Is the Capital Cost Allowance System in Canada Unnecessarily Complex?
AbstractThe purpose of this paper is to investigate whether recurrent changes to Canada’s Capital Cost Allowance (CCA) system have significantly increased its complexity leading to incremental costs and inefficiencies for businesses. The study examines the extent to which the CCA system meets the principles of simplicity, equity and neutrality, assesses the efficiency of using the system as the vehicle for introducing economic incentives, and gauges how the CCA system affects the international competitiveness of Canadian businesses. Informed by views of accounting professionals and industry representatives, the results of the analysis provide evidence of the increased complexity of the CCA system. The system falls short on several key principles of a sound tax system and does not properly represent economic reality of the underlying assets. Moreover, the use of the system for economic incentives is generally not effective; however, representatives from certain industries emphasize the importance of such incentives for retaining international competitiveness.
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Bibliographic InfoPaper provided by Certified General Accountants Association of Canada in its series Working Papers with number 130401.
Length: 19 pages
Date of creation: Apr 2013
Date of revision:
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More information through EDIRC
Captial Cost Allowance system; tax simplification; international competitiveness; accelerated capital cost allowance; tax policy;
Find related papers by JEL classification:
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
This paper has been announced in the following NEP Reports:
- NEP-ACC-2013-05-05 (Accounting & Auditing)
- NEP-ALL-2013-05-05 (All new papers)
- NEP-PBE-2013-05-05 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jack M. Mintz, 2007. "2007 Tax Competitiveness Report: A Call for Comprehensive Tax Reform," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 254, September.
- Duanjie Chen & Jack M. Mintz, 2009. "The Path to Prosperity: Internationally Competitive Rates and a Level Playing Field," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 295, September.
- Annabelle Mourougane, 2008. "Achieving Sustainability of the Energy Sector in Canada," OECD Economics Department Working Papers 618, OECD Publishing.
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