Canadian Lawyer

42 J A N U A R Y 2 0 1 9 w w w . c a n a d i a n l a w y e r m a g . c o m Aptowitzer, who is also associate professor of law at the University of Ottawa, provides charities with tax planning, corporate governance and gift planning. He also consults for foreign governments on civil society regulation. He says the work the firm does for tax public policy likely drives business and earns them votes in the survey. This activity includes publishing in journals, papers on tax policy written for the C.D. Howe Institute by Aptowitzer and fel- low partner Arthur Drache and working with the media as a charity law expert, as well as authoring the book Starting and Maintaining a Charity in Canada. Contributing to public policy discussions in Canada is also a focus for TaxChambers LLP, according to Vitaly Timokhov, whose work for the firm includes publishing books, articles and public speaking on Canadian and inter- national taxation. Timokhov's practice ranges from Cana- dian tax planning, reorganizations, mergers, acquisitions and tax planning for mid-market businesses and high-net-worth individuals. TaxChambers LLP has offices in Toronto. "We like to be influencers. Tax is a very academic subject. We like the complexity of the subject. We like the impact of this subject," he says. Timokhov says that, in comparison with all other areas of law, tax law is the most relevant to Canadian political dis- course. "Taxes affect everyone. Everybody complains about them, but they affect everyone," he says. In 2017, the federal Liberal government introduced tax changes it said were intended to prevent income splitting, which was a tax-planning strategy where a business owner would move income into the names of family members to be taxed at a lower rate. The move created backlash from self- employed professionals such as lawyers, doctors, farmers, accountants and business owners. "There definitely was a fairly significant push against the changes suggested by the government," Timokhov says. Instead of publishing academic papers or testifying in front of committees, Timokhov says he went to clients, discussed the changes and educated his clients on how they would affect them and advised them to reach out to their MPs to voice their concerns. "From my perspective, that was the only way to communi- cate the policy to decision-makers in the way that they would really understand the impact of their constituencies," he says. The government backtracked and adjusted its tax policy, which includes lowering the small-business tax rate to nine per cent from 10.5 per cent. Timokhov says he is pleased that the changes are now not so "draconian." "To me, it was really unexpected that the government actually stepped back and listened to our concerns," says Timokhov. The revised small-business tax changes will come into effect in 2019 and, although Timokhov says it's impossible to tell what effect these changes will have on the long-term economic health of Canada, his clients feel the government is trying to "confiscate and penalize them for being good savers." "Why are we really tax- ing the most economically active members of our soci- ety — the middle class, the entrepreneurs? . . . There's no societal goal to kill the golden goose, which is the group in this country that creates most of the employ- ment," he says. But even if your MP is Chrystia Freeland, apply- ing pressure to affect U.S. tax policy is next to impos- sible. But Trump's tariff and tax changes are serious for TaxChambers LLP's clients, many of whom have cross- border trading relationships, assets and properties south of the border. "The fiscal policy changes in the United States are huge," Timokhov says. The unpredictability of U.S. fiscal policy is a challenge for clients of Felesky Flynn LLP, according to Craig McDougall, a partner at the firm's Calgary office, whose practice includes cor- porate, commodity and personal tax planning. "I think the key thing is the tax rules are always changing. And it's just difficult for our clients to stay on top of it," he says. Those criticisms apply to Canadian tax policy as well, and on the home front, McDougall's clients are also frustrated with the low price Canadian oil is fetching on the interna- tional market, partly attributable to lack of pipeline capacity. "There's a continued focus from our client's perspective on reliable access to market for our resources. That's been a real challenge in our area, just generally, and that obviously has a trickle-down effect to our clients and their ability to effectively be competitive," he says. The "deep discount" on Canadian crude driving down prof- its is creating some opportunities and "a lot of pain," leading to reorganizations, downsizing and sale of assets, he says. Felesky Flynn LLP's clients include those in natural resources, high-net-worth individuals and the MUSH sec- tor (municipalities, universities, schools and hospitals), says McDougall. As opposed to the force of commodity prices, the winds of demographic change are speeding up business for the firm in the wealth management area, as the aging population moves assets to the younger generation. "One of the trends that we're seeing right now is that, with the aging population, there's a great deal of focus on moving both wealth and management of large private and, in some cases, public businesses to the next generation," he says. "There's a lot of work that's done there to make sure that there's an orderly progression of business from one gen- eration to the next and doing so in a way that doesn't result in punitive taxes being payable." The Big Four accounting firms While the large accounting firms have affiliated tax-law firms, we do not consider these tax-law firms to be boutiques, as they share the brand with their larger organization. In previous surveys, we did include these entities but the landscape has evolved quickly and more areas of legal services are being internalized in these large organizations.

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