that second location, that business would be eligible for the CEWS and could retain its employees. If instead the Ottawa location decided to buy the assets of the second location, the business would not be eligible for the CEWS program.
It's important to remember that these are emergency programs. They were not designed as long-term economic recovery programs. If done in a gradual way, phasing out current emergency programs such as the CEWS and the Canada emergency response benefit will ensure Canadians can build back a robust and growing economy.
The CEWS phase-out could target businesses that are still under public health orders to remain closed or that were most severely impacted by the pandemic, or decrease the subsidy percentage from 75% over time.
We know businesses with a rainy-day fund were less reliant on the emergency programs and were able to maintain their employees with limited support. The current tax rules penalize small to medium-sized Canadian businesses for maintaining cash and investments over a certain amount. It is imperative that this limit be increased to ensure businesses can weather future challenges.
Last, there has been much written about Canadian debt loads. We are taking on more debt at the household level and across all orders of government. At MNP, we've completed a quarterly consumer debt index. Our March, 2020 study indicated that nearly half of Canadians are concerned about being close to insolvency.
It is our recommendation that future economic recovery programs consider the concerns of impending deferred debt obligations, and incentivize real economic growth and job creation. We need a strong foundation and framework for recovery.
Thank you for your important work.
Joy Thomas
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Joy Thomas
2020-05-01 16:37
Thank you, Mr. Chair and members.
I'm Joy Thomas. I'm the president and CEO of the Chartered Professional Accountants of Canada. With me today is Bruce Ball, our vice-president of taxation. I'd like to thank you for your invitation. It's a pleasure to be virtually with you today.
The federal government has acted swiftly and decisively through its COVID-19 economic response plan to provide direct assistance, tax payment deferrals and liquidity support at a time when support was most urgently needed. The accounting profession appreciates that we need to take these measures now, while at the same time we're very cognizant of the work ahead to manage the nation's finances. We've been asked by the committee today to speak to the theme of support for Canadians who are not eligible for existing measures.
We'll start by saying CPA Canada supports the federal government's plan. Unfortunately, when the response is of such historic magnitude and is under extreme time pressures, certain individuals and businesses will be overlooked among the initial stimulus measures. This has happened, and the government deserves credit for making adjustments to assist some of those who have fallen through the cracks and are not eligible for government supports. We've seen enhancements to the Canada emergency wage subsidy program, the Canada emergency response benefit and the Canada emergency business account. We've also seen additional support provided to vulnerable Canadians, students and graduates, essential workers who are keeping us safe and seniors who helped to build this great country.
Please note that we have attached an appendix to our remarks to highlight gaps in support. It's vital that existing gaps be addressed, and we understand that some of these issues are being actively considered by government now.
CPA Canada welcomes the opportunity to participate in the discussion that's happening today. As always, we are appearing here to support Canadians, our businesses and our society at large. Our organization maintains good working relationships with parliamentarians and senior government officials. In particular, we'd like to acknowledge the commitment and the dedication of the Canada Revenue Agency and Finance Canada. Extending numerous tax deadlines and providing greater clarity around the wage subsidy program are appreciated by tax professionals and their clients, including small to medium-sized businesses and individual taxpayers.
The key issues that we're hearing from members around shortfalls in support relate primarily to the Canada emergency wage subsidy program. Some specific issues include certain partnership arrangements that are not eligible, such as private-public partnerships and partnerships involving pension funds. Some cost-sharing or paymaster arrangements do remain problematic. The monthly revenue test does not work in some situations, such as for seasonal businesses or other businesses whose revenue does not occur on a consistent monthly basis. As well, a number of technical issues that need to be worked through on the wage subsidy.
We're also hearing that extensions to other tax deadlines are needed, as outlined in our appendix. We're currently discussing those issues with CRA.
I'm very proud of the CPAs who are making a positive difference by helping individuals and businesses across our country, and this includes those CPAs who are supporting front-line health care workers by offering to prepare their returns free of charge through the Accounting for Bravery program that is running in Ontario and Manitoba. Elsewhere there are other initiatives, such as virtual tax clinics to help low-income and vulnerable Canadians with tax filings. CPA Canada is also doing its part by developing financial literacy and other resources to support members in helping Canadians and businesses survive through the COVID-19 pandemic and, importantly, to prepare for recovery.
We're all rising to the challenge, and collectively we will get through this crisis. The talks around a gradual reopening of the economy are promising; however, as leaders gradually start to ramp up our economy, there are many considerations at play and much at risk. Any reopening needs to ensure that the health of Canadians is protected, that workers are supported and that decisions are data driven and evidence based. Ultimately, Canada will need a plan for recovery towards a sustainable economy with resilience for the future.
I'd like to thank you. Bruce and I look forward to taking your questions.
View Marty Morantz Profile
CPC (MB)
Thank you, Mr. Chair.
To the chartered professional accountants, I've been hearing from some of the firms in my riding—and I've made a point of this in the past—that there are many gaps in these emergency programs. One of them that I found interesting was among the professional accountants. Many of them can't show a required revenue loss year over year because in February, March and April they're busy processing their clients' tax returns and they leave their billings until after tax season. Apparently this is a widespread problem and CPA firms are struggling because they can't maintain their staff because they don't have the revenue.
I'm just wondering if you've been hearing reports of this, and if you have any comments on it.
Bruce Ball
View Bruce Ball Profile
Bruce Ball
2020-05-01 17:53
All right. I'll go first.
From what I'm hearing it really depends on what the firm does, too. A fair bit of work for our profession has slowed down, so insurance work has slowed down a bit because a lot of that does require more than working at home. I think for tax people, they've been kept pretty busy dealing with the compliance, so I think it really depends on the nature of the firm.
The other thing I've heard is that it has hit smaller firms probably worse than larger firms. I think the larger firms were set up better for working from home and that kind of thing. Like many smaller businesses, I think they were hurt as well. Some practices focused on elder care as well, and I think that's been an issue. It's very difficult to work with those clients right now.
Joy Thomas
View Joy Thomas Profile
Joy Thomas
2020-05-01 17:54
No, I think Bruce has really covered it.
I was going to say that what we are hearing does seem to come more from small and medium-sized practitioners. Their revenue is more specific to certain parts of the year, whereas the larger firms across the country offer a number of advisory services, audit services and tax services, so it's more spread out.
There definitely are some issues with variations in revenue, whether it's in the accounting profession or across the country. I think that's one area we have identified in some of the issues we are discussing with the government now.
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