OSC seeks members for continuous disclosure advisory committee

first_img Don’t believe the hype: BCSC proposes new rules for stock promoters James Langton Regulators propose slimming corporate disclosure CSA sets rules on non-GAAP financial reporting Share this article and your comments with peers on social media The Ontario Securities Commission (OSC) is inviting new applications for membership on its continuous disclosure advisory committee. The committee advises OSC staff on the regulator’s continuous disclosure review program, along with policy initiatives and rulemaking in that area. It also provides advice to OSC staff on emerging issues. Keywords DisclosureCompanies Ontario Securities Commission Related news The committee consists of 10 to 15 members who meet five times annually. Members serve two-year terms. The committee is chaired by Sonny Randhawa, manager, corporate finance, OSC. Applications are due by Feb. 24. Facebook LinkedIn Twitterlast_img read more

CRA audit incentives lead to poor taxpayer outcomes, study suggests

first_imghand grabbing money bag samuaritop/123RF Rudy Mezzetta Increasing pressure on the Canada Revenue Agency to raise tax revenue, as well as the structure of the CRA’s internal performance targets, may be contributing to poorer quality tax audits, according to a study published by the C.D. Howe Institute on Thursday. The study explored CRA audit incentives, such as its “fiscal impact” metric, which includes tax assessed, tax refunds reduced, interest and penalties, but doesn’t include the impact of appeals, reversals and uncollected amounts. The structure of the fiscal impact metric could create an incentive for the CRA to increase assessed amounts because reversals are not reported, the study suggested. Keywords Tax auditsCompanies Canada Revenue Agency O’Toole calls for pause on CRA audits for businesses struggling due to Covid-19 Crypto firm strikes client disclosure deal with CRA The study’s authors recommended:  that reversals of assessments be included in the definition of “fiscal impact”; that the CRA put a greater focus on its “validated risk” metric to determine “overall compliance and confidence that taxes will voluntarily be paid,” and less focus on fiscal impact;that linking the CRA’s fiscal impact and the estimated tax gap be avoided.  The authors of the study also recommended that governments “resist the urge to pay for Covid-19 measures and the loss of tax revenues” by putting even greater pressure on the CRA to raise revenue via aggressive audits.   “The CRA is already under pressures that are creating poor outcomes for taxpayers,” the authors wrote. “We fear that further strengthening of CRA’s incentives to collect taxes will adversely affect the CRA’s ability to work with taxpayers to create a tax system that will flourish as the economy recovers.” The study’s authors said that nearly $1 billion in increased funding the CRA received in the 2016 and 2017 federal budgets came with explicit expectations from the government that the CRA raise $5 of tax revenue for every $1 of expense. This represented a significant increase from the CRA’s historical rate of tax revenue “return” relative to expense, and potentially amplified the effect of incentives created by the CRA’s performance metrics, the study suggested.  In addition, the government’s recent focus on calculating and reporting Canada’s tax gap —  the theoretical gap between tax that might be collected if all taxpayers were compliant and actual tax revenue collected — has in turn put “further pressure on the [CRA] audit division to assess more corporate income tax” to shrink the gap. Drawing on previous academic research from Kenneth Klassen, who co-authored the study, C.D. Howe suggested that “some auditors may, perhaps unconsciously, be auditing in ways that satisfy the evaluation system used by CRA rather than with a view to the fairest amount of tax due.”As evidence, the study’s authors cite 2016 and 2018 reports from the Auditor General of Canada that “raise questions about the quality of CRA audits and the audit process.” In particular, the study noted that “data provided by the auditor general show a trend for CRA to close files and assess additional taxes toward year-end. Based on the monthly average of reassessments issued in the five-year period ended March 31, 2018, the auditor general reports that almost 40 percent of audit files were closed in February and March,” just before the CRA’s deadline to meet its annual targets by its fiscal year end. The auditor general report also showed that the CRA could not accurately report the result of its compliance activity, and that the revenue results were significantly less than what the government had estimated. “Overstating the results of its compliance activities is consistent with the types of behaviour that is driven by the incentives CRA faces,” the authors of the C.D. Howe study wrote.  Related news Share this article and your comments with peers on social media CRA, RQ should be held liable for auditor mistakes, CFIB says Facebook LinkedIn Twitterlast_img read more