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The purpose of this paper is to examine the distributional impact of personal income tax in Canada and China over the most recent decade.
Abstract
Purpose
The purpose of this paper is to examine the distributional impact of personal income tax in Canada and China over the most recent decade.
Design/methodology/approach
The Urban Household Survey in China and the Canadian Socio‐Economic Information Management System data are employed.
Findings
It was found that, in both Canada and China, the personal income taxes are progressive, that is, tax payments and average tax rates are increasing in the income share of high‐income taxpayers.
Research limitations/implications
This paper does not explore the connection between tax progressivity differences and social, political, and cultural differences in the two countries.
Practical implications
This paper is of interest to policy makers, economists, and academics, who seek to design an income tax system which can mitigate income inequity efficiently. Given that income taxes have changed in China in recent years, future studies should be conducted to compare the distributional impacts of the new tax system against those of the old tax system.
Originality/value
This is the first study of distributional impact of income tax in China. This is also the first study to compare tax distribution between China and a developed country.
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Yosra Fourati Makni, Anis Maaloul and Rabeb Dabbebi
The purpose of this paper is to investigate the determinants of tax-haven use of publicly listed Canadian firms.
Abstract
Purpose
The purpose of this paper is to investigate the determinants of tax-haven use of publicly listed Canadian firms.
Design/methodology/approach
Based on alternative measures of tax havens (TH) and referring to a sample of 235 Canadian firms over the period of 2014–2015, probit-regression analyses are used to examine the determinants of tax-haven use.
Findings
The authors provide evidence that multinationality, intangible assets, thin capitalization, withholding taxes, equity-based management remuneration and tax fees paid to auditing firms are positively associated with TH use. Furthermore, the authors show that the variable relating to R&D intensity is positively associated with TH use. The authors also document that strong corporate-governance structures are negatively associated with TH use.
Research limitations/implications
This study is only limited to Canadian firms, so the results may not be generalizable to other countries.
Practical implications
The results may assist tax watchdogs in their efforts to understand the tax behavior held by Canadian firms. They may also be interesting for tax authorities in planning enforcement activities.
Originality/value
This study uses a sample from publicly listed financial and non-financial firms. It also uses various lists of TH published by various competent sources (IMF, 2000, 2007; TJN, 2005; OECD, 2012). The findings corroborate the recent media attention about the extensive use of TH by Canadian firms.
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This article reports on a study on the value‐added tax (VAT) levied on new residential properties sold to individuals by developers registered for VAT purposes. The objective of…
Abstract
This article reports on a study on the value‐added tax (VAT) levied on new residential properties sold to individuals by developers registered for VAT purposes. The objective of the research was to evaluate the current VAT provisions applicable to new residential properties in South Africa by measuring them against the principles of taxation, and by comparing the results with those obtained for the United Kingdom, Canada and Australia. Similarities and differences are established and evaluated. It is recommended that the supply of new residential properties in South Africa be zero rated.
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Manon Deslandes, Suzanne Landry and Anne Fortin
– The purpose of this paper is to examine whether the significant dividend tax rate reduction for individual investors in Canada in 2006 affected firms’ payout policies.
Abstract
Purpose
The purpose of this paper is to examine whether the significant dividend tax rate reduction for individual investors in Canada in 2006 affected firms’ payout policies.
Design/methodology/approach
Using regression models, the authors examine the impact of the 2006 dividend tax cut on dividends and share repurchases in Canadian listed firms from 2003 to 2008. The authors also ran a multinomial logit regression to examine choices between payout policies.
Findings
Following the tax cut, firms increased their dividend payouts, with larger increases for firms in which shareholders benefited from the reduced tax rate. However, the 2006 tax cut appears to have had no negative effect on distributions through share repurchases. After the 2006 dividend tax cut, firms owned by shareholders subject to dividend taxes were more likely to use a combination of distribution mechanisms than share repurchases only, dividends only, or no payouts.
Practical implications
Shareholders’ tax preferences are an important factor for firms to consider when designing payout distribution policies. Following the 2006 dividend tax cut, firms increased their dividend payouts.
Social implications
The findings provide tax regulators with insight into how firms react to tax reform. They suggest that firms adapt their payout policy in the face of: a noteworthy dividend tax cut (6.2 per cent); a dividend tax cut that does not encourage tax arbitrage; and a dividend tax cut that does not economically favour dividend payment over share repurchases.
Originality/value
The paper considers the 2006 dividend tax rate cut in Canada, which presents a number of significant features that allow capturing the effect of a tax cut on payout policies.
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This paper reports on a research study of value‐added tax (VAT) that applies to new residential properties developed by developers who are registered for VAT purposes. The…
Abstract
This paper reports on a research study of value‐added tax (VAT) that applies to new residential properties developed by developers who are registered for VAT purposes. The objective of the research was to compare the current VAT provisions relating to new housing in South Africa with those of the United Kingdom, Canada and Australia. Similarities and differences were determined and discussed. It was ascertained that the selected countries all have special rebates or concessions regarding new housing, whereas South Africa has none.
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A section 80M(1)(d) reportable arrangement is defined in the Income Tax Act 58 of 1962, as amended, and contains the reasonable expectation of a pre‐tax profit requirement. Such…
Abstract
A section 80M(1)(d) reportable arrangement is defined in the Income Tax Act 58 of 1962, as amended, and contains the reasonable expectation of a pre‐tax profit requirement. Such an arrangement must be reported to the Commissioner of the South African Revenue Service within 60 days. Failure to do so can result in a R1 million penalty. It is submitted that this requirement is subjective because of a lack of indigenous litigation and implementation guidelines. The Canadian reasonable expectation of profit (REOP) test may be of value to formulate objective standards against which to apply the section 80M(1)(d) reportable arrangement.
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Steven Graham and Wendy L. Pirie
The fact that stocks going ex‐dividend decline in price by less than the dividend amount is theoretically attributed to the differential taxation of dividend and capital gains or…
Abstract
The fact that stocks going ex‐dividend decline in price by less than the dividend amount is theoretically attributed to the differential taxation of dividend and capital gains or the differential taxation of investor groups. NYSE, Amex and Toronto Stock Exchange listed stocks, and stocks interlisted on these three exchanges, are examined to infer the tax jurisdiction of the marginal investor. The stock price changes relative to the dividends are consistent with a tax clientele effect. Further, the stock price changes are plausible given the tax rates. Ex‐dividend day behavior is different for non‐interlisted stocks on all three exchanges, suggesting each exchange has a different tax clientele. Canadian firms interlisted on US exchanges exhibit ex‐dividend day behavior consistent with the appropriate US exchange’s non‐interlisted stocks, suggesting that the marginal investors in these stocks are American.
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The theme of this year's conference on economic crime was hidden wealth in general — not necessarily dressed up as money laundering. Therefore the question becomes how is wealth…
Abstract
The theme of this year's conference on economic crime was hidden wealth in general — not necessarily dressed up as money laundering. Therefore the question becomes how is wealth ‘hidden’ rather than laundered — how can we best identify these funds — and are we politically willing to go after them and at what ‘costs’ to society in terms of dollars, but more importantly in terms of privacy and confidentiality considerations?
This paper aims to examine the relationship between pyramid ownership structure and tax avoidance.
Abstract
Purpose
This paper aims to examine the relationship between pyramid ownership structure and tax avoidance.
Design/methodology/approach
This paper is an empirical work using a sample of Canadian listed firms.
Findings
Relying on several proxies for tax avoidance, the authors find that firms affiliated with pyramidal structures generally engage in more tax avoidance activities than non-affiliated firms; firms affiliated with more complex pyramids engage in more tax avoidance practices and firms located at the lower tiers of the pyramids avoid more taxes; and some pyramid-affiliated firms with larger deviation between controlling shareholders’ cash flow rights and control rights engage in more tax avoidance practices.
Social implications
A broader understanding of the relationship between pyramidal structure and tax avoidance can be pursued by including firms in other countries, where the pyramid groups (pyramid structure) are prevalent, but institutional environments differ from that of Canada.
Originality/value
This study highlights the importance of pyramid ownership in shaping tax avoidance activities among Canadian-listed firms. Canada provides an ideal setting for studying the impact of ownership structure, as it contains a diverse corporate ownership structure ranging from widely held freestanding firms to pyramidal business groups.
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The purpose of this paper is to examine the significance of political and community activism in Toronto’s Chinese Canadian community between 2000 and 2016.
Abstract
Purpose
The purpose of this paper is to examine the significance of political and community activism in Toronto’s Chinese Canadian community between 2000 and 2016.
Design/methodology/approach
Adopting a mixed approach (historical, political and personal), the paper draws from both primary and secondary sources to explore three different cases – SARS in 2003, the Head Tax Redress in 2006 and Maclean’s “Too Asian?” controversy in 2010 – to illustrate discrimination against the Chinese Canadian community in Toronto during the 2000–2016 period while illuminating the importance of safeguarding human rights and dignity in the community.
Findings
The outbreak of SARS in early 2003 traumatized the whole city of Toronto and sparked waves of racial discrimination and bigotry directed at the Chinese Canadian community. Meanwhile, the community’s ongoing struggle to fight for justice and redress for the Chinese Head Tax seized the opportunity in 2006 to successfully challenge the Canadian government and other political parties to recognize and apologize for the racist tax and its long-term negative impact on the community. However, despite constant efforts, discrimination against Asian Canadians rose again, fueling Maclean’s controversial “Too Asian” article in 2010. Notwithstanding Canada’s positive image abroad, racial discrimination still exists. This paper urges that Canadians of all backgrounds must come together in solidarity and work hard to advocate for social and racial justice and human rights.
Originality/value
This paper will be of interest to community activists, journalists and scholars who are interested in the history of political and community activism in Toronto since 2000. Policymakers may also learn that an unexpected public crisis like SARS can ignite racial intolerance and negative attitudes toward Chinese Canadian and other communities.
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