States are increasingly concerned with the domestic and international tax strategies of businesses. Since the 2008 Global Financial Crisis, tax planning by corporations has come under greater scrutiny, sometime resulting in a CRA audit. This trend to maximize tax revenues from both domestic and international business operations is evident in the recent Budget Implementation Bill of the Canadian Government, and its added budget to support CRA audit. This puts boards of directors in a difficult positon. They must balance the tax cost of their activities with a view to maximizing profits and shareholder returns while at the same time keeping an eye out for changing rules, administrative practices, and social expectations. Chartered Professional Accountants can help boards analyze their current tax circumstances and devise strategies to minimize risk while maximizing returns. A review by a Chartered Professional Accountant can also uncover past errors that can be remedied through a Voluntary Disclosure.
The duty of a board of directors to consider their company’s tax strategy speaks to their responsibility to manage or supervise the management of the corporation’s business and affairs. This cannot be undertaken from the view of shareholders alone, but has to be an inclusive look at the views of all stakeholders on whom the success of the business depends. But tax is only one challenge that a Chartered Professional Accountant can help with. Risk identification, risk management, and risk neutralization are other areas where Chattered Professional Accountants can add value. Canada offers a valuable means for directors to manage risk of past errors or misstatements; the voluntary disclosure program. However, a Voluntary Disclosure is only available before a CRA audit. Once a CRA audit is under way, it is too late for a Voluntary Disclosure. The board can retain a Chartered Professional Accountant to conduct an audit with an eye to exposing tax risks that can then be neutralized with a Voluntary Disclosure. Waiting for a CRA audit is the wrong strategy.