Alberta cuts business tax, boosts infrastructure spending to reboot economy

By Dean Bennett

THE CANADIAN PRESS

EDMONTON _ Alberta is cutting business taxes, pumping billions into infrastructure and making a full-court press to lure jobs from Toronto, Montreal and elsewhere to rebound from the COVID-19 pandemic.

“We’re going to be placing a huge emphasis on finance and financial technology,” Kenney said Monday in Calgary.

“All of those banks and insurance companies down on Bay Street that are paying way more taxes. Their workers are paying way more taxes. They are paying way more for rent. They’re fighting Toronto traffic.

“We’re going to be telling them that they can save money for their shareholders, for their workers, for their operations by relocating financial and fin-tech jobs to places like downtown Calgary, downtown Edmonton.”

Kenney said they will also target companies in other locations such as Montreal, Houston and New York as his province works to dig out of a cratered provincial economy caused by the pandemic and by a global oil price war that sent profits into a tailspin.

Alberta has flattened the curve on COVID-19 and has reopened much of its economy, albeit with health safety conditions, and Kenney said now is the time to get the economy back on its feet.

This year’s budget deficit is expected to balloon from $7 billion to $20 billion.

Kenney announced an immediate $10 billion will be spent on a range of infrastructure projects, including roads, health-care facilities, and schools to create construction jobs, with spinoff benefits to other service providers.

Kenney cut the corporate income tax rate to 10 per cent from 12 per cent after taking office last year. That figure was to go down to eight per cent in the coming years, but Kenney announced it will be done this week. That makes it four percentage points lower than key competitors such as British Columbia.

Albertans already have the lowest tax regime in Canada and pay no sales tax.

There will also be an Innovation Employment grant to encourage high-tech companies and investment. The grant replaces tax incentives put in place by the previous NDP government, which Kenney scrapped on the grounds the incentives were too narrowly focused.

Details on this fund, and other sector-specific initiatives are expected in the coming days.

NDP Opposition Leader Rachel Notley said the $10 billion will help as a short term  “shock absorber” but called Kenney’s other ideas unimaginative, adding the corporate income tax cut didn’t bring back jobs before the pandemic, and won’t bring them back after.

“There’s very little new that is in here and it proves that this government is already out of ideas,” said Notley.

Ken Kobly, head of the Alberta Chambers of Commerce, said the announcement delivers critical aid.

“The measures announced today will help business operators get back on their feet so they can begin rebuilding our economy,” he said.

The plan is a marked departure from the laissez-faire economic platform Kenney championed and won on in the election. Kenney chastised then-premier Notley’s NDP at the time for heavy spending on infrastructure and on day-to-day operations, saying it would cripple future generations with unsustainable debt.

Since then, as the oil and gas economy has been slow to recover, Kenney assumed a more direct interventionist approach.

In March, his government agreed to provide $1.5-billion, plus a $6-billion loan guarantee, to Calgary-based TC Energy Corporation, enabling the completion of the KXL pipeline.

Finance Minister Travis Toews said Monday that “there’s good debt and bad debt.” Bad debt, he said, is borrowed money for operations while good debt invests in infrastructure that in turn lures businesses to the province.

“This is an incredible ditch that we have to get through, and so it warrants a significant investment,” said Toews.

 

Commission income earned by life insurance broker was taxable

By Law Times

Taxpayer was life insurance broker employed by G Inc., was majority shareholder of G Inc. and was director and officer. Commissions in respect to any life insurance policies placed through services of taxpayer were paid to, and received by, G Inc. and G Inc. paid salary to taxpayer for services he provided on its behalf. In 2014, taxpayer purchased life insurance policy with benefit amount of $1,000,000 on his own life. Insurer paid first year commission in amount of $20,822.41 to G Inc. and bonus commission of $36,439.22 was paid in respect of policy by C Ltd. to G Inc.. In 2014, G Inc. paid salary of $111,617 to taxpayer and relying on Canada Revenue Agency (CRA) administrative policy, taxpayer deducted from his salary $57,261.53, which represented total of commissions in respect of policy. CRA issued reassessment to disallow deduction of commissions. Taxpayer appealed. Appeal dismissed. Nothing in s. 8 of Income Tax Act permitted taxpayer, in computing his income from employment in 2014, to deduct commissions received by G Inc. in respect of policy. Commission income earned by life insurance broker was taxable. If CRA determined that particular taxpayer did not qualify for favourable treatment set out in CRA’s administrative policy, taxpayer’s appeal could not be decided in manner that was inconsistent with Act. Even if administrative policy could be applied, taxpayer did not come within that policy.

Ghumman v. The Queen (2019), 2019 CarswellNat 2252, 2019 CarswellNat 2324, 2019 TCC 125, 2019 CCI 125, Don R. Sommerfeldt J. (T.C.C. [Informal Procedure]).

Case Law is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. These cases may be found online in WestlawNext Canada. To subscribe, please visit store.thomsonreuters.ca

Taxpayer was life insurance broker employed by G Inc., was majority shareholder of G Inc. and was director and officer. Commissions in respect to any life insurance policies placed through services of taxpayer were paid to, and received by, G Inc. and G Inc. paid salary to taxpayer for services he provided on its behalf. In 2014, taxpayer purchased life insurance policy with benefit amount of $1,000,000 on his own life. Insurer paid first year commission in amount of $20,822.41 to G Inc. and bonus commission of $36,439.22 was paid in respect of policy by C Ltd. to G Inc.. In 2014, G Inc. paid salary of $111,617 to taxpayer and relying on Canada Revenue Agency (CRA) administrative policy, taxpayer deducted from his salary $57,261.53, which represented total of commissions in respect of policy. CRA issued reassessment to disallow deduction of commissions. Taxpayer appealed. Appeal dismissed. Nothing in s. 8 of Income Tax Act permitted taxpayer, in computing his income from employment in 2014, to deduct commissions received by G Inc. in respect of policy. Commission income earned by life insurance broker was taxable. If CRA determined that particular taxpayer did not qualify for favourable treatment set out in CRA’s administrative policy, taxpayer’s appeal could not be decided in manner that was inconsistent with Act. Even if administrative policy could be applied, taxpayer did not come within that policy.

Ghumman v. The Queen (2019), 2019 CarswellNat 2252, 2019 CarswellNat 2324, 2019 TCC 125, 2019 CCI 125, Don R. Sommerfeldt J. (T.C.C. [Informal Procedure]).

Case Law is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. These cases may be found online in WestlawNext Canada. To subscribe, please visit store.thomsonreuters.ca

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