OTTAWA: A British Columbia court has exposed details of a corporate tax rebate program aimed at luring companies to set up international finance operations in the province, ostensibly to create jobs and turn Vancouver into a global financial hub. The B.C. Court of Appeal ruling provides a glimpse into a multi-million-dollar tax refund claimed by one of the companies that took advantage of the program: Canada’s Toronto Dominion Bank.
The International Business Activity (IBA) program has become a hot-button issue ahead of the May 9 provincial election after a New York Times piece earlier this week exposed what it called “a sweet deal for businesses, offering them tax breaks in an unusually opaque arrangement.”
The TD Bank example is “just the tip of the iceberg,” a watchdog agency says. The court ruling reveals that TD Bank, which reported profits of $2.5 billion in the first quarter of this year, claimed a provincial tax refund under the IBA of more than $2.8 million in the 2012 tax year. That year, TD reported an annual profit of $6.47 billion. However, the tax refund has been tied up in the courts after the province claimed TD Bank missed the province’s filing deadline.
In its April 21 decision, the appeal court ordered the province’s commissioner of income tax to reconsider the bank’s request for an extension to file its 2012 return. The incentive program was created through the International Business Activity Act in 1988 as a way to entice companies to set up international financial operations in the province. While it was created by the Social Credit government, in recent years, it has been expanded by the Liberals. Both foreign and Canadian companies are eligible for the tax rebates.
Until now, the size of refunds given by the province to individual companies hadn’t been revealed, although the B.C. government has said $140 million in rebates had been handed out under the IBA since 2008, including $21 million this past year alone. TD Bank acknowledged it was a member of the IBA program but would not provide details about the international nature of its operations in the province. A non-profit watchdog agency said the revelations should anger B.C. taxpayers.
The B.C. Finance Ministry, which oversees the IBA, rejected the accusations of secrecy. There’s “nothing sinister about the program,” said ministry spokesperson Jamie Edwardson. He wouldn’t reveal any details about individual corporate tax refunds. “Government is bound by the requirements of taxpayer confidentiality set out in the IBA Act, a standard of Canadian tax law,” Edwardson said. “This is true for taxpayer information in corporate and personal income tax returns.”
