This document discusses various topics related to corporate taxation, including: - How corporate profits flow through mutual funds and institutional investors to governments via taxes. - Definitions of key terms like dividends, tax avoidance, and the OECD's BEPS initiative. - Differences between tax avoidance and tax evasion. - International comparisons of business tax rankings. - How corporate taxes, income taxes, and other taxes flow to fund government services like schools, hospitals, infrastructure and programs. - The importance of supporting innovation to drive business growth and jobs. - Debates around proposals for higher corporate tax rates or taxes on stock options.

1. HOW DO CORPORATE
PROFITS FLOW
BY: PAUL YOUNG, CPA, CGA
DATE: JUNE 21, 2019

2. PAUL YOUNG - BIO
• CPA, CGA
• Financial Solutions
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
• SME – Emerging Technology
• SME – Cloud-based solutions
Contact information:
Paul_Young_CGA@Hotmail.com

3. AGENDA
• What are mutual funds
• What are institutional investors
• What are dividends
• Investment decisions
• Why do Countries Tax Income
• What is BEPS
• Tax Avoidance definition
• Business Tax Ranking
• Blog – Corporate Tax
• Blog – Corporate Tax
• PBO and Corporate Tax
• How does tax income flow
• Why is innovation important
• Green Party and Taxation
• Alexandria Ocasio-Cortex / Taxation
• Sample of Financial Statement
• Analysis of Revenue
• Analysis of Cost
• Analysis of After Tax income

4. INTRODUCTION
• This presentation looks at corporate tax include the issues
facing the corporate taxation.

5. MUTUAL FUND
• What is a mutual fund
• A mutual fund is quite simply
a collection of stocks, bonds,
or other securities owned by a
group of investors and
managed by a professional
investment company. When
you put money into a mutual
fund, it is combined with
money from similar-minded
investors. Source -
http://www.globefund.com/c
entre/GettingStarted02.html

6. INSTITUTIO
NAL
INVESTORS
• What are institutional investors?
• An institutional investor is a nonbank person or
organization that trades securities in large enough
share quantities or dollar amounts that it qualifies
for preferential treatment and lower commissions.
Institutional investors face fewer protective
regulations because it is assumed they are more
knowledgeable and better able to protect
themselves. Examples of institutional
investors include pension funds and life
insurance companies.
• An institutional investor is an organization that
invests on behalf of its members. Examples
include endowment funds, commercial banks,
mutual funds and hedge funds.
Source:
http://www.investopedia.com/terms/i/institutionali
nvestor.asp

7. DIVIDENDS
• What are dividends?
• A dividend is a distribution of a portion
of a company's earnings, decided by
the board of directors, to a class of its
shareholders. Dividends can be issued
as cash payments, as shares of stock,
or other property
Source -
Investopedia http://www.investopedia.co
m/terms/d/dividend.asp#ixzz4N0nwF2E
6

8. STOCK MARKET
SOURCE – STATS CANADA, BMO AND TSX

9. INVESTMENT
DECISIONS
• Personal Investor
• Retirement Plans (RRSP, TFSA, Bonds and other options)
• Holding Stocks
• Buying and selling stock
• Pension Funds
• Goals
• Looking for business with solid returns
• Portfolio different components
• Money Market
• Foreign Holdings
• Local Holdings
• Institutional Investors
• Goals
• Will look at companies with a set rate of return (i.e. 6-8% or
higher)
• Will buy and sell chunk of shares to managed their returns

10. WHAT DO
WE TAX?
•If an investor has real estate and stock
portfolio those holding are not tax until they
are sold
•Capital Gains Taxation (based on selling of
Wealth)
What do countries not tax wealth
•Income earn from different sources of income
What do Countries Tax

11. WHAT IS
BEPS
• The Organization for Economic
Cooperation and Development
(OECD)’s Base Erosion and Profit
Shifting (BEPS) initiative seeks to
close gaps in international taxation
for companies that allegedly avoid
taxation or reduce tax burden in
their home country by engaging in
tax inversions (moving operations)
or by migrating intangibles to lower
tax jurisdictions. – Source -
https://www.pwc.com/gx/en/servic
es/tax/tax-policy-
administration/beps.html

12. TAX
AVOIDANCE
DEFINITION
Tax avoidance is the use of legal
methods to modify an individual's
financial situation to lower the amount of
income tax owed. This is generally
accomplished by claiming the
permissible deductions and credits. This
practice differs from tax evasion, which
uses illegal methods, such as
underreporting income to avoid paying
taxes.
Source -
https://www.investopedia.com/terms/t/t
ax_avoidance.asp

13. BUSINESS TAX RANKING
Source - https://taxfoundation.org/publications/international-tax-
competitiveness-index/
Trudeau
Harper

14. BLOG –
CORPORATE
TAX
• Douglas Gray No it does not! Oil
pays their taxes and gets their
tax deduction. Clean Tech gets
R&D and/other deductions like
Oil and Gas. Clean Tech loses
money which means they do not
pay corporate taxation as there
is no taxable income.
https://www.slideshare.net/paul
youngcga/how-corporate-and-
business-taxation-flows-to-
government
• The liberals are handling grant
money out to clean tech via
SDTC - https://www.sdtc.ca/en/
• My advice to you is stop taking
comments from people that have
never done a corporate tax
return in their life.

15. BLOG – CORPORATE TAX
• Jean,
• Where are you getting your information? All I see is a bunch of word salads with no evidence to support your claim.
• FYI
• I all about solutions including a fair tax system. I am about all angles including delivery of program spending, re-looking at the tax code, shutting down tax havens,
etc.
• You appear to be anti-business as such likely will not read my posts, but will take the NDP at their word when it comes to taxation, right?
• Corporation pay carbon tax, excise taxes, payroll taxes, royalties, corporate income tax - https://www.slideshare.net/paulyoungcga/how-corporate-and-business-
taxation-flows-to-government
• Mutual funds and pension funds invest in corporations - https://www.investopedia.com/university/mutualfunds/mutualfunds.asp
• Many corporations do not get direct business subsidies - https://www.investopedia.com/articles/basics/11/introduction-to-government-subsidies.asp (Direct
subsidies are loans, grants, etc.)
• Tax deductions are not subsidies. Corporations have to qualified for tax deductions - https://taxfoundation.org/corporate-tax-rates-around-world-2018/ -
Countries need to be competitive with all their tax, environmental and other government policies.
• There are rules around income movement it is called transfer pricing. The rules have change based on BEPS -
https://www.osler.com/en/resources/regulations/2018/canada-begins-ratification-process-for-multilateral-tax-convention-to-implement-beps
• You want to fixed income taxation then go after the tax code - https://www.brookings.edu/research/a-golden-opportunity-to-simplify-the-tax-system-options-for-
reforming-a-complex-tax-code/
• Governments around the world need to go after tax havens - https://medium.com/@nslewis/tax-havens-make-gdp-screwy-c241430447d9 - Liberals refused to go
after tax havens as the panama papers have shown there are liberals with holdings in tax havens - https://www.cbc.ca/news/business/stephen-bronfman-trudeau-
paradise-papers-1.4382511
• Trudeau and Morneau have trust funds. Maybe it is time to go after trust funds - https://www.advisor.ca/tax/tax-news/cra-to-demand-more-info-on-trusts-
beginning-in-2021/

16. PBO / CORPORATE TAX
• https://www.theglobeandmail.com/politics/article-canadian-corporations-may-have-avoided-25-
billion-or-more-in-taxes-in/
Canadian companies
transferred more than $1.6-
trillion in 2018 to low-tax
countries known as offshore
financial centres and conduits
to these nations, according to
a new report by the
Parliamentary Budget Officer.
• Liberals decided to mess with small business tax rules
and/or make Canada less competitive. Businesses have
decided to re-look at their international expansion -
https://www150.statcan.gc.ca/n1/daily-
quotidien/190424/dq190424a-eng.htm or
https://www.slideshare.net/paulyoungcga/2019-
election-canada-and-global-competitiveness-may-
2019
• Transfer pricing rules
• Government needs to do a better job reviewing
transfer pricing rules
• https://www.grantthornton.ca/en/insights/Cam
eco-decision-Impact-on-CRA-transfer-pricing-
audits/
• Where is PBO on tax treaties
• You need tax treaties -
https://taxca.com/category/tax-treaties/
• Where has Morneau been on tax treaties?
• Where is the PBO on BEPS
• https://home.kpmg/xx/en/home/insights/2018/05
/tnf-oecd-review-of-11-preferential-regimes-
beps-inclusive-framework-members.html
• Profits flow via R&D or intercompany dividends or
intercompany interest

17. WHAT DO TAXES PAID
Schools
Schools
• Spending
• Teachers Salaries
• Support Staff Salaries
• Role
• Educate kids
Hospitals Hospital
• Spending
• Salaries
• Procurement
• Role
• Cure the sickHospitals
Infrastructure
• Spending
• Salaries
• Procurement
• Role
• Moved goods and people between different
Roads
Other Areas
• Retirement – CPP,
OAS, GIS
• Public Safety –
Police, Fire Military
• Training/Skills
Development
• Immigration
• Other Departmental
Spending

18. WHY IS
IMPORTANT
TO SUPPORT
INNOVATIO
N
• Innovation leads to business growth
and jobs
• Countries need to have the right
policies
• Stock options
• Corporate Taxation
• Personal Taxation
• Hydro Rates
• R&D Credits
• Trade and Foreign Investment
Protection

19. LOBLAWS –
SHARE PRICE

20. LOBLAWS – INCOME STATEMENT
Sales are
generated by
what customers
will purchase
from Loblaws
• Vendor
purchases
• Rebates
• Volume
discount
• Procuremen
t Cost• Employees
• Consumers
• Taxpayers
• Tax bodies
• Corporate
Taxation
• Payroll
Taxation
• Consumption

21. INCOME FLOW / STATEMENT OF EQUITY
Analysis
• Loblaws paid out 416M
in dividends
• Loblaws kept $144
million of earning for
the business

22. ALEXANDRIA OCASIO-CORTEZ / TAXATION
70% taxation rate
Source - https://taxfoundation.org/summary-
federal-income-tax-data-2017/ or
https://www.cbpp.org/research/federal-
tax/policy-basics-where-do-federal-tax-revenues-
come-from or
https://www.taxpolicycenter.org/briefing-
book/what-are-sources-revenue-federal-

23. GREEN PARTY AND CORPORATE TAXATION
Someone needs to explain to @MikeSchreiner how taxing works. If your entity does not make taxable
income, then there is no corporate tax!
1. https://torontosun.com/news/provincial/ontario-lost-up-to-1-2-billion-selling-clean-energy-at-a-loss-
engineers
2. https://www.bnnbloomberg.ca/awash-in-red-ink-canadian-clean-tech-struggling-despite-ottawa-s-
green-goals-1.729679
3. NR companies in general make profit - https://globalnews.ca/news/4643295/canada-big-oil-company-
profits-report/
4. Corporate Taxation - https://www.slideshare.net/paulyoungcga/how-do-corporate-taxes-flow-to-social-
programs

24. WHAT IS REQUIRED
• All governments need to put more focus on economic development.
• The Income Tax act needs to be overhauled
• Expansion of tax treaties and better enforcement of BEPS
• CRA is struggling with both moneys and resources - https://www.cbc.ca/news/politics/tax-debt-liberal-budget-collections-
1.4715967 or https://www.cbc.ca/news/politics/cra-tax-avoidance-evasion-1.4787781
• More is required to eliminate tax havens and/or profit shifting. BEPS was a good first start -
https://www.dwpv.com/en/Insights/Publications/2019/US-Regulations-Target-Hybrid-Structures
• Majority of the taxes collected are from payroll taxes. The private sector plays a vital role in the collection of taxes.
• Carbon taxation are regressive tax and do nothing for the environment -
• Governments need to focus on the delivery of their program spending via value for money and/or activity-based costing
models.
• Governments need to stop thinking you can tax people to prosperity.