Advanced Taxation: Canada's Tax System - Problems and Solutions

This report, focusing on advanced taxation, provides an analysis of Canada's tax system, drawing from the CPA Canada report "Canada’s Tax System: What’s so Wrong and Why it Matters." The report highlights concerns related to income inequality, labor force growth, and the country's tax system's performance. It examines the loss of corporate tax advantages, leading to reduced foreign direct investment (FDI) and potential job losses. The report also addresses the complex nature of the Canadian tax system, which hinders business growth, especially for SMEs, and the uncertainty surrounding R&D benefits. It emphasizes the need for tax reforms, simplification of the GST/HST system, and a re-evaluation of personal taxation to improve compliance and social benefits. The report concludes that Canada's tax system needs major reforms to align with international standards and improve competitiveness.

Running head: ADVANCED TAXATION
Advanced Taxation
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Article Summarization...............................................................................................................2
Reference....................................................................................................................................4

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Article Summarization
This article takes into consideration the worries related to the taxation systems since
the taxation system of the country is not performing as per the expectations at the time of rise
in income inequality, reduction in the labour force growth and other major issues. This article
named “Canada’s Tax System: What’s so Wrong and Why it Matters” by the Chartered
Professional Accountants (CPA) Canada considers the analysis of certain real case studies for
illustrating the issues in Canadian tax system for the people and business (cpask.ca, 2019).
This article indicates towards the loss of corporate tax advantage by Cananda over the
last six years that the country used to enjoy due to the lowest tax rates as compared to other
G7 countries. However, both U.S. and other countries have reduced their corporate tax rate
for gaining the tax advantage that Canada used to enjoy. This affected Canada by reducing
the mobility in investment while increasing the exposure of profit repatriation to U.S. This
has led to the lowest level of Foreign Direct Investment (FDI) in the country while putting
635,000 Canadian jobs and $85 billion of Canada’s GDP under threat (cpask.ca, 2019).
As per this report, the complex nature of Canadian taxation system is hindering the
business growth and innovation of the Canadian SMEs since their compliance cost is
increasing. This affecting the job opportunity in Canada as SMEs are major source of jobs.
Due to the uncertainty in the eligibility criteria to claim R&D benefits under Canadian
taxation system, there has been reduction in encouraging innovation in businesses. This tax
reform related to R&D has become an urgency for the country to revive the situation
(cpask.ca, 2019).
This article mentions about a survey of CPA Canada where 71% of CPA has indicated
towards the complex nature of tax expenditure that needs major reform. Under the Canadian
taxation, there is major complications in the GST/HST system in the presence of several

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exemptions and concessions that have made these rule costly as well as time-consuming. For
these reasons, the taxation rule related to GST/HST need to be simplified. This article has
also indicated towards the fact that most of the Canadians have lost their faith in country’s tax
system due to the increased competition. For the individual tax payers, there is a major gap
between the amount of tax that should be collected and how much it should actually receive.
The presence of this gap making the Canadian tax system in effective in delivering social
benefits in effective and efficient manner (cpask.ca, 2019).
On the overall basis, the Canadian tax system does not have any alignment with the
international standards and thus, it is losing the competitive ground. For this reason, it is
needed to bring major reforms in this country’s taxation system. In addition, Canada’s tax
expenditures have major role in complicating the overall taxation system of the country.
Lastly, the personal taxation system of Canada provides major discouragement in
compliances and thus, this situation needs to be revised for providing social benefits in more
effective manner (cpask.ca, 2019).

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Reference
Cpask.ca. (2019). Canada’s Tax System: What’s so Wrong and Why it Matters. Retrieved 14
April 2019, from
https://www.cpask.ca/public/CKeditorUpload/News_Publications/Documents/
CanadasTaxSystemFINAL-EN.pdf