In the tax policy world of 2024, Canadian accountants and businesses face many challenges as they try to properly administrate their existing corporate structures and execute their tax planning. Today’s tax laws are far more complex and ambiguous than they were a decade ago, particularly in the owner/manager or mid-market space. While the rules for large corporations and multinationals are no less complex, those businesses have many more resources then the typical owner/manager.

For those asking why these new challenges have come about, there’s at least one simple answer: the Income Tax Act has ballooned with the government introducing complex legislation to address simple issues, a number of small tax credits and even non-tax policy items as tax legislation. For example, it was recently determined you can no longer deduct expenses related to an Airbnb rental unit if there are any restrictions – in an apartment building, for example – on the use of this unit for this purpose. With these types of changes, it has become increasingly difficult to stay on top of all the rules. But as challenging as the current tax situation is, it does appear to be the new normal, and we do anticipate additional bumps in the road.

Advocating for tax reform

Rather than remove old policy or streamline rules, the government has added new tax credits and other programs, increasing the length of the Tax Act. In our experience, this approach complicates matters. As tax practitioners, we advocate for sensible tax reform, actively contributing to CPA Canada and the CBA/CPA Joint Committee on Taxation, as well as making recommendations directly to politicians, including Shadow Finance Committee members. For instance, last year we provided a series of recommendations to the Department of Finance regarding intergenerational business transfer rules, in an effort to promote tax fairness and integrity. This kind of advocacy is growing more prevalent in the accounting industry, with most of the major accounting firms currently focused on pushing for a return to simplicity. The industry recognizes the complexity of the Tax Act is problematic and it risks getting worse without action.

Tax reform is not without risk

While most accountants agree tax reform would be a positive development, we recognize it could have some drawbacks. For one, significant tax reform could require practitioners and their clients to learn the Tax Act and policy from scratch, which is daunting for everybody. In recent years, we’ve seen significant changes in American tax policy create a period of instability. Tax reform isn’t a magic bullet that instantly fixes everything – and the industry is aware of that – but it would allow everyone to reset and begin again. Ultimately, this could be the path to greater stability in the long term.

Adapting to the new normal

As challenging as current tax policy may be for accountants, it’s significantly more challenging if you don’t understand the rules and what is required for your business to be compliant. With that in mind, we prioritize educating our clients, so they can play a more proactive role in navigating tax policy. One way we do this is by creating product education materials – including Tax Alerts – and participating in various industry conferences. We also focus on enhancing our clients’ tax and financial reporting, so we have better, more accurate information. Amid the evolving landscape of today’s tax policy, we know it’s more critical than ever to support our clients in managing complexity and co-creating tailored solutions for their unique business needs.

Baker Tilly’s Ignite series features insight from audit, tax and advisory experts that covers a range of topics affecting financial planning for individuals and businesses both today and in the future. From SMB advisory and wealth management to tax policy and digital transformation, Ignite articles aim to inspire action.

Meet the Author

Sean Grant-Young
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