Corporate Tax vs Direct Subsidies

HOW DO
CORPORATE
PROFITS FLOW
BY: PAUL YOUNG,
CPA, CGA
DATE: DECEMBER
8, 2021

PAUL YOUNG - BIO
• CPA, CGA (1996)
• Academia (PF1, FA4, FN2, MU1. and
MS2)
• SME – Customer Success Management
• SME – Risk Management
• SME – Close, Consolidate and
Reporting
• SME – Public Policy
• SME – Emerging Technology
• SME – Business Process Change
• SME – Financial Solutions
• SME – Macro/Micro Indicators
• SME – Supply Chain Management
• SME – Data, AI, Security, and Platform
Contact information email: Paul_Young_CGA@hotmail.com
LinkedIn: https://www.linkedin.com/in/paul-young-055632b/
SlideShare - https://www.slideshare.net/paulyoungcga
Twitter: https://twitter.com/paulyoungcpa
Youtube - https://www.youtube.com/user/youngercga1968/videos

INTRODUCTION
THIS
PRESENTATION
LOOKS AT
CORPORATE TAX
INCLUDE THE
ISSUES FACING
THE CORPORATE
TAXATION.

AGENDA
• Program Spending/% of GDP
• Taxation / % of GDP
• FDI / Government Policies
• What are mutual funds
• What are institutional investors
• What are dividends
• Investment decisions
• Why do Countries Tax Income
• What is BEPS
• Digital Tax
• Excess Profit Tax
• Tax Havens
• Small business tax reforms
• Tax Avoidance definition
• Business Tax Ranking
• Subsidies
• GDP / Per capita
• 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
• Socialism
• Government Taxation and Spending
• Sample of Financial Statement
• Analysis of Revenue
• Analysis of Cost
• Analysis of After-Tax income

SIZE OF GOVERNMENT
Source -
https://www.economicshelp.org/blog/158853/eco
nomics/list-of-government-spending-as-a-of-
Government needs to focus on the following:
1. Assessing all programs to ensure they are efficient
and effective through more value for money audits -
https://www.slideshare.net/paulyoungcga/the-
importance-of-value-for-money-and-perfomance-
based-audits
2. All levels government need to have audited crisis and
emergency management reports for all their
departments, agencies, and GBE (Government
Business Enterprises) -
https://www.slideshare.net/paulyoungcga/why-
there-needs-to-be-audited-reports-of-crisis-
emergency-management-policies-and-procedures
3. All levels of government need to move to digital
footprint -
https://home.kpmg/xx/en/home/industries/governm
ent-public-sector/the-new-reality-for-
government/digital-is-not-the-future-it-is-today.html

TAXATION AND GOVERNMENT
Source - https://www.economicshelp.org/blog/158853/economics/list-of-government-spending-as-
a-of-gdp/
1. fix the tax code
2. close-down tax havens
3. Implement value for money on all programs
4. Stop throwing money at the symptoms
I have written many blogs on tax fairness -
https://www.slideshare.net/paulyoungcga/wealth-
and-taxation-fairness-february-2021
Source -
https://financialpost.com/financial-
times/chrystia-freeland-calls-bidens-
global-tax-plan-a-breakthrough-moment

Blog – Stock Market – WE – November 26, 2021 - https://www.slideshare.net/paulyoungcga/what-is-up-with-stock-marklet-
november-26-2021
U.S. stocks plunged on Friday, with global markets rattled by a new coronavirus variant discovered in South Africa, which
fanned concerns that new growth-crushing lockdowns could be imposed if the variant spreads widely.
Source - https://ca.finance.yahoo.com/news/stock-market-news-live-updates-november-26-2021-125443465.html

TOP FDI DESTINATION VS GLOBAL
RANKINGS

INSTITUTION
AL
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/institutionalinvest
or.asp

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.com/terms/d/dividend.asp#ixzz
4N0nwF2E6

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

FEDERAL GOVT
– FISCAL
MANAGEMENT
• GDP growth is 2%
on avg for Trudeau
• Trudeau has no
balance budget

BUSINESS SUBSIDIES
https://www.nextbigfuture.com/2019/06/coal-oil-and-gas-subsidies-are-5-trillion-per-year-because-of-uncharged-air-
pollution.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2Fadvancednano+%28nextbigfuture%29
Here is what I told people.
Can you show me how business is getting subsidies or tax breaks or other benefits? FYI – It is private sector that create jobs and not the government. The role of
government is set policies to encourage investment. BTW: How did the NDP fair in both Ontario, MB, SK and AB over the past 20+ years?
1. Companies pay environment charges - https://business.financialpost.com/entrepreneur/regulatory-accumulation-is-still-damming-entrepreneurial-flow-comment or
https://www150.statcan.gc.ca/n1/daily-quotidien/181214/dq181214d-eng.htm
2. Tesla - How this not a subsidy? https://www.nextbigfuture.com/2019/09/tesla-gets-10-tax-exemption-in-
china.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2Fadvancednano+%28nextbigfuture%29 @realDonaldTrump
3. Companies downsizing - https://business.financialpost.com/commodities/energy/exclusive-spains-repsol-cuts-30-of-canadian-staff-in-global-
restructuring?utm_medium=Social&utm_source=Facebook&fbclid=IwAR20OQ-
lF4DZZ2XdU2DimCNOg046pGwf_j161xMWqNiGfjq3GyuX3ofnnaE#Echobox=1560944759
4. Products include many environment costs as part of their product cost
5. Clean Technology relies on direct subsidies - https://www.fraserinstitute.org/article/despite-decades-of-government-subsidies-canadian-innovation-has-waned and
yet Clean Technology on average loses nearly $4B per year - https://www.bnnbloomberg.ca/awash-in-red-ink-canadian-clean-tech-struggling-despite-ottawa-s-
green-goals-1.729679
6. Many countries power production is made via fossil fuel. If you have plug in stations and/or other battery devices then they have a carbon footprint -
https://www.slideshare.net/paulyoungcga/2019-election-power-generation-clean-sources-canada-february-2019
7. There many pieces to the environment that are all but ignored - https://www.slideshare.net/paulyoungcga/2019-election-climate-change-and-the-environment-canada
8. Tax on Pollution - https://www.slideshare.net/paulyoungcga/art-of-taxing-pollution-canada-environment BTW: A carbon tax is like a consumption tax, right? Both
those taxes are regressive taxes which means they hurt the low to middle class more in terms of cost. https://www.slideshare.net/paulyoungcga/2019-election-
middle-class-canada-june-2019-149149542
9. Competitiveness - https://www.slideshare.net/paulyoungcga/2019-election-canada-and-global-competitiveness-may-2019
10. GDP Growth - https://www.slideshare.net/paulyoungcga/2019-election-gdp-and-economy-canada
11. National Pharmacare would cost $17B+ per year - https://www.slideshare.net/paulyoungcga/2019-election-drug-program-pharmacare-canada-june-2019
12. Wealthiest - https://www.slideshare.net/paulyoungcga/2019-election-top-1-wealthiest-canada-june-2019
13. Low ROI/Clean Technology - https://www.nextbigfuture.com/2019/07/low-energy-return-will-not-cause-a-
Singh is for Automotive subsidies, right
?
https://globalnews.ca/news/5903303/
ndp-auto-industry-jobs-incentives/

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

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

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/services/tax/tax-
policy-administration/beps.html
• Most countries are not fulfilling their commitment to amend their tax treaties to
meet global standards aimed at preventing tax avoidance through tax treaty
shopping, an April 1 OECD report shows. Out of 2,295 tax treaties in force
between “Inclusive Framework” countries on July 1, 2020, only about 350 treaties
were compliant with the minimum standard on tax treaty shopping set out the
OECD/G20 base erosion profit shifting (BEPS) plan Action 6 final report, the OECD
said. https://mnetax.com/countries-continue-to-permit-tax-treaty-shopping-
despite-beps-promises-oecd-report-reveals-43292

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/tax_avoidance.asp

DIGITAL TAX
Source - https://taxfoundation.org/digital-tax/ or https://taxfoundation.org/oecd-beps-
digital-tax/
• A DST is a tax on selected gross revenue streams of large digital companies. Each country’s
proposed or implemented DST differs slightly. For example, France applies a 3 percent tax on
revenues from targeted advertising, the transmission of data collected about users for advertising
purposes, and from providing a digital interface. All DSTs have domestic and global revenue
thresholds, below which companies are not subject to the tax. Back to top
• EU has led the charge on a digital tax - https://taxfoundation.org/digital-tax-europe-2020/
• Canada is imposing sales tax on digital transactions - https://quaderno.io/blog/digital-taxes-
around-world-know-new-tax-rules/
• United States taxation, especially sales tax charging on digital varies state by state -
https://quaderno.io/blog/digital-taxes-around-world-know-new-tax-rules/

EXCESS PROFITS TAX
Source -
https://www.inve
stopedia.com/ter
ms/e/excess-
profits-tax.asp
https://www.canadianmanufacturing.com/financing/
excess-profits-tax-would-reap-8-billion-for-
government-budget-watchdog-says-269175/
NDP/Peter Julian
Risk:
• The measurement used can vary across sectors and/or between
different companies -
https://www.jstor.org/stable/41789788?seq=1
• USA repeal the excessive tax charge -
https://taxfoundation.org/financing-defense-excess-profits-tax-
solution/
• PBO Analysis -

TAX HAVENS
• For the second time this week, experts are sounding the alarm on the multi-billion-dollar cost
of tax dodging. Today’s Parliamentary Budget Officer’s report suggests Canada is losing up to
$25 billion or more a year in tax revenues from multinational corporations avoiding taxes
through tax havens. “Canadians are being robbed of investments to health care, childcare,
education and green infrastructure – all of which the government could afford if it were to get
serious about cracking down on tax avoidance,” said Toby Sanger, executive director of
Canadians for Tax Fairness. The PBO’s findings add to a similar report this week from the
Canada Revenue Agency that estimated corporations are responsible for at least $10 billion --
40% of the federal government’s estimated $24-billion overall tax gap. Source -
https://www.taxfairness.ca/en/press_release/2019-12/tax-avoidance-costing-canada-25b-
year-pbo
• Source - https://www.taxjustice.net/press/tax-haven-ranking-shows-countries-setting-
global-tax-rules-do-most-to-help-firms-bend-them/

SMALL BUSINESS TAX REFORMS
• Here is another group that @justintrudeau and @navdeepbains have ignored with all their policies
over the past four years - https://www.cbc.ca/news/politics/council-of-canadian-innovators-
ceos-pen-letter-innovation-1.5310290?fbclid=IwAR1EVBolxLLesLktXNLQ-lfWqhURP5SQY7CK3--
qbpE5Vfmg2ooCctwm60Y
• Tech Startups have complaining feverishly to Liberals about the changes to small taxes, i.e. income
sprinkling, passive income, tax rates, etc. The liberals ignored small tech startups as they have
spent more time courting large tech companies - https://www.slideshare.net/paulyoungcga/what-
is-next-for-canadas-technology-sector or taxation rules for small business -
https://www.slideshare.net/paulyoungcga/canada-whats-next-for-small-business
• Small business tax reforms - https://globalnews.ca/news/3743459/trudeau-tax-reforms-tax-
loopholes-small-business/ or https://www.investmentexecutive.com/news/industry-news/will-a-
minority-government-revisit-small-business-taxation/
•

BUSINESS TAX RANKING
Source - https://taxfoundation.org/publications/international-tax-competitiveness-index/ or
https://taxfoundation.org/publications/corporate-tax-rates-around-the-world/
Trudeau
Harper

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.

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/

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 centers 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

WHAT DO TAXES PAID
Schools
Schools
• Spending
• Teachers Salaries
• Support Staff Salaries
• Role
• Educate kids
Hospitals Hospital
• Spending
• Salaries
• Procurement
• Role
• Cure the sick
Hospitals
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

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

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

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

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-

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!
•
• https://torontosun.com/news/provincial/ontario-
lost-up-to-1-2-billion-selling-clean-energy-at-
a-loss-engineers
• https://www.bnnbloomberg.ca/awash-in-red-
ink-canadian-clean-tech-struggling-despite-
ottawa-s-green-goals-1.729679
• NR companies in general make profit -
https://globalnews.ca/news/4643295/canada-
big-oil-company-profits-report/
• Corporate Taxation -
https://www.slideshare.net/paulyoungcga/how-
do-corporate-taxes-flow-to-social-programs

PROBLEM WITH SOCIALISM
• Many people miss construed that providing social programs is the only
definition of socialism. Complete socialism means complete
government control all aspect of the economy and people’s lives
• Social programs need to be funded properly including tied to
outcomes. Too many government throw money at the symptoms which
never fixes the root cause when it comes to an issue
• Source - https://www.slideshare.net/paulyoungcga/failures-of-socialism-
238542106

GOVERNMENT ROLE
• Government role is set policy to ensure tax fairness
• Government role is to deliver social spending in a way that
outcomes are improve as well as money is delivering in a value
for money way
• Reforming Government -
https://www.slideshare.net/paulyoungcga/how-to-reform-the-public-
sector-in-canada-and-around-the-world

WHAT IS
REQUIRED
• All governments need to put more focus on economic development.
• No to a wealth tax - https://www.slideshare.net/paulyoungcga/wealth-tax-does-the-
world-need-a-wealth-tax
• Canada needs to be competitive - https://www.slideshare.net/paulyoungcga/canada-
competitiveness-analysis-of-policy
• The Income Tax act needs to be overhauled -
https://www.slideshare.net/paulyoungcga/designing-social-programs-and-tax-
fairness-policies
• 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. -
https://www.slideshare.net/paulyoungcga/how-to-reform-local-and-municipal-
government or https://www.slideshare.net/paulyoungcga/the-role-of-operational-
and-performancebased-auditing-on-government-and-the-private-sector
• Governments need to stop thinking you can tax people to prosperity -
https://www.slideshare.net/paulyoungcga/transforming-the-economy-postcovid19-
canada-and-the-world

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