Unfavourable:  Why Canada’s Global Tax Competitiveness Needs Reconsideration

Dr. Dean Smith

Given the federal government’s increase of the federal personal tax rate from 29% to 33%; their attack on small business taxation (including the introduction of the tax on split income (TOSI) rules and the clawback of the small business deduction for passive investment income); and the upcoming Canadian federal election, Canadian entrepreneurs are concerned about their increased tax burden, and investors should be too, says Dr. Dean Smith, President Cadesky U.S. Tax, Ltd., a keynote speaker at DAC this November.

By Dr. Dean Smith PHD, CFP, TEP, CPA, President Cadesky U.S Tax Ltd., who will be speaking at the Distinguished Advisor Conference in Puerto Vallarta, Mexico on November 12, 2019. Dr. Smith’s presentation will be focused on:

  • The changing global tax environment
  • How Canadian tax rates compare to other industrialized countries
  • The Canadian reporting requirements for Canadian entrepreneurs who are considering expanding their business beyond Canada

For 2019, the top Canadian personal tax rate ranges from a low of 44.5% (Nunavut) to a high of 53.53% (Ontario). These rates do not compare favourably with many of Canada’s industrialized competitors. For example, under the Tax Cuts of Jobs Act of 2017, the United States reduced the top U.S. federal personal tax rate from 39.6% to 37% (state taxes, however, must also be considered).

A major difference, however, is where the level of taxable income at which the top tax rate kicks in. For example, a resident of Ontario will be subject to the maximum personal rate at Cdn $220,000 of taxable income. In the U.S., for a single individual, the top U.S. federal tax rate kicks in at US $501,301 of taxable income. For Married Filing Joint filers, the top rate kicks in at US $612,351 of taxable income.

We can see similar lower rates in other countries. For example, the top UK personal tax rate is 45% on taxable income in excess of £150,000. In Australia, the top rate is 45% on taxable income in excess of AUS $ 180,000. In China, the top rate is 45% on taxable income in excess of CNY 960,000.

Join Dr. Smith at DAC as he discusses Canadian tax competiveness in a global economy, and weigh in on the following question on our September Poll : “Do you believe this is the right time for a meaningful tax reform in Canada?”