Good morning.
Mr. Chair and members of the committee, thank you for the invitation to come to address you here.
I have been a professor of taxation at the Université du Québec in the Outaouais since May 1, 2015. My interests and field of research are mainly in the area of aggressive tax planning, whether by SMEs or others.
Before joining the Université du Québec in 2015, I worked in the income tax area for over 25 years, about half of that time being spent at the Canada Revenue Agency. When I began at the agency, I worked as a tax avoidance auditor. Afterwards, I worked at the agency, here in Ottawa, for the Income Tax Rulings Directorate.
Before joining the agency, I worked for a little over 10 years for a tax accounting firm. My clients were SMEs for the most part. And so I worked in tax planning for SMEs.
In short, I have worked in taxation since 1990.
There is no doubt that the proposed reform will be changing the tax planning landscape for SMEs. That is why I am here. I like putting things in layman's terms, I like to understand the rules and explain them. That is what I have been doing in the media since July 18. On several occasions I have had the opportunity of commenting on the file, or rather of explaining the rules and helping people to understand the tax policy.
It must be said from the outset that tax planning, either through income splitting or passive investments, that is to say the first two categories of measures, was legitimate and acceptable in tax policy. It was a change in tax policy. The fact that people used it does not mean that it was a loophole.
The third category of measures involves the conversion of dividends into capital gains. These are very specific measures that are intended to plug holes, if you will. There are tools in the act, but the government did not have much success regarding certain transactions. Tax planners were very creative in finding ways to bypass the law. That is why certain more specific tools were created, in order to prevent the possibility of tax avoidance.
My specialty is tax avoidance. Although I understand the overall system well, I have a few comments or reservations as to the last category of measures, that have to do with tax avoidance. Measures have been proposed that will certainly solve the problems, but may cause collateral damage in the case of legitimate transactions. This is going to cause some uncertainty.
This week, the Department of Finance held an information day with some tax specialists' associations. They were told that the purpose of these new measures was to counter tax avoidance transactions, but the fact remains that this is creating some uncertainty.
I am not here to lobby nor to exert pressure for either side. I am at your disposal to answer questions or comment the proposed measures in a general way.
Thank you very much.