Investing in the government

Revenue Canada's interest rates are better than most banks', leading some companies to overpay their tax bill

According to the latest report by Canada’s auditor general, some Canadian corporations have come up with an ingenious, albeit counterintuitive, investment scheme: overpaying their tax bill. Combined, some of Canada’s biggest businesses have raked in $30 million by topping up their tax bills by $4 billion thanks to Revenue Canada’s comparatively generous five-to-seven per cent interest rates. Even when Revenue Canada tried to return the money to the companies to avoid shelling out the interest, the companies simply refused, preferring to stash their funds with government rather than a bank. Auditor General Sheila Fraser has recommended the government implement stricter rules to control the problem.

Toronto Star

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