Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Did someone forward you this email? Sign up to get Tax and Spend in your inbox.

When it comes to tax debts, there’s usually no such thing as an honest mistake.

It’s certainly possible that a taxpayer can make a good-faith error. It’s just that Ottawa usually doesn’t care all that much. A mistake, even an honest one? Please pay up. An error based on incorrect information from the government? Sorry about that. Now, please pay up.

Story continues below advertisement

Exceptions to that rule have been rare, and usually limited to waiving interest and penalties, not the underlying debt, a theme that this week’s Tax and Spend explores. Rare that is, until last week, when the Liberal government reversed course, and announced that self-employed individuals who had wrongly obtained up to $14,000 under the Canada Emergency Response Benefit could keep those payments.

At issue was confusion over what qualified to meet the CERB requirement of at least $5,000 in income. In the early days of the pandemic, the Canada Revenue Agency told some applicants that gross business income (before deducting expenses) could be used. Later, the CRA made it clear that net income had to be used, leaving some short of the mark – and on the receiving end of letters asking them either to demonstrate their eligibility or to repay benefits.

The government has veered away from those repayment demands, instead saying self-employed recipients could keep their CERB funds, so long as they met all other criteria. For those individuals, at least, an honest mistake led to a rare act of fiscal forgiveness.


Taxing questions

Responding to last week’s piece on the outlook for Alberta’s corporate taxes, Patrick DeRochie tweeted that more than just the growing pessimism about the future profitability of the province’s oil and gas sector was at play: “Also important to note that the provincial government made it an urgent priority in 2019 to reduce corporate tax rates,” he wrote.

Mr. DeRochie is correct, of course. Premier Jason Kenney did campaign on lower corporate tax rates, not just reversing hikes under the previous NDP government but cutting them further to just 8 per cent by 2022. Faced with the economic turmoil from the coronavirus, Mr. Kenney accelerated that plan, with the 8-per-cent rate put in place as of July 1, 2020, a year and a half ahead of schedule.

What’s been the effect of the cuts? Certainly, revenue declined in the first fiscal year in which rates were cut. And the government has said that lower corporate tax rates will cost the treasury hundreds of millions of dollars a year, with costs rising this year and next because of the accelerated reductions. But the UCP government has argued that the lower rate will generate investment and tax revenue in the longer term. (The effect of the rate cuts are somewhat muted in the current economic environment, since corporate profits have dwindled.)

The reality is, corporate tax revenue is heavily influenced by external forces – including the broader economy, and tax rates in other jurisdictions, particularly the United States. For confirmation, look no further than what happened after the NDP raised the corporate tax rate in July, 2015. Even with the rate increase, Alberta’s corporate tax revenue declined in that fiscal year, and the two that followed.

Story continues below advertisement


Line Item

Heading into the coronavirus crisis, Canada’s economic performance was weaker than in the four prerecessionary periods of the past four decades, contends a new report from the Fraser Institute. The authors compare income, employment and business investment trends in the 1986-1989, 1997-2000, 2005-2008, 2011-2014, and 2016-2019 time periods. Business investment was clearly weaker between 2016 to 2019, they write, than in earlier time periods, particularly in the 1980s and 1990s.

The picture is much the same for income, with most measures pointing to the Chrétien years of 1997-2000 as a high-water mark of prosperity. On employment, the Trudeau government appears to outperform, with unemployment rates lower than in earlier periods. But the Fraser report argues that much of that advantage is due to lower labour-force participation. If participation rates had not declined, the unemployment picture for 2016 to 2019 would have been worse, not better, than in previous prerecessionary periods, it says.


If you liked this edition of the Tax and Spend newsletter, share it on LinkedIn or post it on Twitter.

Follow me on Twitter, @PatrickBrethour or ask your Taxing Question here.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies