In Other News
The globalization of the economy and the expansion of technology continue to drive exponential change, and one of the ways accounting standard-setters have kept pace is by implementing international financial reporting standards (IFRS). These include accounting standards for private enterprises (ASPE) that were introduced, in large part, to provide smaller businesses with less onerous reporting and disclosure processes, as standard-setters recognized that creditors were the main users of small businesses’ financial statements.
Much has been written about digitalization, AI, and machine learning, and how these developments signify the advent of the fourth Industrial Revolution. The development of new technologies continues to accelerate, and we’re already seeing digital business transformation begin to alter the DNA of business culture and structure. Essentially, we’re all looking at a new way of doing business.
Before Bill C-208 came into effect on June 29, 2021, owners of a small business corporation, a family farm, or a fishing corporation were penalized when they sold or transferred shares to their child through a corporation owned or controlled by the child. The anti-avoidance rule in section 84.1 of Canada’s Income Tax Act (the ITA) recharacterizes capital gains as taxable dividends if taxpayers receive non-share consideration, such as cash or a promissory note for the proceeds of their shares to a non-arm’s length (related) corporation. Due to this recharacterization, section 84.1 not only subjects taxpayers to higher taxes (taxable dividends are subject to a higher tax rate than capital gains), but it also eliminates the opportunity for taxpayers to claim their lifetime capital gains exemption (LCGE) on the sale of their shares.
With its mandate to protect the public, CPABC is responsible for establishing and enforcing the professional standards of its registrants. Its duties also include working to combat money laundering. Anti-money laundering (AML) education and awareness campaigns are not new to CPABC—nor are the rules designed to prohibit any activities associated with money laundering. However, as money laundering risks evolve, so must the CPA profession.