Think Growth

We are pressing for a more competitive, simpler and equitable tax system to support Canada’s economic recovery and future.

Starting the Conversation

COVID-19 has change our world and forced everyone to think differently. To help Canadian policymakers think differently about growing our economy beyond the status quo while still paying for today’s health crisis, we launched the Think Growth project – a business led review of Canada’s tax system. Weassembled a team of Canadian leaders to explore ideas for harnessing Canada’s tax system for inclusive recovery and growth. Our Special Commissioners met with hundreds of businesses and tax practitioners throughout Canada in 2020.. These conversations are below to watch and feed into an important research and recommendations on needed tax reform and innovation.

What’s Being Said

Watch our country crossing conversations with businesses and tax practitioners to hear the feedback we received on tax reform and innovation. Conversations like these, helped us explore ideas for Canada’s economic recovery and future.

HERE’S HOW TAX POLICY UPDATES CAN HELP CANADIANS AND BUSINESSES DURING THE CRISIS

This summer, the Canadian Chamber of Commerce began the Think Growth project to review Canada’s tax system knowing that tax policy could be used to help reignite economic recovery following the pandemic and that a full review by parliamentarians couldn’t wait much longer. The Canadian Chamber’s project took matters into hand by appointing a panel of leading tax and business experts to explore potential tax reform options.

After consultations with a broad mix of Canadians, businesses and tax practitioners on how to harness Canada’s tax system for job retention and growth, the Canadian Chamber is sharing what its panel heard is the type of reform that fits and is needed now at this point in the crisis.

With our economy still operating below its pre pandemic capacity, both Canadians and employers need continued support with liquidity, the lowering of costs and relief on administrative burden. We also need methods of boosting domestic spending to support main street businesses. The suggestions the Canadian Chamber is releasing support these objectives. While it may be still too early to move forward with bigger structural reforms, there are many administrative and process related actions that can be taken now to start building a better business climate.

Short term reforms to help Canadians

  • Simplify tax filing so that every Canadian can access their tax benefits (e.g. automatically file simple tax returns) 
  • Enhance the GST/HST and/or low-income credit for all Canadians (note: a recommended offset when adjusting Canada’s tax mix)
  • Enhancing the deduction for childcare expenses and removing the requirement that only the lower income spouse may apply the deduction
  • Process work-space-in-the-home expenses with a clear COVID-19 relevant definition and without a T2200 form
  • Improve use of electronic communications for filing processes, including the broader use of email and permitting documents to be electronically attached to filings
  • For the CRA to transparently measure and report on administrative tax processes (e.g. the length of time or cost to complete forms.)
  • Identify non-refundable personal tax credits for elimination in favour of simplifying filling and increasing the basic personal credit instead

Short term reforms to help small employers

  • Process work-space-in-the-home expenses with a clear COVID-19 relevant definition and without a T2200 form
  • Simplify tax on split income (TOSI) rules (i.e. splitting income with children) by increasing the age of eligible children a few years
  • Simplify section 55 requirements (i.e. taxation of dividend income)
  • Remove section 84.1 tax disincentives that arise on the sale of a small business to family members
  • Make childcare an eligible business deduction
  • Increase the lifetime capital gains exemption limit on qualified small business corporate (QSBC) shares
  • A temporary consumption tax (i.e. GST/HST) holiday to spur local purchases
  • Permanently increase the revenue threshold for GST/HST registration
  • Create a temporary Employee Retention Tax Credit to offset COVID-19 related expenditures or a temporary Investment Tax Credit to encourage productive growth
  • Allow 100% deductibility on capital expenditures in the year incurred to facilitate cash flow
  • Accelerate the ability to turn tax losses into cash through credit trading, refunds or other means
  • Improve the use of electronic communications for filing processes, including the broader use of email and permitting documents to be electronically attached to filings
  • Continue demonstrating leniency and discretion for small business audits during the pandemic
  • Publish statistics on small business audit activity, including the length of disputes, the return on audits and the rate of auditor churn
  • Educate the CRA’s auditors on small business operations so the CRA has practical insights as to the challenges faced by small businesses in dealing with the CRA. Also ensure CRA employees have knowledge of small business statistics and other relevant economic information on Canada’s private sector.

Short term reforms to help large employers

  • Process work-space-in-the-home expenses with a clear COVID-19 relevant definition and without a T2200 form
  • Consider a more transparent metric for assessing the actual return to Canada from the CRA’s audit activity
  • Defer the CRA’s right to collect disputed tax amounts from corporate taxpayers until the CRA has completed its review of a corporate taxpayer’s appeal
  • Increase resources allocated to CRA’s client service and appeals groups in order to avoid tax disputes and/or more effectively deal with tax disputes more timely
  • Accelerate the ability to turn tax losses into cash through tax consolidation, credit trading, refunds or other means
  • Create a temporary Employee Retention Tax Credit to offset COVID-19 related expenditures or a temporary Investment Tax Credit to encourage productive growth
  • Allow 100% deductibility on capital expenditures in the year incurred to facilitate cash flow
  • Review the Canadian Scientific Research & Experimental Development Tax Incentive (SR&ED)

Business leaders, economists and everyday Canadians have also been clear that tax reform is a critical element in repairing the economic damage of COVID-19. What was once a problem too big and too complex to address has become a must-do for Canada’s political leaders. We’ve seen sweeping policy changes delivered in a matter of weeks amid COVID-19, so there’s no longer a reason not to do what is so critically needed.

Let’s get started now.

Background on Canada’s Tax System

We’ve long advocated for tax reform for Canadians and businesses. Our report, 50 Years of Cutting and Pasting, outlines our historic position as well as why Canada has the tax system it does today.

Updates