Good morning, Mr. Chairman, honourable members. Thank you for the invitation to appear before your committee to speak to you about Bill C-48.
My name is Kim Moody. I'm a tax practitioner from Calgary, Alberta, and a partner in a unique tax advisory practice comprised of approximately 20 Canadian chartered accountants, U.S. certified professional accountants, Canadian lawyers, and U.S. lawyers.
We focus strictly on tax advisory matters for the private client, for the benefit of the two professions that dominate the practice of tax in Canada: accountants and lawyers. Most of our clients have direct or indirect interests with our southern neighbours, the U.S., and therefore we practise in U.S. tax law as well.
I've had the pleasure in my 20-plus years of practice in tax to serve for some of the distinguished organizations representing our profession. For example, I'm the immediate past chair of the board of the Canadian Tax Foundation. I'm also the immediate past chair of the Society of Trust and Estate Practitioners, STEP, and I've volunteered extensively for the Canadian Institute of Chartered Accountants in various tax capacities. I'm a current member of the CBA /CICA Joint Committee on Taxation.
However, my remarks today are not at all to be associated with these prestigious organizations. Instead, my remarks to you today represent the views of myself and our firm. At the outset, our firm supports the passage of Bill C-48. While some of its contents are not perfect, as I'll comment later, it is important to get it passed.
More than 200 years ago, Adam Smith, in his landmark book, The Wealth of Nations , laid out the basic principles of a good taxation system. Overly simplified, those principles are fairness, certainty, convenient to pay, and administratively simple. While we could debate those four principles for a long time, it is the certainty principle that would be compromised by not quickly passing Bill C-48. We believe that certainty in tax matters has been severely compromised by the inability to pass the collection of technical amendments that comprises Bill C-48. We expressed this view to the Auditor General when we were interviewed by her office prior to the release of her fall 2009 report.
As a private practitioner, do we advise clients to adhere to existing law or proposed law? Not an easy question to answer, given the recent history of how long it takes to get technical amendments passed. As you know, Mr. Chairman, some of the content of Bill C-48 originates from 1999.
As mentioned, Bill C-48 contains technical amendments that are by no means perfect. For example, there is proposed subsection 56.4, the restrictive covenant proposals, about which I wrote a paper for the Canadian Tax Foundation in 2008. They're very wide-sweeping and can have significant unintended consequences. If you're interested in good bedtime reading, I'd be glad to give you a copy of my 60-plus-page paper.
Second, there are the non-resident trust proposals in proposed section 94. Such proposals are extremely broad and nearly incomprehensible.
There are compelling arguments—which our firm agrees with and are consistent with Adam Smith's principles—that wide-sweeping, imperfect, and incomprehensible draft legislation should not be passed. In a perfect world, such draft legislation would be more targeted, have fewer unintended consequences, and be understandable. However, Bill C-48 contains measures that reflect good tax policy—reasons for its inclusion. To not pass such imperfect legislation would compromise Adam Smith's fairness principle, which at this point is critically important to consider. We only hope that such imperfections can be later fixed.
Our firm is sympathetic to some of the factors that have led us to where we are today. We commend the Department of Finance for the hard work they obviously do to ensure, to the best extent possible, that Canada's tax legislation is fair.
We would encourage the government to explore better ways to pass important tax proposals into law in a more timely, accurate, and comprehensible manner. For example, it would be ideal for the Department of Finance to engage the private and academic tax community on tax policy matters on a regular basis. Our firm's clients are usually successful private clients. Such businesses and individuals contribute greatly to the economic success of this country and deserve a certain tax system.
Thank you for your time. I'd be pleased to respond to your questions.