Financial Executives International Canada has released the brief it submitted to the House of Commons Standing Committee on Finance for its pre-budget discussions.

The 74-page submission focuses on three recommendations: the introduction of corporate group tax reporting in Canada; the allowance of a tax deduction for stock option awards reported on a corporation’s income statement; and the establishment of a Centre for Continuing Workplace Training and Education.

The submission also includes an appendix prepared by Professor Barry Gorman, of St Marys University that examines the fact that Canadian corporations are not currently permitted to offset their unused losses, deductions or tax credits against the taxable income or taxes payable of another member of the same corporate group. According to the report, this prohibition imposes significant monetary costs and competitive disadvantages on Canadian corporate groups relative to their international peers.

The case for a tax deduction for the cost of stock option awards mirrors the arguments now being heard in accounting circles regarding the proposed treatment of options. Many commentators are currently advocating the mandatory inclusion of stock option award expenses on a company’s income statement since they constitute a real expense to the company and its shareholders. Consequently, to the degree that companies do record these expenses on their statements, FEI Canada asserts that they should be permitted to treat them as a deductible expense for tax purposes.

FEI Canada also recommends that the government give additional substance to its oft-repeated commitment to lifetime learning and retraining by supporting the development of a Centre for Continuing Workplace Training and Education. It says the Centre would operate as a clearinghouse and catalyst for training and continuing education courses and programs. FEI Canada feels the absence of this type of Centre at this time makes the process of identifying and delivering workplace related education/training programs very time consuming and expensive.