Canadian Banks Finally Getting a Tax Hit
We are all familiar with the term “the rich get richer, and the poor get poorer”, and in some cases the same could be said about businesses. It always seems like the big corporations and the lending institutions like our banks who rake in a decent profit also get the best tax breaks.
This may be all about to change in at least one instance. A $1.24 billion tax loophole may be on the verge of being closed for the banks.
This comes as a result of a proposal that exists in the Federal budget. Currently banks are allowed to claim an income tax deduction when they pay out some form of dividends under specific derivatives contracts. It is a complex financial dealing, and one that is way above the heads of the average citizen. It is often this type of complexity that causes us to create a closed mind so we really don’t know what is going on in these financial institutions. We do know that there is always talk about them increasing their service prices, and tacking new ones on. All of this taking place while big announcements are being made about the large volume of profit they are raking in.
If this proposal is accepted it will mean that the government can expect to recoup about $365 million from what would have been tax deduction in the next fiscal year. Then if you carry this forward for a total of four years the amount saved re the tax deductions would amount to $1.24 billion. T hat is a whopping amount of money, and for once instead of the general public feeling the brunt of a tax hit, those who can afford it are.
You can bet the banking institutions who will be affected by this on the whole are not happy. They will be scrutinizing this and no doubt coming back with their arguments once done. Now the banks are already crying the blues indicating that their industry sits as being one of the most highly tax industries there is. It is said that they collectively paid almost $8 billion in the 2013 tax years. Isn’t this understandable since they are also one of the most lucrative industries in existence? You only pay taxes on what you may right? So how can an entity that enjoys such high profit margins possibly complain about being in this type of tax position. Just imagine having to pay that amount of taxes after possibly having the advantage of prominent tax loopholes.