Find Accountancy, Audit and Tax expertise in Canada
The accounting industry in Canada is characterised by a few very large national firms, a number of regional firms, and numerous local firms and practitioners. The ‘Big Four’ (PwC, Deloitte Touche, KPMG and Ernst & Young), Meyers Norris Penny and BDO are some of the largest professional services companies that operate in Canada, comprising a significant part of the sector. The industry serves the requirements made by the Canadian Business Corporations Act (1985), which obliges all businesses to be audited except in unusual circumstances. In 2011 the International Financial Reporting Standards (IFRS) were approved by the Accounting Standards Board and incorporated into Part I of the Canadian Institute of Chartered Accountants (CICA) Handbook. Subsequently, it is mandatory for this to be adopted by publicly accountable enterprises for interim and annual financial statements. The standards that are laid out in Part II of the CICA Handbook have been approved by the Accounting Standards Board in relation to private enterprises. The strength of Canada’s auditing and reporting standards was reflected in its 6th place ranking in the world (out of 144 countries) in the World Economic Forum’s Global Competitiveness Report (2012-13), with a value of 6.1 out of 7, significantly above the world mean of 4.6. It found itself in an even stronger position in the 2011 World Bank’s Ease of Doing Business Index for resolving insolvency, placing 3rd in the world (out of 183 countries), below only Japan and Singapore.
The Canadian Institute of Chartered Accountants is the main professional body representing the industry. The Institute aims to unify Canada’s accounting bodies, forming one of the largest accounting organisations in the world, representing over 82,000 chartered accountants (2012). Entry into the profession requires higher education, followed by work experience in a Chartered Accountant Training Office, which include CA firms, leading corporations and government organisations that have recognised CA training programmes in place.
Personal income tax in Canada consists of the combination of provincial/territorial tax and federal income tax. Federal income tax rates are progressive, ranging from 15%-29% (tax year 2010-11). However, with the addition of provincial taxes, combined Canada tax rates may go up to 50% for some individuals with taxable income exceeding CAN 150,000. Provincial tax rates are also progressive, with the maximum ranging from 10% (Alberta) to 24% (Quebec). For businesses, both profit income and capital are subject to corporate taxes. Corporate income tax is set at 38% of taxable income; although for Canadian-controlled corporations the rate is 11% should they claim a ‘small business deduction’. The Canadian Revenue Agency (CRA) is the body responsible for collecting taxes throughout Canada. The country was 32nd in the world for total tax rate in the 2011 Ease of Doing Business Index, with a value of 28.8%, compared to New Zealand with 34.4% (53rd), United Kingdom with 37.3% (67th) and the United States with 46.7% (103rd). In the Ease of Doing Business Index it placed 8th in the world for paying taxes, the second highest OECD country after Ireland.
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