Quote: Why are some Canadian companies paying almost no tax?
April 8, 2014
By Canadian Consulting Engineer
Extract from a blog published in Canadian Business magazine by Duncan Hood posted February 27, entitled "Why are some Canadian companies paying almost no tax?"
Extract from a blog published in Canadian Business magazine by Duncan Hood posted February 27, entitled “Why are some Canadian companies paying almost no tax?”
Quote: “We independently scoured the financial statements of select large corporations in Canada to come up with a shortlist of 15 companies that are using legal strategies to achieve unbelievably low tax rates. For instance, we found that Canadian Pacific Railway paid an average effective cash tax rate of just 1.8% over the past decade. Manitoba Telecom paid 4.1%. Gildan Activewear paid 5.5%. And First Capital Realty has gone for years without paying any cash taxes at all.
“These companies are using several different strategies to lower their taxes, but the government just keeps adding to their arsenal. A new policy that just came into effect in 2009 allows Canada to sign tax information exchange agreements with countries such as Bermuda, the Cayman Islands and the Isle of Man. It was intended to allow authorities to ferret out scofflaws hiding their money in offshore accounts. Instead, it ended up allowing companies to set up subsidiaries in these jurisdictions and bring their profits home tax-free.
“Companies that do so are not breaking the law. The problem is that only certain types of businesses can take advantage of these agreements, which results in a corporate tax system that is neither transparent nor fair….”
The article is based on an investigative study by the magazine. No engineering companies were on the list.
To read the blog in Canadian Business, click here.
To see the Canadian Business “Complete Ranking,” click here.