Canadian Companies Fail To Take Advantage Of Tax Deferral Scheme

by Mike Godfrey, Tax-News.com, Washington

30 April 2002

According to reports, Canadian companies largely failed to take advantage of a tax deferral scheme established by the federal government to ease the economic pain which was expected to hit the country this year.

The Canadian Federation for Independent Business (CFIB), has blamed a lack of publicity regarding the policy, arguing that there was little follow-up on the measure, and that the details were almost inaccessible on the CCRA website.

The program granted a six month deferral on corporate income taxes for the first three months of this year. However, although this would theoretically have benefited both companies and the federal government during the economic slowdown, adoption of the plan would have proved too cumbersome for many Canadian small businesses, and organisations were, in any case, only given a short time to take advantage of the scheme.

Speaking to the Canadian Globe and Mail on Monday, one senior economist suggested that the initiative was designed to reduce the nation's sizeable budget surplus, which is likely to embarrass the government given that it turned down many spending requests in the December budget, pleading poverty.

'It was an accounting trick to cut down on this year's surplus,' explained Marc Levesque. 'It was a very obvious attempt to transfer revenues from one year to the next.'

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