Quote:
Originally Posted by Frequitude
Ya, but fundamentally speaking all business are taxed on income, not revenue. To call CDE a "subsidy" goes against the underlying structure of corporate tax.
Whether its an Albertan drill hole, an Ontario manufacturing plant, or the pencil some Yukon car dealership buys, costs get netted off of revenue to determine taxable income.
If anything, CDE is a "penalty" because costs must be spread out instead of writing it off as it occurs.
Ah well, we digress...
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This is not entirely true, pencils may qualify for some type of capital cost allowance (been a while since I've calculated corporate income tax) but corporate income, treated under our tax laws is revenue.
There are a host of various tax breaks and writeoffs available like for capital costs but the CDE and the CEE are specialized write offs for the oil and gas sector. CEE allows 100% write off from income and allows carry forward and allows flowthrough shares. That's three big subsidies right there that don't exist for other businesses. CDE allows 30% of costs to be written off. If, as you say the the tax system exists, that you can write off all of your capital expenses then why would we need these specialized items?
Bottom line, it's a subsidy and a very big one at that. One report estimated that it's worth over $600 million in foregone tax revenues.