Rough seas for BC economy - Institute of Chartered Accountants of BC

October 2009 

Rough seas for BC economy 

On the Cover 

The 2009 BC Check-Up report 

shows mixed results for 2008 

and a rough start for 2009. 

What does the future hold? 

In this issue 

News from the Executive Tour 

Crystallizing the capital gains exemption 

Don’t abdicate your professional 

judgment

Left to Right: 

Farida Sukhia, Chris Halsey-Brandt, Ron Parks, Spencer Cotton, 

Rosanne Terhart, Robert D. Mackay, Gary M. W. Mynett, Hugh G. Livingstone, 

Cheryl Shearer, Jeff P. Matthews, Kiu Ghanavizchian, Vern Blai r. 

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Gary Mynett: 604.697.5202 

Ron Parks: 604.697.5242 

Hugh Livingstone: 604.697.5238 

Spencer Cotton: 604.697.5212 

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Rosanne Terhart: 604.697.5286 

Farida Sukhia: 604.697.5271 

Chris Halsey-Brandt: 604.697.5294 

Kiu Ghanavizchian: 604.697.5297

contents 

On the Cover 

8 

Checking Up on the 

Provincial Economy 

What our provincial BC 

Check-Up report reveals 

about living, working, and 

investing in BC 

26 

CA Social Networking Group 

Hosts Baseball BBQ 

4 Notes from the CEO 

Thoughts on the economy 

6 For the Profession 

News from the Executive Tour 

16 Tax Traps & Tips 

Crystallizing the capital gains 

exemption in the context of 

business succession 

18 PD News 

Fall PD highlights 

20 Plugged In 

News for and about members 

& students 

Movers and shakers in the 

profession 

Reminder: Nominations for 

the election of FCAs 

Nominate a future president 

30 Ethical Dilemmas 

Don’t abdicate your 

professional judgment 

Want to get 

the word out? 

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Beyond Numbers 

Beyond Numbers goes out to 

more than 9,000 members, 

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and over 200 external 

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Beyond Numbers has won 

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Communications – BC Branch 

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Beyond Numbers, contact our 

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Email: 

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10% 

Cert no. SCS-COC-00867

October 2009, No.482 

Published eight times annually by the 

Institute of Chartered Accountants 

of British Columbia. 

Editor 

Michelle McRae 

Thoughts on the 

economy 

Design 

Blindfolio Design 

604-761-9212 

Advertising 

Advertising In Print 

Phone: 604-681-1811 

Fax: 604-681-0456 

Senior Director of External Affairs 

Lesley MacGregor 

Institute Council 

Karen Keilty, FCA 

President 

Peter Norwood, CA 

1st Vice-President 

Lenard Boggio, FCA 

2nd Vice-President 

Michael Macdonell, CA 

Treasurer 

Jack Arnold, CA 

Linda Lee Brougham, CA 

Kyman Chan, CA 

Karen Christiansen, CA 

John Crawford, CA 

Gordon Holloway, FCA 

David Hughes 

Anthony Mayer, CA 

Al McNair 

Sheila Nelson, CA 

John Sims, FCA 

James Topham, CA 

Kenneth Tung 

Praveen Vohora, CA 

Chief Executive Officer 

Richard Rees, FCA 

Beyond Numbers is printed in British Columbia and 

mailed eight times annually to more than 9,000 

chartered accountants and more than 1,800 CA students 

in public practice, industry, education, and government 

service throughout BC, Canada, and other countries. 

Beyond Numbers’ editorial and business offices 

are located at: 

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Vancouver, BC V7X 1M4 

Phone: 604-681-3264 

Toll-free in BC: 1-800-663-2677 

Fax: 604-681-1523 

Internet: www.ica.bc.ca 

Opinions expressed are not necessarily 

endorsed by the Institute. 

Beyond Numbers supports the CA profession in BC 

by sharing news from the Institute and news about 

members, by sharing viewpoints on issues of specific 

interest to members, and by promoting member 

involvement in Institute activities. 

Publications Mail Agreement No: 40062742 

Notes from the CEO 

What a difference a year can make. Just 12 months ago, BC 

had one of the fastest growing economies in Canada. While the forestry sector 

was struggling, the overall unemployment rate was still relatively low, and for 

the most part, we seemed to be working through the economic downturn. That 

all changed, however, with the financial meltdown last October, as the prices of 

all of BC’s export commodities sank, and the province lost its tenuous grip on 

prosperity. 

This reversal of fortune is reflected in the 2009 BC Check-Up report, which 

details how our economy held its own for most of 2008, then took a sharp 

downturn in 2009. Specifically, the report indicates that while BC made strides 

in many LIVE and WORK indicators last year, much room for improvement 

remains when it comes to our INVEST indicators—especially with respect to 

productivity, exports, and corporate profits. 

It’s important to put the downturn in context. While BC’s economy has taken a 

hit since last fall, so too have the economies of our closest competitors. In 

addition, BC’s move to the HST will help maintain a competitive business and 

taxation climate, and should encourage investment. 

With the economy top of mind, we offer this month’s cover story, which 

highlights the results of the 2009 BC Check-Up and features updated statistics 

for several economic indicators. 

The BC Check-Up is a central pillar of the Institute’s public affairs program, 

providing CAs across the province with an opportunity to offer commentary 

on the economy. This year, we’re reshaping the process a bit. Hard copies of 

the BC Check-Up will no longer be produced, but, as in previous years, members 

will be able to access and download the report from the Institute’s website at 

www.bccheckup.com. 

Comments or questions on this topic? Contact me at rees@ica.bc.ca. 

—Richard Rees, FCA 

Want to contribute to the BC Check-Up? Contact Kerri Brkich, our manager 

of public affairs, at 604-488-2625 or brkich@ica.bc.ca. 

4 ica.bc.ca October ’09

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1297 

October ’09 ica.bc.ca 5

For the Profession 

Executive Tour 

Addresses Key 

Pressures on BC 

and the Profession 

By Karen Keilty, FCA 

President 

By the time this issue of Beyond Numbers 

reaches your mailbox, I, along with the 

BC Institute’s executive team, will have 

visited Cranbrook, Kelowna, Vernon, Penticton, 

and Kamloops during the annual Executive 

Tour. While several other stops are planned over 

the next few months, I know that we will not 

reach all of you. So for those of you who cannot 

attend the remaining meetings, this article offers 

a brief outline of the issues being addressed this 

year. 

The economy 

We know the state of the BC economy is a concern 

for many members. During the Executive 

Tour, we are sharing details from the 2009 

edition of the provincial BC Check-Up report, 

and discussing what the report reveals in terms 

of the current economy. (For more details on 

the report, please see the cover story on page 8.) 

Ensuring the continued 

growth of the profession 

Today, the BC Institute has approximately 

10,000 members and 2,000 students—record 

numbers in both categories. While we are 

proud to have so many qualified people in the 

profession, we also recognize that demographics 

and market growth for services will continue to 

increase the demand for CAs in the future. We 

are mindful of this reality as we continue 

developing a strategy to ensure the profession’s 

continued growth. 

During the Tour, we are updating members 

about a part of this strategy that has already been 

implemented: the new practical experience 

requirements for students. 

As detailed in the September 2009 issue of 

Beyond Numbers (pages 12-13), the introduction 

of new practical experience requirements in 

September 2007 means that CA students can 

now train outside of audit and assurance to earn 

their designations. This change in experience 

requirements creates new opportunities for CAs 

in public practice and in industry. 

In BC, we have welcomed industry employers 

Telus and PRA group into our training 

program. They join CA firms Deloitte & 

Touche LLP (Tax & FAS), KPMG LLP (Tax), 

and PricewaterhouseCoopers LLP (Tax), which 

have taken this opportunity to expand their 

training programs into new areas. 

I encourage each of you to think about whether 

you work in the right environment to train the 

next generation of CAs. If you think you do, 

visit www.CATOadvantage.ca or contact Lara 

Greguric, CA, director of CA Training Offices 

for CASB, at greguric@casb.com, or Harp 

Bagri, CA, manager of CA Training Office 

Liaison for CASB, at bagri@casb.com, to find 

out how you can get involved. 

The expanded experience opportunities create 

an opportunity for the CA profession to broaden 

the types of students trained and expand the 

number of students in the profession as a whole. 

As our economy grows and more baby boomers 

retire, growth in the number of new members 

and in the range of their training will help ensure 

that the CA profession remains the 

preferred choice for business, government, and 

not-for-profit organizations. 

Implementing new standards 

The Executive Tour also gives us an opportunity 

to update members about the status and 

implementation of new standards, and to 

remind members of the various resources that 

are available. 

IFRS 

As the January 1, 2011 conversion date nears, 

IFRS remains a hot topic. A wide variety of 

resources are available to help members make 

the transition to IFRS. In particular, a very 

useful one-stop source for IFRS news can be 

found at www.cica.ca/IFRS. 

Private enterprise GAAP 

The comment deadline for the Exposure Draft 

on private enterprise GAAP has closed. The 

Accounting Standards Board (AcSB) received 

over 170 responses, and AcSB staff members also 

received feedback at stakeholder consultations 

across the country. At the time of this writing 

(mid-September 2009), the AcSB is in the 

process of reviewing the comments received, 

with the objective of issuing the standards in 

early 2010. We will continue to provide updates 

as we learn more. 

Upcoming Executive Tour dates (check for more dates at www.ica.bc.ca) 

Nelson/Castlegar/Trail 

Thursday, October 8, 2009 

5:30 pm: “No-Host Reception” 

6:00 pm: Dinner 

Victoria 

Wednesday, November 18, 2009 

12:00 pm: Lunch 

Duncan 

Thursday, November 19, 2009 


Nanaimo 

Thursday, November 19, 2009 

5:30 pm: “No-Host Reception” 

6:00 pm: Dinner 

Campbell River 

Friday, November 20, 2009 


Prince George 

Tuesday, November 24, 2009 



Financial reporting for NPOs 

Together with the Public Sector Accounting 

Board (PSAB), the AcSB is also deliberating on 

the future direction of financial reporting for 

not-for-profit organizations. Stay tuned for 

more information in early 2010. 

New auditing standards 

Although the new auditing standards will come 

into effect for audits of financial statements with 

the year ended on or after December 14, 2010, 

the new quality control standard will actually 

come into effect a full year earlier, on December 

15, 2009. This new quality control standard will 

be applicable to firms that perform audits and/or 

review engagements. It will also apply to many 

small practitioners, as the new standard will 

stipulate that anyone involved in the performance 

or quality control review of a particular 

engagement can no longer conduct an inspection 

of that engagement as part of the firm’s 

monitoring. This change will mean that sole 

practitioners who have previously self-inspected 

files will no longer be able to do so, effective 

December 15, 2009. 

To help practitioners make this change, the 

ICABC has created a posting board at www.ica.bc.ca 

under Member Centre>Management Information 

and Tools>Trading of Quality Control Services 

(direct: www.ica.bc.ca/kb.php3?catid=1083), where 

members can post requests to trade quality 

control services with other members. 

Keeping you informed 

I look forward to speaking with more of you as 

the Executive Tour continues. For those of you 

who won’t be able to make it to the remaining 

meetings listed below, I hope this summary has 

given you a good sense of where things currently 

stand. If you have any questions, please do not 

hesitate to email me at president@ica.bc.ca. 

$125,000 – Director of Finance 

A CA with experience focused in the 

manufacturing sector is looking for an 

opportunity to further their career. This 

individual is seeking an opportunity with 

a progressive organization where their 

contributions will add value to the senior 

management team. They bring a strong 

skill set in systems, reporting, budgeting 

and business development. 

$85,000 – Hands-on Controller 

A designated individual is looking for 

a position within a small to medium 

sized organization where they can be 

responsible for all finance related duties. 

They have gained excellent experience 

working for a number of years within 

the distribution industry. They have 

hands-on experience preparing financial 

statements, management reports, 

budgeting, cash management, as well 

as overseeing accounts payable and 

accounts receivable functions. 

$85,000 - Public Practice 

A CA with 2 years at a management 

level is seeking an opportunity where 

future Partnership exists. This candidate 

articled in a large firm to gain more 

exposure in working directly with 

clients on review and compilation 

engagements. This candidate is seeking 

an opportunity with a progressive and 

entrepreneurial public practice firm. 

$65,000 – Senior Corporate Accountant 

A recently designated individual with 

experience mainly within the resource 

sector is seeking an opportunity to 

move into a management role and gain 

more supervisory experience. They 

have solid experience in all areas of 

full cycle accounting including month 

end journal entries, general ledger 

reconciliations and financial statement 

preparation. They have worked with a 

Controller on the budget preparation. 

This candidate thrives in a challenging 

and fast paced environment. 

$45,000 – Intermediate Accountant 

An accounting student, who is 

motivated to complete their studies and 

move forward in their career, has gained 

a majority of their experience in the 

mining sector. They have experience in 

preparing balance sheet reconciliations, 

recording monthly depreciation, 

preparation of journal entries, 

processing of journal entries, processing 

their hourly payroll and assisting with 

month-end preparation. 

$40,000 – Accounts Receivable 

An Accounts Receivable Clerk with 

3 years experience is looking for a 

position with a stable company that will 

provide growth in the future. They are 

familiar with all aspects of accounts 

receivable. 


On the Cover 

How is BC Faring in a Troubled 

Economy? 

By Kerri Brkich, Manager of Public Affairs 

(The following article is based on a report from Chisholm Consulting.) 

The year 2008 was tumultuous for the 

economies of BC, Canada, and the 

world. Many jurisdictions, such as 

Ontario and the US, were already in the throes 

of an extended recession when news broke last 

fall that the US government was propping up 

Bear Stearns. Suddenly, the extent of bad debt 

on the books of major banks and investment 

houses became a topic of growing concern. 

In short order, US mortgage lenders Fannie 

Mae and Freddie Mac had to be bailed out, and 

Lehman Brothers—a company that had survived 

the Great Depression of 1929—went bankrupt. 

In the end, the US saw 25 banks and credit 

unions fail in 2008, compared to only three 

failures in 2007, and none in either 2006 or 2005. 

The financial carnage that ensued affected the 

credit and lending systems of every western, 

industrialized nation. Lending all but stopped, 

and credit streams dried up for many businesses 

and consumers. 

While much has been written about the 

impact of these events on Canada, our interest 

in producing this year’s BC Check-Up is more 

specific: What have these events meant for BC? 

Full BC Check-Up available at www.bccheckup.com. 

What the BC Check-Up reveals 

Since the Institute of Chartered Accountants of 

BC began producing the BC Check-Up report in 

1999, we’ve seen the economy go through peaks 

and valleys. However, we’ve never seen anything 

like the results of this year’s edition. 

The story of 2008 has two very distinct phases: 

pre and post-financial crisis. For the most part, 

the province held its own for the first half of 

2008. Forestry communities stumbled early on, 

as a result of non-existent US housing starts, but 

the rest of the province continued to tick along, 

buoyed by strong retail sales and robust construction 

and real estate sectors. 

However, as the financial meltdown worsened 

in the latter half of 2008, BC’s economic situation 

began to deteriorate rapidly. After years of 


P L A T I N U M M E M B E R 

record-low unemployment in BC, the third and In addition, we are seeing government debt 

fourth quarters of 2008 saw the number of job balloon to levels not seen since the beginning of 

seekers rise steadily. Consumer confidence the decade. In its September Budget Update, the 

plunged, retail sales slumped, and the real estate provincial government announced three years of 

market stagnated—particularly in tourist destinations 

like the Okanagan and Kootenays. expect to balance the books until at least 2013. 

substantial budget deficits and said it does not 

In addition, international demand for BC’s That said, other jurisdictions are also planning 

export commodities dried up, and workers in to use deficit financing to deliver vital public 

the mining and oil and gas industries joined their services and pay for fiscal stimulus packages in 

forestry counterparts in experiencing reduced the next few years. BC has an advantage here 

shifts and job losses. 

over many of its competitors: our low rate of 

Many companies that had been scraping by, debt going into the crisis, which will help 

especially those in the coastal forest industry, cushion the blow to the BC government’s bottom 

lost access to vital lines of credit, and in the latter line. 

half of 2008, business and consumer bankruptcies The provincial government also recently 

began to spike in communities around BC. announced that BC will move to an HST as of 

As detailed in the BC Check-Up, the yearly results 

for BC’s live, work, and invest indicators in should provide some welcome relief to a 

July 1, 2010. In the short-term, this change 

2008 were cushioned by strong first and second beleaguered economy and help preserve existing 

quarters. The proportion of high-technology jobs; in the long-term it should have a positive 

jobs in the workforce continued to increase; BC impact on both productivity and investment. Of 

enjoyed a comparatively low rate of government course, the devil, as they say, is in the details, 

debt; and real wages and job creation increased and how the provincial government chooses to 

at rates above the national average. However, implement this important tax change will 

our investment climate lagged behind last year, determine how much BC stands to gain from 

with declines in productivity, corporate profits, the benefits inherent in a value-added consumption 

tax. 

and exports per worker, all of which have 

declined further in the first half of 2009. 

While the first half of 2009 has been grim, 

In 2009, there is no question that BC is there are indications that the second half may be 

currently battling one of the worst recessions in better—or at least, no worse. For example, the 

a generation. The employment picture has pace of Canadian housing starts picked up in 

steadily worsened, and the economy has slowed, August, with BC’s urban housing starts recording 

with most major industrial sectors struggling in a 56% gain over July; and it is expected that this 

the face of the global recession. Moreover, the positive momentum will be maintained into the 

housing market remains fragile in many regions, third quarter. Another example is the optimism 

and many BC consumers put a hold on major expressed about the economy by senior-level 

purchases and investments in the first half of the CAs in response to a recent survey: The measure 

09.OBRTurnbullAd1 9/21/09 9:45 AM Page 1 

year. 

was up to 28%—a huge increase from the low of 

4% recorded in the first quarter of the year, and 

the even lower 2% recorded in the fourth quarter 

of 2008. 1 

Many economists are predicting that BC’s 

economy will improve in late 2009 and in 2010, 

due to spending on public infrastructure, the 

stimulus from the 2010 Winter Olympics, and 

recovering consumer confidence. However, in 

order for BC’s economy to experience significant 

recovery and growth, global markets and commodities 

prices will have to rebound. Until this 

happens, recovery will be slow at best. 

In the meantime, here’s a closer look at the data. 

1 

CICA/RBC Business Monitor (Q2 2009). 

Protect it. Grow it. 

In That Order 

Ross Turnbull, CA, CBV, CFA 

Director, Portfolio Manager 

Average Monthly Performance 

(Dec/94-Sept/09) 

3.6% 

4.1% 

Performance Since Inception 

(Dec/94-Sept/09) 

777% 

Tel 604 844 5363 

Toll Free 1 888 886 3586 

rturnbull@odlumbrown.com 

up months 

(59% of time) 

down months 

(41% of time) 

276% 

odlumbrown.com 

trust • vision • investment integrity 

*The Model is an all-equity portfolio established by the Research Department in December 1994, with a 

hypothetical investment of $250,000. The Model provides a basis with which to measure the quality of 

our advice and the effectiveness of our disciplined investment strategy. Trades are made using the 

closing price on the day a change is announced. These are gross figures before fees. Past performance is 

not indicative of future performance. MEMBER CIPF 

-1.9% 

-3.8% 

ob model portfolio* 

s&p/tsx total return index 

Portfolio measurements and comparisons are done at mid-month and not month end. 

ob model 

portfolio* 

s&p/tsx total 

return index 


live 

BC saw some improvement as a place to LIVE in 2008. For the tenth year in a row, BC led the comparison jurisdictions 

in both reducing the number of youth at risk (-1 ppt) and absolute levels (8%). 

In addition, the province’s personal disposable income growth rate (2.9%) ranked second in our comparison and was 

ahead of the national average (2.4%) last year. In 2008, BC’s debt-to personal disposable income ratio was down slightly 

(-0.8%), and shelter costs were up only 0.4 ppt, due to shelter and other expenses rising at roughly the same rate. 

Increased wages and lower debt will positively impact British Columbians’ standard of living. However, BC’s health care 

spending ranked last among our comparison jurisdictions, although, its health care delivery system was rated as second 

best among all Canadian provinces. The table below shows how BC compared with Alberta, Ontario, and the national 

average on our five key indicators over one and five-year periods. 

Summary of LIVE Key Indicators * BC AB ON CAN 

Real Personal Disposable Income per Capita $28,616 $37,189 $28,847 $28,591 

Debt to Personal Disposable Income 1.28 0.84 0.97 0.92 

Shelter Costs as % of Total Household Expenditures 20.7% 17.4% 21.3% 19.5% 

Youth at Risk 8.0% 12.5% 9.8% 10.9% 

2008 Value 

health 

Health Expenditures per Capita $2,894 $3,149 $2,964 $3,016 

Health Consumer Index National Ranking in 2008** 2 nd 5 th 1 st n/a 

Real Personal Disposable Income per Capita 2.9% 3.5% 1.7% 2.4% 

Debt to Personal Disposable Income -0.8% -1.2% -4.0% -2.1% 

Shelter Costs as % of Total Household Expenditures 0.4 ppt*** 0.2 ppt 0.6 ppt 0.3 ppt 

Youth at Risk -1.0 ppt 0.1 ppt 0.0 ppt -0.3 ppt 

health 

Health Expenditures per Capita 1.1% -3.3% 4.8% 2.5% 

Health Consumer Index National Ranking in 2008 n/a n/a n/a n/a 

2007-08 % Change 

Real Personal Disposable Income per Capita 17.3% 24.0% 8.9% 13.1% 

Debt to Personal Disposable Income 17.4% 15.1% 7.8% 10.8% 

Shelter Costs as % of Total Household Expenditures 0.1 ppt -1.0 ppt 0.9 ppt 0.5 ppt 

Youth at Risk -1.4 ppt -1.2 ppt -3.1 ppt -1.6ppt 

health 

Health Expenditures per Capita -3.2% 6.9% 29.3% 15.6% 

Health Consumer Index National Ranking in 2008 n/a n/a n/a n/a 

2003-08 % Change 

* Improvements in quality of life are indicated by increases in real disposable income per capita and per capita health care expenditures, 

and decreases in debt/personal disposable income, cost of living, and youth at risk. 

** This is how BC ranked among all Canadian provinces. 

*** ppt = percentage point. 


live 

Combined, our five “live” indicators provide a measure of British Columbia’s social well-being and standard of living. Understandably, each indicator is interconnected: 

Access to education and quality health care leads to a more stable and productive workforce; this, in turn, drives up personal disposable 

incomes. And higher disposable incomes are key to managing mortgage debt, especially in BC, which has one of the most expensive real estate markets in 

Canada. 

So how did BC’s live indicators fare in 2008? 

Youth education and employment 

BC continues to lead the country in high school completion rates. In 2008, 8% of BC youth did not graduate from high school, compared to 9.8% in 

Ontario, 12.5% in Alberta, and a national average of 10.9%. In fact, since 2002, BC has had the lowest percentage of “youth at risk” in our comparison. 

Youth at risk are defined as the percentage of the labour force, aged 19 to 24, who have not completed high school. 

Youth unemployment in BC was at its lowest (6.9%) in March 2008, when jobs in construction, manufacturing, and trade were plentiful. By March 2009, 

however, youth unemployment had reached 13.5%, the highest it had been in nearly five years. 2,3 However, despite the challenges it presents for young jobseekers, 

the current global recession may provide an increased incentive for BC youth to remain in school, creating a better chance for a prosperous future. 

Provincial health care expenditures 

In addition to being a leader among the comparison jurisdictions in terms of high school completion, BC also scored well when looking at the “bang for buck” 

of provincial health care expenditures. In 2008, BC’s real health care expenditures per capita rose by 1.1%, to $2,894—the lowest amount of health care 

spending in our comparison by $70 per capita. However, a comparison of the Health Consumer Index rankings—an indicator we’re introducing in this 

edition of the Check-Up—shows that BC placed highly among all Canadian provinces in terms of health care delivery last year—second only to Ontario. 

The Health Consumer Index evaluates provincial health care delivery based on five criteria: outcomes, waiting times for treatment, primary care, patient 

rights, and “generosity.” 4 The idea of a consumer-based assessment of health care is new to Canada, but offers a fresh and rigorous way of measuring success, 

both within Canada and internationally. Combining this new indicator with our traditional one (real provincial health care expenditures per capita) provides 

a balanced approach to evaluating our province’s standing in terms of health care. 

Although BC has one of the lowest expenditures per capita of all the comparison jurisdictions, it obtained a high Index value in 2008—in fact, the second 

highest of all the provinces. Consequently, BC had one of the highest “bang for buck” ratios of all the provinces last year. 

Personal disposable income 

Just as health and education are important indicators of BC’s social well-being, personal disposable income, or “take home pay adjusted for inflation,” 5 is an 

important indicator of economic well-being. 

In 2008, BC’s real personal disposable income rose by 2.9%; this was the second highest increase after Alberta (3.5%), ranking ahead of Ontario and the 

national average (1.7% and 2.4% respectively). Between 2003 and 2008, BC’s real personal disposable income grew by 17.3%; once again, this was second 

to Alberta (24%) and ahead of Ontario and the national average (8.9% and 13.1% respectively). 

These gains were crucial to raising BC’s standard of living, as BC’s absolute disposable income levels have consistently lagged those of the comparison 

jurisdictions and the national average. In fact, 2008 marked the first time in the last five years that the disposable incomes of British Columbians (averaging 

$28,616) surpassed the national average ($28,591). 

While BC has seen this indicator improve over one-year and five-year periods, wages and salaries in some cornerstone industries began to drop in 2009. 

When comparing the first quarter of 2009 to the same period in 2008, wages and salaries in goods-producing industries decreased by 7.7%, with the biggest 

decreases occurring in agriculture, forestry, fishing and hunting (-19%) and manufacturing (-12.8%). Services-producing industries saw wages and salaries 

rise by 2.3%, but this slight increase was mainly due to increases in public sector administration jobs, not in private sector jobs. 

Improving wages is crucial to mitigating British Columbians’ financial vulnerability. Over the past decade, BC has sustained the highest personal disposable 

debt-to-income ratio in our comparison. In 2008, BC’s ratio was 1.28, compared to 0.84 in Alberta, 0.97 in Ontario, and a national average of 0.92. 

While our province’s personal debt-to-disposable income ratio declined by 0.8% in 2008, this was the weakest one-year result in our comparison: Alberta’s 

ratio declined by 1.2%, the national average declined by 2.1%, and Ontario’s ratio declined by 4%. 

2 

BC Stats, Labour Force Survey, March 2009. 

3 

In the BC Check Up report, we compare both one and five-year trends. Where possible, we also identify important longer-term trends that will shape 

our future. 

4 

“Generosity” refers to the range of services provided in each province. The methodology was developed and used by the Health Consumer Powerhouse, 

Europe’s leading independent provider of consumer information. The work of the Health Consumer Powerhouse has initiated improvement in healthcare 

systems in Europe. 

5 

Take-home pay is the income left over after deductions for taxes, social insurance, and other fees. Statistics Canada, May 2007. 


Housing and shelter 

In 2008, mortgage debt in BC represented 

roughly 70% of total consumer debt—hardly 

surprising given that average real housing prices 

in BC were at least $100,000 greater than prices 

in Alberta and Ontario. But while our province 

continues to lag in this indicator, BC consumers 

appear to be holding their own. Despite expensive 

real estate prices, British Columbia has 

some of the lowest mortgage arrears rates and 

personal bankruptcy rates in the country. 6 

This is more important than ever, especially 

when looking at the shelter share of total household 

expenditures 7 (shelter share), which reflects 

the cost of living. In 2007, shelter accounted for 

20.7%, or one fifth, of total household expenditures 

in BC. Only Ontario exceeded this 

percentage, with 21.3%. 

In 2007, BC’s housing prices rose and vacancy 

rates declined, causing the shelter share indicator 

to increase by 0.4 percentage points (ppt), the 

first significant gain in several years. Only 

Ontario saw its shelter share grow more quickly, 

increasing by 0.6 ppt. For British Columbians 

whose incomes did not rise at the same rate as 

the cost of shelter, this increase in shelter share 

represented a decline in standard of living, as 

more income was diverted to housing. 

dap_beyondnumbers_sep09.eps 9/9/2009 1:56:57 PM 

Shelter Cost as a Percentage of Total Household 

Expenditure, Provinces and Canada, 2003 to 2007 

22 

21 

20 

19 

18 

17 

2003 2004 2005 2006 2007 

BC 20.6% 20.2% 20.4% 20.3% 20.7% 

AB 18.4% 18.6% 17.4% 17.2% 17.4% 

ON 20.4% 20.6% 19.9% 20.7% 21.3% 

CDN Average 19.0% 19.2% 18.9% 19.2% 19.5% 

Source: Statistics Canada 

Between 2003 and 2007, BC saw only a slight 

increase in this indicator (0.1 ppt), as shelter and 

other nominal household expenditures rose at 

similar, and rapid, rates. 

Overall 

Our live indicators will face challenges in 2009. 

While health care and education should remain 

constant or improve, wages will likely decrease, 

negatively affecting the debt to disposable income 

ratio and shelter share of household 

expenditures. 

6 

CIBC, Household Credit Analysis, March 

2009. 

7 

Household expenditure includes total current 

consumption, personal taxes, personal 

insurance payments and pension 

contributions, and gifts of money and 

contributions. Shelter costs include 

expenditures on principal accommodation 

(either owned or rented) and on other 

accommodation, such as vacation homes or 

accommodation while travelling. Expenditure 

on owned principal accommodation includes 

regular mortgage payments, if any. 


work 

BC saw improvement in three of the five WORK indicators in 2008, and tied for first among the comparison 

jurisdictions for growth in educational attainment (1 ppt), and ranked second in real wage growth (1.3%) and job 

creation (2.1%). 

Pay equality declined by 1.2% last year, and the unemployment rate increased by 0.4 ppt. It could be argued—from 

the perspective of employers—that the increase in the unemployment rate was desirable, as the previous record-low 

unemployment levels caused shortages of workers in some industries over the last two to three years. However, the 

unemployment rate has surged in 2009, indicating BC’s economy is feeling the brunt of the recession. 

The table below shows how BC compared with Alberta, Ontario, and the national average on our five key indicators 

over one and five-year periods. 

Summary of WORK Key Indicators* BC AB ON CAN 

Educational Attainment 62.7% 62.3% 67.5% 65.6% 

Unemployment Rate 4.6% 3.6% 6.5% 6.1% 

Real Wage Rate $23.43 $26.32 $23.94 $23.52 

Female/Male Wage Ratio 0.827 0.790 0.837 0.838 

2008 Value 

Job Creation 48,000 53,900 93,500 259,400 

Educational Attainment 1.0 ppt** 0.8 ppt 1.0 ppt 0.7 ppt 

Unemployment Rate 0.4 ppt 0.1 ppt 0.1 ppt 0.1 ppt 

Real Wage Rate 1.3% 3.1% 0.3% 0.8% 

Female/Male Wage Ratio -1.2% 0.3% 0.1% -0.2% 

Job Creation 2.1% 2.8% 1.4% 1.5% 

2007-08 % Change 

Educational Attainment 3.8 ppt 3.4 ppt 5.6 ppt 4.6 ppt 

Unemployment Rate -3.4 ppt -1.5 ppt -0.4 ppt -1.5 ppt 

Real Wage Rate 5.2% 8.6% 4.1% 5.6% 

Female/Male Wage Ratio -1.5% 1.8% 2.4% 1.8% 

Job Creation 14.9% 17.3% 7.6% 9.3% 

2003-08 % Change 

* A positive increase in the value of these indicators (except for unemployment levels where a decrease indicates improvement) 

means an improvement in the quality of the province’s work environment. 

** ppt = percentage point. 


work 

Overall, BC’s job creation level and real wages increased at rates above the national average in 2008, and educational attainment levels increased at the fastest 

pace in years. Unfortunately, while many of BC’s work indicators improved last year, unemployment increased and pay equality deteriorated. The global 

economic slowdown began to affect work indicators late in 2008, and many work indicators have not been faring well in 2009. 

Our work indicators give an overview of BC’s domestic economy: Job gains and losses directly affect the unemployment rate, pay equity, and real wages; 

and the level of educational attainment in the workforce can dictate how quickly an economy rebounds from a downturn, as a highly educated workforce will 

often translate into higher productivity levels. 

Job creation and loss 

The most important indicator for an economy’s overall health is job creation or loss, which measures the absolute change in the number of employed workers, 

and shows where new opportunities or losses have occurred in the various sectors of the economy. 

BC’s economy created 48,000 new jobs in 2008, an increase of 2.1%, which was well above the national job growth rate of 1.5%, and Ontario’s increase 

of 1.4%. However, this was down from the 60,000 - 70,000 new jobs created over the last three years. By comparison, Alberta’s job creation was up by 2.8% 

in 2008, following its huge 80,000+ job creation pace in 2006 and 2007. Between 2003 and 2008, almost 300,000 jobs have been created in BC, signifying 

a total employment growth rate of 14.9%. Over this same period, Alberta created an almost identical number of jobs—296,600—which represented employment 

growth of 17.3%. Interestingly, BC and Alberta generated over 40% of the new jobs in Canada between 2003 and 2008, despite representing only 25% 

of the total Canadian population. 

While BC enjoyed one of the fastest growing economies in Canada in the past few years, the downturn has hit hard. Compared with 2008, the first seven 

months of 2009 have signalled job losses in both the goods and services-producing sectors, as the number of jobs in BC’s economy dropped by 2.6%. 

Overall, the goods-producing sector saw jobs drop by 10.5%, as economic staples such as agriculture (-6.2%); forestry, fishing, mining, oil and gas (-9.2%); 

utilities (-11.6%), construction (-9.9%); and manufacturing (-11.6%) all took significant hits. Services-producing sectors faired better, but were still down 

by 0.4%. While some sectors such as health care and social assistance (7.5%); trade (1.4%); and information, culture, and recreation (0.9%) saw job growth, 

all other services-producing sectors saw declines. Those with the worst number of losses included transportation and warehousing (-10%); business, building 

and other support services (-4.3%); and finance, insurance, real estate and leasing (-3.7%). 

Unemployment 

It should come as no surprise that the unemployment rate, which measures the number of unemployed persons as a percentage of the population, aged 15 

and older, who are employed or actively looking for work, has been rising steadily over the past ten months. BC’s record-low unemployment rate of 4.2% in 

2007 rose to 4.6% in 2008—still far below the unemployment rates in Ontario and Canada (6.5 % and 6.1% respectively). 8 

Between 2003 and 2008, BC’s unemployment rate dropped by a whopping 3.4 percentage points (ppt). This was more than double the Canadian average 

(-1.5 ppt) and more than eight times the progress made in Ontario (-0.4 ppt). 9 However, unemployment has risen continuously in 2009, reflecting the growing 

challenges of the BC economy. By August 2009, BC’s unemployment rate was 8%, which is back up to levels seen at the beginning of the decade. It was 

highest in the resource-dependent Cariboo (13.3%), and lowest in the more economically diverse Vancouver Island/Coast (6.6%). 

Wages 

A slowing job market and higher unemployment levels may put downward pressure on wages in many industries. As our province has continually lagged 

behind our comparison jurisdictions in real wages for the last five years, closing the wage gap will continue to be a significant problem. In 2008, real wages 

in BC were $23.43 per hour, which was the lowest in our comparison. That said, BC’s one-year wage growth of 1.3% in 2008 was higher than average and 

narrowed the wage gap with Ontario. 

Alberta pulled ahead of BC in 2008, with a real wage gain of 3.1%, as lower costs for shelter and gasoline helped tame the high levels of inflation that had 

nullified Alberta’s wage gains in 2007. 10,11 

Between 2003 and 2008, Alberta saw an 8.6% increase in real wages, compared to BC’s growth rate of 5.2%, and Ontario’s increase of 4.1%. BC’s gains 

lagged behind the national average (5.6%) during this same period. 

BC’s mining and oil and gas industries continued to have the highest wages, which increased by 9% in 2008 to an average of $44.73/hour. 12 Other top 

earners were workers in utilities ($40.51/hr); information & cultural industries ($32.76/hr); professional, scientific and technical services ($32.60/hr); and 

public administration ($32.30/hr). However, as there have been job losses in many of these sectors, it is likely that wage rates in these sectors may also drop 

over time and be reflected in next year’s results. 

As most of the wage gains and higher wage positions were in male-dominated fields, it is not surprising that BC’s female-to-male wage ratio declined by 

1.2% in 2008, down to 0.827. By comparison, the national average declined by 0.2%, while Alberta and Ontario both realized small gains (0.3% and 0.1% 

respectively). 

8 

Statistics Canada, Labour Force Survey, 2008. 

9 

Ibid. 

10 

Statistics Canada, Survey of Employment, Payrolls, and Hours and Consumer Price Index, 2008. 

11 

Alberta Finance & Enterprise, Economics and Statistics – Alberta Inflation, June 13, 2008. 

12 

Statistics Canada, Survey of Employment, Payrolls, and Hours and Consumer Price Index, 2008. 


BC was the only jurisdiction to see a decline in 

wage parity between 2003 and 2008, with its ratio 

declining by 1.5%. During this same period, 

Ontario’s wage parity ratio rose by 2.4%, and 

Alberta and Canada both saw an increase of 

1.8%. 

From the late 1990s to about 2004, our 

comparison jurisdictions experienced improvements 

in wage parity, most likely due to the 

increased number of women who obtained a 

post-secondary education throughout the 

1990s. 13 In BC, wage parity slowed because the 

proportion of women in management declined 

from 38% in 1998 to 34.1% in 2008. 14 There 

was also a corresponding reduction in the share 

of high-wage jobs held by women. Another 

factor to consider is that although women’s 

nominal wages in BC rose by 11.9% between 

2003 and 2008, men’s rose by 13.6% during the 

same period. 

While BC’s wage parity lost ground in 2008, 

the preliminary results from 2009 show a slight 

rebound, no doubt due to massive job losses in 

male-dominated resource industries. When 

comparing the first quarter of 2009 with that 

of 2008, pay equity was 0.5% higher; when 

looking at the second quarter results for both 

periods, the 2009 rate was 2.1% higher. 

Real Average Hourly Wages (2008$), Provinces 

and Canada, 2003 to 2008 

27 

26 

25 

24 

23 

22 

2003 2004 2005 2006 2007 2008 

BC $22.28 $22.40 $22.52 $22.80 $23.12 $23.43 

AB $24.24 $24.75 $25.19 $25.45 $25.54 $26.32 

ON $22.99 $23.25 $23.40 $23.51 $23.87 $23.94 

CDN Average $22.28 $22.57 $22.74 $22.92 $23.33 $23.52 

Source: Statistics Canada, Survey of Employment, Payrolls and Hours and 

Consumer Price Index 

Educational attainment 

Just as the number of jobs, the unemployment rate, and wage levels are key indicators of the health of our domestic economy, the level of educational attainment 

is a predictor of labour productivity and competitiveness. 

Educational attainment measures the percentage of the labour force, aged 25 to 54, that has received some level of post-secondary education. 15 In 2008, the 

educational attainment of BC’s labour force rose by 1 ppt, reaching 62.7%. 16 While this is the highest level of education BC’s labour force has ever achieved, 

it was still lower than Ontario’s level and the national average (67.5% and 65.6% respectively). 

Notwithstanding their current rankings among the comparison jurisdictions, BC and Alberta are seeing faster growth in educational attainment, and they 

are likely to catch up to Eastern Canada in the coming years. This is not only due to improved graduation rates and greater post-secondary participation, but 

also due to an influx of highly skilled workers. Between 2007 and 2008, the number of workers with education above a bachelor’s degree rose by 15.8% in 

BC and 11.1% in Alberta—well above growth rates in Ontario and Canada (7.9% and 7% respectively). 

Considering BC’s dismal results in labour productivity, gains in educational attainment are likely key to improving our overall productivity and economic 

performance. 

Overall 

While BC’s work environment fared relatively well in 2008, it has already faced a myriad of challenges in 2009. In addition, a weak investment climate may 

hinder the pace of our eventual economic recovery. 

13 

Marc Frenette and Simon Coulombe, Has Higher Education Among young Women Substantially Reduced the Gender Gap in Employment and Earnings? 

Statistics Canada, Analytical Studies Branch Research Paper Series, June 2007. 

14 


15 

Includes post-secondary certificate, diploma, or higher, which includes diploma programs at colleges, as well as trades and technical certification programs. 

16 



invest 

BC’s investment climate continued to see lacklustre results in 2008, ranking lowest or second-lowest in three out of 

five indicators. This is not a surprise, given that BC’s real GDP declined 0.3%, and was below the national average 

growth rate of 0.5%. 

In 2008, the value of BC’s exports declined by 9.1%, due primarily to the slump in US demand for solid wood products, 

and lower mineral and gas prices. BC’s labour productivity declined by 1.7% and corporate profits declined by 0.3 ppt. 

On the bright side, BC tied for first in employment in the sciences, posting a 0.2 ppt increase. In addition, BC’s 

financial liabilities/GDP declined 2 ppt, the best result in our comparison. 

The table below shows how BC compared with Alberta, Ontario, and the national average on our five key indicators 

over one and five-year periods. 

Summary of INVEST Key Indicators BC AB ON CAN 

Productivity 38.0 47.5 41.7 40.9 

Employment in the Sciences 6.6% 7.6% 7.6% 7.1% 

Value of Exports per Worker $27,915 $51,881 $46,135 $26,548 

Net Provincial Financial Liabilities 

as a Percentage of GDP* 

6.9% -6.4% 21.4% 20.8% 

2008 Value 

After-Tax Corporate Profits-to-GDP Ratio 9.34% 18.79% 7.27% 10.80% 

Productivity -1.7% -1.4% -0.6% -0.5% 

Employment in the Sciences 0.2 ppt** -0.3 ppt 0.2 ppt 0.1 ppt 

Value of Exports per Worker -9.1% -4.2% -6.7% -6.3% 


as a Percentage of GDP 

-2.0 ppt -1.5 ppt -1.1 ppt -1.7 ppt 

After-Tax Corporate Profits-to-GDP Ratio -0.3 ppt 2.1 ppt -1.0 ppt 0.2 ppt 

2007-08 % Change 

Productivity -0.6% 2.5% 3.4% 3.3% 

Employment in the Sciences 0.3 ppt 0.7 ppt 0.4 ppt 0.5 ppt 

Value of Exports per Worker -4.3% -0.8% -4.5% -3.9% 


as a Percentage of GDP 

-7.1 ppt -7.3 ppt -2.7 ppt -6.6 ppt 

After-Tax Corporate Profits-to-GDP Ratio 2.3 ppt 2.2 ppt -2.1 ppt 1.1 ppt 

2003-08 % Change 

* Net provincial financial liabilities as a Percentage of GDP — 2007 value presented and % changes from 2003 to 2007 and 2006 to 

2007. An increase in all of the foregoing indicators except net financial liabilities is a desirable change in terms of investment conditions. 

Conversely, a decline in government net financial liabilities to GDP ratio is a desirable change. 

** ppt = percentage point.

invest 

A vibrant investment climate is the key to raising BC’s standard of living. High productivity and exports per worker positively affect corporate profits, encouraging 

investment and leading to higher wages for workers. Greater corporate profits and higher wages affect government revenue, and government 

surpluses present an opportunity to pay down debt. All of these factors help to create a competitive, vibrant economy that attracts educated workers; and, 

again, educated workers have a positive impact on productivity. 

Productivity 

Productivity is crucial to long-term economic growth. Real labour productivity measures the efficiency of the workforce, or the amount of output per personhour 

worked. 17 In 2008, BC’s productivity declined by 1.7% and Alberta’s by 1.4%, while Ontario and Canada as a whole saw declines of 0.6% and 0.5% 

respectively. 

Between 2003 and 2008, BC’s productivity declined by 0.6%. Productivity was dampened by the service sector, which plays a large role in the economy 

and is more labour-intensive than the goods sector. (Productivity growth in most of BC’s service industries has actually been weak since 1990.) Another 

factor is the low educational attainment of BC’s labour force. Without investment in “human capital,” labour simply cannot achieve its full potential. 

Since 2001, BC has made some tentative steps towards improving productivity, mainly through government investment in public infrastructure and tax 

changes. However, the economic downturn reveals the tenuousness of our foothold on prosperity, and underscores the amount of work that still needs to be 

done. 

After BC moves to an HST, businesses will save nearly $2 billion in production costs and $150 million in tax compliance costs. In the short-term, these 

savings should buoy the economy. In the long-term, these savings will lead to greater capital investment and will improve the productivity gap, as businesses 

invest in new machinery, new technology, and improved training for workers. 

To boost BC’s productivity growth, we need ongoing investment in private and public infrastructure, in technological innovation and dissemination, and 

in the education and training of BC’s labour force. 

Profits 

Low productivity directly affects corporate profits, and corporate profitability is a strong indicator of a province’s current and future investment climate. 18 

In 2008, BC’s ratio of after-tax corporate profits declined by 0.3 percentage points (ppt) to 9.34%. Ontario declined even further, with a 1 ppt drop to 

7.27%. The national average increased by a meagre 0.2 ppt to 10.80%, and Alberta saw this indicator rise by 2.1 ppt to 18.79%, due to oil and gas revenues. 

In 2008, Canadian corporations saw profits begin to decline as the world financial system and markets stalled. Canadian pre-tax operating profits declined 

from $68.3 billion in the first quarter of 2008, to $62.4 billion in the fourth quarter of the same year. Between the first quarter of 2008 and the first quarter 

of 2009, Canadian industry pre-tax operating profits declined by 19.3%, or $13.2 billion. However, some of the gross profit losses were offset by declining 

provincial and federal general corporate tax rates in 2008. 

In BC, many corporate profit losses occurred in the resource sector, reflecting the decline in quantity and price of forest products shipments, our major 

export. Export revenue is a significant source of basic income into our provincial economy, but it is sensitive to global demand conditions. 

Exports per worker 

An increase in the exports per worker value reflects an improvement in the trade environment and investment climate. In 2008, BC’s exports per worker 

value declined by 6.8% to $27,915, and Ontario’s declined by 6.7% to $46,135. Although the value of Alberta’s exports per worker declined by 4.2% to 

$51,881 last year, it was still almost double that of BC and ranked as the highest value in Canada. 19 

Between 2003 and 2008, the value of BC’s exports per worker was down by 4.3%. During this same period, Ontario saw a decline of 4.5%, and Alberta 

saw a decline of 0.8%. While the value of total exports from BC rose by 5.9% between 2003 and 2008, the number of workers increased at almost double 

this rate (10.7%). In the first five months of 2009, the value of BC’s domestic exports per worker was down by 17.8%. 

Workers in the sciences sector 

The labour market share of workers in the natural and applied sciences is a barometer of technological dissemination throughout the workforce. 20 In 2008, 

Alberta and Ontario led the comparison jurisdictions with 7.6% of the labour force employed in science-related occupations, while the national average was 

7.1%. BC lagged behind, with 6.6%. 

17 

Ideally, a productivity measure should account for both labour and capital inputs used in production; however, labour productivity is generally used as a 

proxy measure for total change in productivity. 

18 

Our indicator is the ratio of after-tax operating profits to GDP, which allows us to compare jurisdictions. Our definition of profits includes those accrued 

in both private sector and government business enterprises. Government business enterprises (GBEs), which constitute 5-10% of total profits, are legal 

entities with a separate set of financial statements, which qualifies them in the parlance of Statistics Canada as “institutional units.” GBEs differ from 

other government services in that they generally charge prices that are related to the cost of production, as in the case in private enterprises, and are 

subject to tax. Gaming and liquor sales are excluded from GBE profits because of the nature of their profits. Governments have established monopolies 

for these enterprises, and it is impossible to distinguish between profits earned as a margin on their operations or earned as monopoly producers. They 

are, therefore, classified as indirect taxes—specifically, taxes on products. 

19 

The value of Canadian exports per worker was $26,548 in 2008, but as this figure nets out inter-provincial shipments, and it is not comparable to the 

provinces’ values. 

20 

Natural and applied sciences include professional occupations in physical and life sciences, engineering, architecture, planning, and a range of related 

technical occupations. 


Not only was BC’s percentage of workers in the sciences comparatively low, it also showed only a small increase of 0.2 ppt in 2008. Nevertheless, this small 

increase was on par with Ontario’s gain, and just slightly above the national average gain of 0.1 ppt. Alberta, by contrast, saw a decline of 0.3 ppt, as its oil 

and gas sector slowed down. 

In a labour market study conducted in February 2008, the BC Technology Industries Association predicted that BC would see 5,000 new technology jobs 

by September 1, 2008. 21 The economic challenges in late 2008 dampened the real numbers, but there is no question that many of these predicted jobs were 

realized. In addition, science-related jobs emerged in several of BC’s traditional sectors, as industry evolved to become more competitive and meet growing 

market challenges. Hopefully this growth will continue, as it will have a positive impact on BC’s productivity. 

Net government liabilities 

Without a strong and productive work and investment climate, the BC government is severely limited in its ability to meet the needs of citizens, and in its 

ability to pay down debt. 

The net government liability indicator measures past fiscal policy and future tax burden. 22 In 2007, BC’s financial liabilities declined by 2 ppt, comprising 

only 6.9% of the GDP. In Alberta, where all provincial government debt has been eliminated, the ratio was -6.4%. Ontario posted a decline of 1.1 ppt, and 

saw its government liabilities drop to 21.4%; while Canada posted a decline of 1.7 ppt, and saw its government liabilities drop to 20.8%. By the end of 2007, 

strong economic growth, positive government revenues, and prudent fiscal policy had all laid the groundwork for lower government debt in BC. But the 

tumultuous economic and financial events of 2008, and a correlative growth in unemployment, severely altered the context for government spending. 

In February 2009, the government forecast a budget deficit of $495 million. However, by the time the September 2009 budget update was released, that 

figure had jumped to $2.8 billion for the 2009/10 fiscal year, $1.7 billion for 2010/11, and $945 million for 2011/12. It is clear that the economic downturn 

hit the BC economy much harder than the government had anticipated. Other jurisdictions, like Alberta, are also predicting increased debt as the full implications 

of the economic downturn become clear. 

Lower than forecasted income tax and resource royalties are the primary causes for this about-face. According to the provincial government, compared to 

the February 2009 Budget, taxation revenue is expected to decline by 6.9% in the fiscal year 2009/10, by a further 4.6% in 2010/11, and by another 2.9% 

in 2011/12. In addition, the estimates for natural resource royalties for the next three years have declined by $2.1 billion since February. 

Overall 

The results for BC’s investment climate were not encouraging in 2008, and the outlook for 2009 is even bleaker. Even though we are working through a 

recession, continued investment in machinery and equipment, technology, and education for workers is necessary if we are to increase BC’s productivity and 

begin to put our economy back on solid ground. 

Where do we go from here? 

A strong economy is the backbone of our society. Creating an environment that encourages investment in technology, infrastructure, and education spurs 

companies and workers to become more productive, thereby driving up profits and wages. This, in turn, creates more jobs, lowers unemployment, and boosts 

personal disposable incomes. In addition, increased economic activity provides increased revenues to government, providing money for the social services we 

all depend on. Our economy and society is interconnected, and without gains in all three of our report areas—live, work, and invest—we will remain vulnerable. 

BC’s economy has been through a lot in the past 12 months, and it looks like we have a long way to go before our economy begins to see the kind of growth 

that was, until recently, taken for granted. After a year of modest growth in 2008, and a year of contraction in 2009 (to date), the 2010 BC Check-Up will 

provide an interesting benchmark. In the meantime, the only thing that’s certain is that the financial crisis and economic downturn resulting from the events 

of last fall will deeply impact the provincial, national, and global economies for years to come. 

A full version of the 2009 BC Check-Up is available at 

www.bccheckup.com. And if you’d like to participate in the BC Check-Up 

project, please contact me at brkich@ica.bc.ca. 

21 

Techtalent BC, Labour Trends in the BC Technology Sector, carried out by the BC Technology Industries Association, February 2008. 

22 

Our indicator—net government financial liability as a percentage of GDP—is derived from Financial Management System (FMS) data of Statistics 

Canada. The numerator—net government financial liability—is defined as total provincial financial assets (including sinking funds) minus financial 

liabilities, plus guaranteed debt. Guaranteed debt is defined as a guarantee issued by the provincial government on behalf of its crown corporations that 

could lead to a claim on the government if a corporation does not meet its obligations. The FMS provincial government data provides consistent results 

that can be compared between provinces. For more information on the FMS system of accounting, see Statistics Canada Cat. No. 68F0023. 


Tax Traps & Tips 

Crystallizing the 

Capital Gains 

Exemption in the 

Context of Business 

Succession 

By Jimmy Kwan, CA, CFA 

An estate freeze is a common technique 

used in business succession planning. 

A typical arrangement of an estate 

freeze in the context of a private corporation is to 

“freeze” the value of the shares of a corporation 

by exchanging the owner’s common shares for 

fixed-value preferred shares. With all of the 

corporation’s value after the freeze being 

attached to the fixed-value preferred shares, the 

owner’s heirs or related parties are able to 

subscribe for common shares of the corporation 

for a nominal amount. The future appreciation 

of the value of the corporation will then accrue 

to these heirs and related parties. 

There are, of course, other options. Many 

owners, for example, choose to pass their 

corporations on to the next generation simply 

by selling to their heirs. These owners have the 

option of triggering the capital gains exemption 

(CGE), the benefits of which have been extolled 

in numerous articles. But does this mean that 

owners should always claim the CGE when they 

transfer shares to family members? 

Comparing sources of 

retirement income 

Let’s assume the owner (Owner) of a Canadiancontrolled 

private corporation (Opco) is 

considering retirement and would like to “cash 

out” to secure sufficient financial resources to 

maintain his lifestyle needs after retirement. If 

a complete freeze has been implemented, as 

described above, the Owner could simply 

redeem the preferred shares over his lifetime to 

provide himself with dividend income. 

Alternatively, the owner could cash out by: 1) making an outright sale to unrelated parties; 2) making 

a sale to related successors and claiming the capital gains exemption (CGE); or 3) making a sale to related 

successors and not claiming the CGE. 

So which of these options would be the most tax efficient? 

Facts and assumptions 

Before getting into a detailed numerical analysis, these are the top marginal BC personal rates 1 (2009) 

that will be used in this article: 

Income 43.70% 

Capital gains 21.85% 

Eligible dividends 2 19.92% 

Ineligible dividends 3 32.71% 

For the purposes of this article, let’s assume that: 

• The fair market value of Opco is $1,000,000; 

• The adjusted cost base and paid-up capital is nominal; 

• The $750,000 CGE is available; and 

• If the Owner were to implement the estate freeze as noted above, his daughter (Successor) would be 

the only person who would subscribe for common shares of Opco. 

Estate freeze strategy 

Under the estate freeze strategy, the Owner could exchange, on a tax-deferred basis, his common shares 

for preferred shares with a redemption value of $1 million, as per section 86 of the Income Tax Act 

(Act). If the Owner were to redeem these preferred shares over his lifetime to cover cash flow needs, his 

income taxes would be between $199,200 and $327,100, depending on whether eligible dividends 

could be declared when the shares are redeemed. Note: The range of income taxes would be higher if 

not all the shares were redeemed in 2009, as the tax rates on both eligible and ineligible dividends will 

increase in the next few years. 

It is reasonably common for owner-managers to monitor the inactive assets of their Canadiancontrolled 

private corporations (CCPCs) to ensure that the shares of their CCPCs are qualified small 

business shares; this, in turn, ensures that the CGE can be claimed upon disposition. As a result, many 

CCPCs do not carry sufficient cash to redeem the preferred shares. 

To use the example of Opco: In order to generate cash to redeem the preferred shares, Opco would have 

to either sell assets or generate cash flows from its operations. Selling assets might not be a desirable 

choice, however, as it may result in capital gains and recapture. 

In order to generate $1 million from operations to redeem the preferred shares, Opco would incur 

approximately $156,000 of income taxes, assuming all income from operations is eligible for the small 

business deduction. 4 

Sale to unrelated parties 

This article focuses primarily on business succession involving heirs and related parties, but 

it’s worth noting that if Opco could be sold to unrelated parties and the $750,000 CGE were available 

to the Owner, the Owner’s income tax liability would be approximately $54,625, 5 ignoring the impact 

of alternate minimum tax (AMT). 

1 

These are the substantially enacted rates from August 2009. 

2 

The top marginal BC personal rate on eligible dividends is expected to increase to by approximately 26% in 2012. 

3 

The top marginal BC personal rate on ineligible dividends is expected to increase to by approximately 34% in 2012. 

4 

In order to generate $1 million, Opco would need to earn a taxable income of $1,156,000, as the income eligible for the small business deduction is taxed at 

13.5% in BC. Obviously, the $1,156,000 would have to be earned over a few years in order for the entire balance to be eligible for the small business 

deduction. 


Sale to the successor 

If the CGE is claimed 

The Owner can sell shares worth $1 million to 

the Successor. If he were to claim the CGE, his 

tax liability would be approximately $54,625, 6 

ignoring AMT. However, the Successor would 

have to come up with $1 million in after-tax 

funds to finance the purchase of the shares. 

With the entitlement of the small business 

deduction, it would always be more tax efficient 

for Opco to generate the $1 million proceeds 

than to generate the $1 million at the personal 

level. To that end, one strategy would be for the 

Successor to incorporate a holding company 

(Holdco). She could then transfer the shares of 

Opco to Holdco on a tax-deferred basis, as per 

section 85 of the Act. Note: As a result of the 

application of paragraphs 84.1(1)(b) and 

84.1(2)(a.1) of the Act, the Successor could only 

take back a non-shares consideration (such as a 

promissory note) of $250,000. 7 

If Opco were to generate after-tax funds of 

$250,000, it could pay tax-free, inter-corporate 

dividends to Holdco, and Holdco could then 

repay the $250,000 to the Successor without any 

further tax consequences. However, the Successor 

would still need to come up with after-tax funds 

of $750,000 to repay the Owner. In this case, 

Opco would have to earn a pre-tax income of 

$1,288,500 so that an after-tax income of 

$1,114,600 8 could be paid to the Successor as 

ineligible dividends through Holdco. At the 

marginal rate of 32.71%, the Successor would then 

have after-tax funds of $750,000. Therefore, the 

total income tax required to generate $750,000 

at the Successor’s and Opco’s level would be 

$538,500. 

Similarly, in order for Opco to pay intercorporate 

dividends of $250,000, it would need to 

generate $289,000 9 in pre-tax income. Therefore, 

the income tax at Opco’s level would be 

$39,000. In summary, the total income taxes 

would be $577,500. 

Although the tax liability at the Owner’s level 

would be substantially less than under the estate 

freeze strategy, the overall family tax liability 

would be much higher. 

If the CGE is not claimed 

If the Owner chose not to claim the CGE, his tax liability would be approximately $218,500, 10 ignoring 

AMT. The Successor could then transfer the shares of Opco to Holdco and take back a promissory 

note of $1,000,000. Opco would only be required to generate $1,156,000 11 to net $1,000,000 in 

after-tax funds, and the $1,000,000 could then be paid to Holdco and the Successor to repay the 

promissory note owed to the Owner. 

Alternatively, the Owner could sell the shares of Opco to Holdco directly for a promissory note. 

However, due to the application of paragraph 84.1(1)(b) of the Act, the capital gain the Owner would 

have otherwise realized by selling the shares directly to the Successor would now be converted into a 

taxable dividend, and the result would be the same as in the estate freeze strategy. 

Comparing tax costs 

The following table summarizes the tax costs associated with each of the options discussed in this 

article (with the exception of the sale to unrelated parties). 

Estate Freeze Sale to the Sale to the 

strategy Successor with CGE Successor without CGE 

The Owner’s $327,100 $54,625 $218,500 

income tax liability 

Income taxes incurred $156,000 $577,500 $156,000 

to generate $1 million 

after-tax funds 

Total family income $483,100 $632,125 $374,500 

taxes 

To crystallize the CGE or not? 

It is obvious that our hypothetical Owner would incur the least amount of income tax if he were to sell 

the shares to the Successor and claim the CGE. However, this strategy would be the worst choice of the 

three if minimizing total family income taxes is the higher priority. 

It appears that a sale without the CGE would be superior to the estate freeze strategy when it comes 

to minimizing family income taxes. This will be especially true beginning in 2011, when the personal 

tax rate on eligible dividends in BC surpasses the rate on capital gains. Still, with the existence of the 

capital dividend account (CDA), refundable dividend tax on hand (RDTOH), and general rate income 

pool (GRIP) balances, the result could be totally different, making the estate freeze strategy preferable 

in certain cases. 

Something else to consider: Under the sale options, the Owner’s income tax could only be deferred 

for a maximum of 10 years 12 ; under the estate freeze strategy, however, the Owner would only be liable 

for the income taxes on the redemption of the preferred shares—in other words, the income tax could 

be deferred until redemption. 

Consider the options 

The calculations presented in this article are for illustrative purposes only, as many assumptions have 

been included. Readers are advised that a numerical comparison of the tax results of cashing out from 

different alternatives should always be performed, and that quantitative factors should not be considered 

alone—sufficient weight should be given to qualitative factors as well. 

Jimmy Kwan, CA, CFA, is a senior manager with Manning Elliott LLP in Vancouver. 

5 

$250,000 x 21.85%. 

6 

Again, $250,000 x 21.85%. 

7 

As the Opco shares were acquired in a non-arm’s length transaction, the adjusted cost base for the purposes of section 84.1 would be reduced under 

paragraph 84.1(2)(a.1) by any CGEs claimed by the non-arm’s length person after 1984. Therefore, the adjusted cost base of Opco shares for the purposes 

of section 84.1 would be $250,000 instead of $1 million. 

8 

$1,288,500 x (1 – 13.5%) = $1,114,600. 

9 

$289,000 x (1 – 13.5%) = $250,000. 

10 

$1 million x 21.85%. 

11 

$1,156,000 x (1 – 13.5%) = $1,000,000. 

12 

Subsection 40(1.1) of the Act. 


PD News 

For detailed course descriptions or a 

complete schedule of upcoming PD 

seminars, consult your fall 2009 PD 

brochure or visit our website at 

www.icabc-pd.com. To register, call 

the PD department at 604-681-3264. 

FALL PD PROGRAM 

Don’t miss the opportunity to 

attend these conferences: 

CAs in Industry PD Day 

CAs and financial professionals in industry 

currently face many challenges on the way to 

achieving their professional goals, and today’s 

economic realities undoubtedly place even more 

obstacles in the way. So what can you do to pull 

ahead of the pack and stay there? You have to stay 

informed about emerging trends in financial 

management and changes in compliance and 

reporting, and be aware of other outside influences 

that could affect your business. You also 

need to focus on the importance of leadership, 

and on fostering new skills for yourself and your 

team. 

This conference was designed to address these 

issues and provide you with a wealth of practical 

information to use in your workplace. 

Nov 10, 8:40am-5pm, Vancouver 

Local Government Accounting & Auditing 

Seminar 

The ICABC is pleased to co-present this seminar 

with the Government Finance Officers Association 

of BC. 

New accounting standards are changing the way 

we report financial information. Expectations of 

accountability are increasing and are changing 

the way audits are performed. Financing sources 

are getting more complex. This seminar will 

inform participants about the latest rules and 

practices and how these rules and practices 

interact. It will give participants the opportunity 

to meet, interact, and exchange ideas with some 

of the people involved in standard setting. 

Participants will see examples of how some 

communities have dealt with the issues. 

Nov 5&6, 8:30am-4:30pm, Vancouver 

Accounting & Assurance 

Effective Use of Analytical Procedures 

The objective of this seminar is to expose participants 

to the various analytical procedures 

available, and the different application techniques 

that can be used to maximize the effectiveness of 

audit or review work while continuing to meet 

the requirements of the profession. The seminar 

is designed for supervisors and partners of small 

or medium-sized firms performing audit or review 

engagements for small to medium-sized businesses. 

Nov 3, 9am-12:30pm, Kamloops 

Nov 9, 1:30-5pm, Vancouver 

Nov 20, 1:30-5pm, Victoria 

Nov 30, 1:30-5pm, Kelowna 

Evaluating Internal Control: A Top-Down 

Risk-Based Audit Approach 

The traditional “bottom-up” approach to internal 

control documentation has often proven 

time-consuming and less than effective in identifying 

the key controls, and has sometimes 

resulted in over-auditing. Participants of this 

seminar will learn how to improve the effectiveness 

of their audits by applying a “top-down” 

approach to understanding internal controls and 

producing quality audit documentation. 

Nov 19, 9am-5pm, Vancouver 

19 IFRS SEMINARS THIS FALL 

The ICABC is offering 19 IFRS titles this fall. For titles, dates, 

and locations, please see the fall PD brochure or visit our 

website at www.icabc-pd.com. 

Understanding Fraud Risk Factors 

Your risk of being defrauded increases as your 

customers, suppliers, and employees face increasing 

financial pressures. This seminar will help you 

address and reduce the risk of fraud by providing 

you with an understanding of what motivates 

fraudsters, the types of frauds commonly perpetrated, 

and the policies and procedures that can 

be implemented to reduce fraud risk. 

The seminar will be taught by experienced 

fraud investigators who will share their stories 

and experience with participants. Case studies 

will be reviewed, as will classic frauds (such as 

Ponzi schemes) and management frauds (such as 

Lord Black). 


Finance/NPO/Public 

Companies 

Analysis, Financing, and Completion of 

Acquisitions 

More and more CAs, both in industry and 

public practice, are involved in corporate or asset 

acquisitions. The objective of this seminar is to 

help participants act as key members in all 

aspects of an acquisition (or divestiture)—from 

the selection of an appropriate target through 

the entire valuation process, to how to make the 

new part of the corporate family work properly. 


Assurance & Accounting Issues for Public 

Companies 

This seminar will address the most pressing 

assurance and accounting issues faced by auditors 

of Canadian publicly traded companies today. 

Publications, case studies, and discussion will be 

used to identify the common reporting problems 

found by regulators, provide practical advice on 

new reporting requirements, and illustrate best 

practices. 


Not-for-Profit Organizations and Registered 

Charities: Accounting, Auditing, and 

Taxation Issues 

The accounting, tax, and reporting rules for notfor-profit 

organizations (NPOs) differ substantially 

from those that apply to private sector organizations. 

Without a solid understanding of these 

rules, individuals in financial reporting positions 

with NPOs may encounter difficulties meeting 

their reporting requirements. 

This seminar will address accounting, auditing, 

and income tax issues specific to NPOs. 


Nov 17, 9am-5pm, Victoria 


Not-for-Profit Organizations – Acctg Issues 

This seminar will provide an overview of the 

accounting standards for not-for-profit organizations 

(NPOs), and review the application of 

GAAP with an emphasis on the areas where 

choices have to be made in the preparation of 

financial statements. 

This seminar is aimed at individuals who are 

responsible for preparing, analysing, and/or 

auditing financial statements for smaller NPOs. 

Oct 28, 9am-5pm, Vancouver 

Dec 2, 9am-5pm, Victoria 

Management 

Better Connections: How to Create 

Improved Business Relationships 

Communication may be the glue that connects 

people, but it doesn’t come easily for many of 

us. The objective of this seminar is to help you 

create better client and co-worker relationships. 

If you want to feel comfortable when first 

meeting people, know what to say, make a good 

impression, and build trust and confidence, this 

workshop is for you. 


CFO’s Role to the Board of Directors 

The CFO role continues to grow and expand 

far beyond the basic custodianship of the books 

and records. Today’s CFO is responsible for 

ensuring that the overall direction of the business 

is consistent with the direction given by the 

board of directors. This one-day program will 

provide participants with a clear understanding 

of the concerns of board members and of the 

CFO’s role and responsibilities to the board. 


Practical Tips for Controllers and CFOs 

This seminar will provide a wide range of useful 

tips and tools for controllers—tips that are not 

normally provided in seminars or textbooks. 

These tips and tools will be illustrated with 

interesting anecdotes and examples. Participants 

will also have the opportunity to share experiences 

and practices. 

Oct 26, 9am-5pm, Victoria 


Shortcut to Success: The 14 Best Tools for 

Personal and Professional Growth 

The objective of this seminar is to focus on 

the techniques that will help you achieve your 

personal and professional goals. You will learn 

what really leads to success in the modern world: 

mastering the art of communication, discovering 

the magic of motivation, overcoming fears, and 

tapping into your creativity and intuition. 


Strategic Planning: The Basics 

CAs in industry are required to work closely 

with their CEOs and other members of their 

management teams to create and implement 

winning strategies in the marketplace. 

This seminar will provide participants with a 

clear understanding of the basic concepts of 

strategic planning. It is designed for financial 

professionals who are new to strategic planning 

and for those who have not been involved in 

strategic planning for some time and want to 

review and update their knowledge. 


Taxation 

Basic Canadian Income Tax Issues in Cross 

Border Transactions 

This half-day seminar will provide participants 

with a basic overview of a number of key issues, 

including certain Canadian income tax reporting 

requirements relating to the taxation of transactions 

between Canadian companies and non-resident 

businesses. 

Nov 5, 9am-12:30pm, Vancouver 

Tax for Controllers 

Small, growing, and mid-sized companies face 

a broad array of tax and related compliance 

requirements, and the penalties and/or tax costs 

of failing to meet these requirements can be 

severe. Without an in-house tax department, the 

responsibility for this area falls on the controller. 

This seminar will help controllers stay current 

about a broad range of tax and related compliance 

issues, and will provide a comprehensive 

review with cases and examples to draw attention 

to common problem areas.. 

The seminar will cover the information necessary 

for sales, operations, and/or personnel operating 

in any province or territory. In addition, the 

seminar will cover basic tax issues relating to 

export sales, corporate structure, and audits and 

appeals. 

Nov 5-6, 9am-5pm, Abbotsford 

Nov 19-20, 9am-5pm, Vancouver 

Dec 2-3, 9am-5pm, Victoria 

Transfer Pricing: Latest Developments and 

Dealings with Tax Authorities 

This seminar will review the latest transfer pricing 

developments in Canada and internationally, 

and will address strategies for dealing with, and 

resolving, CRA transfer pricing audits. The 

seminar will include one case study and some 

interactive sections. 

Oct 27, 9am-12:30pm, Vancouver 

US Taxation of Foreign Nationals 

This seminar will provide a general understanding 

of US taxation of resident and non-resident 

aliens of the US who are non-US citizens. 

Emphasis will be placed on the determination of 

residency for US tax purposes, US tax filing 

elections to minimize US taxation of foreign 

nationals, and treaty positions. Case studies and 

discussions will be included. 


US Taxation of US Citizens Abroad 

US citizens and resident aliens of the US are 

taxed on their worldwide income. Those not 

currently residing in the US must continue to 

file US tax returns and compute tax by referring 

to the same tax rules as if they were still residing 

in the US. However, these individuals may be 

able to exclude from US taxation all or parts of 

their foreign-earned income. Where the same 

income is subject to foreign taxation, the US 

provides a measure of relief in the form of credits 

or deductions for the foreign taxes. 

This seminar will provide a general understanding 

of how the United States taxes US citizens and 

resident aliens abroad. 


CICA Conference on 

Succession Planning 

November 18-19, 2009 

Simon Fraser University, Vancouver 

Statistics show that between 80 

and 90% of Canadian businesses are 

family-owned, and less than one out 

of three of these businesses will 

continue as a family operation into 

the second generation. This two-day 

conference will provide a comprehensive 

overview of succession 

planning with plenary and concurrent 

sessions, as well as a panel discussion 

featuring family business owners 

who will share their experiences and 

lessons learned. All sessions will be 

delivered by experienced presenters 

who are experts in the area of 

succession planning. Come away 

with the knowledge and skills needed 

to lead a transition team for optimum 

results. 

For further information and to 

register for this conference, go to: 

www.cpd.cica.ca/SuccessionPlanning 


Plugged In: News for and about members & students 

Announcements 

Congratulations! 

Gary Powroznik, FCA, has founded a new company, G-Force Group, after a successful 34-year career with 

PricewaterhouseCoopers LLP, which included 13 years as managing partner in BC. G-Force Group specializes in business, 

real estate, and loan recovery solutions. Powroznik also currently serves on the board of the VGH & UBC Hospital 

Foundation and is chair of Focus Foundation of BC. He formerly served on several other boards, including the Sauder 

School of Business and the Business Council of British Columbia. More information on G-Force Group is available at 

www.g-forcegroup.ca. 

James Topham, CA, has been named to the board of directors and the audit committee of Day4 Energy Inc., a 

manufacturer of solar electric modules. Topham recently retired from a successful 30-year career with KPMG LLP, which 

included 20 years as an audit partner in the technology companies and computer audit practices. He has been the lead 

partner for audit and related services for over 30 Canadian and/or US public companies, and currently serves as a director 

for OverInteractive Media Inc., New Media BC, the Clean Energy Technology Advisory Board, and BC Social Venture 

Partners. Topham also currently serves on the ICABC Council. 

Upcoming Events for Fraser Valley CA Association 

The Fraser Valley CA Association invites CAs to join as members or drop in for its monthly meetings. Meetings include a 

full breakfast and a professional presentation that also earns CPD credits. 

October 14, 2009 

Ed Kroft 

Special Presentation at the Ramada 

Contact laurie@fvcaa.ca to reserve your spot. 

November 5, 2009 

Chris Duggan and Shawn Siak 

International Markets & Global Trading 

Contact laurie@fvcaa.ca to reserve your spot. 

More information is available at www.fvcaa.ca. 


The ICABC Member Recognition Program 

Do you know a CA who has gone the extra mile in the community, made an exemplary 

contribution to the profession, or achieved outstanding success early in his or her career? 

Acknowledge their achievements by nominating them for an ICABC award! 

You can nominate a colleague for: 

Fellowship (FCA) 

Lifetime Achievement 

The Honorary CA Designation 

Early Achievement 

Community Service 

The Ritchie W. McCloy Award for CA Volunteerism 

Nomination deadlines: 

• Fellowship, Lifetime Achievement, Honorary CA: October 15, 2009 

• Early Achievement Award: October 31, 2009 

• Community Service Award: January 31, 2010 

• Ritchie W. McCloy Award: January 31, 2010 

Nomination forms 

Forms are available on the Institute website at www.ica.bc.ca 

under Member Centre>Forms>Member Recognition>Nomination Forms. 

REMINDER: Nominations for the Election of FCAs 

Each year, members are asked to identify chartered accountants who have rendered distinguished service to the 

profession, and to consider nominating these individuals for election to the Institute’s Fellowship. 

The official procedures for the election of Fellows appeared in the September 2009 issue of Beyond Numbers 

magazine (pages 26-27). 

Nominations forms must be received at the Institute office by October 15, 2009. 


CA Social Networking Group Hosts 

Baseball Barbecue 

By John Mackenzie, CA and Jennifer Tokarek, CA 

It was a beautiful evening on June 22, 2009, when the ICABC’s CA Social Networking Group hosted a Vancouver Canadians’ “BBQ Picnic in the Park” 

at Nat Bailey Stadium in Vancouver. The Vancouver Canadians dominated the Everett Aquasox in a 7-1 victory, providing a terrific finish to an evening 

of fun for the assembled throng of CAs. 

We had a great turnout of members from both industry and public practice, providing a wonderful mix for the networking event. There was plenty of 

opportunity for CAs to mingle before the game, as we enjoyed an excellent barbeque dinner (and dodged the occasional foul ball). 

Our CA group also enjoyed the evening’s various entertainment breaks, including the 4th inning “Sushi Race,” featuring the Vancouver Canadians’ sushi 

mascots, “Chef Wasabi,” “Ms. BC Roll,” and “Mr. Kappa Maki. (For the record, Chef Wasabi gave up an early lead after becoming distracted by wildly 

cheering fans and being overtaken by Ms. BC Roll, the ultimate victor.) And of course there was the famous “7th inning stretch,” which featured interactive 

classics like the hokey pokey, led by Nat Bailey’s synchronized dancers (aka the groundskeepers). 

To cap things off, Nat Bailey Stadium was kind enough to offer the CA Social Networking Group three dozen ticket vouchers for an upcoming Vancouver 

Canadians game, which we then donated to the Boys & Girls Clubs of Greater Vancouver and the Kids Up Front Foundation. These two children’s charities 

were very appreciative of the ticket vouchers, and told us the kids had a terrific time using them. 

We’d like to thank those of you who came out, and we hope to see you (and many new faces) at our next event, a BC-themed wine tasting at The Refinery 

in downtown Vancouver. Please note: At the time of this writing, our fall event hadn’t yet happened, so you can expect to see a recap of the wine tasting in 

the November issue of Beyond Numbers! 

John Mackenzie, CA, is a portfolio manager with Odlum Brown Limited in Vancouver, and co-chair of the CA Social Networking Group, along with Jennifer 

Tokarek, CA, the Western Canada regional tax manager for TD Waterhouse Private Client Services. 

The Vancouver Canadians take the field in a game against the Everett Aquasox. 


Nominate a future president 

Think you know a CA who could lead the ICABC through a constantly evolving environment? Nominate 

them for future presidency! 

We’re looking for CAs who are dynamic leaders and front-runners in their professions and 

communities—CAs who have the ability to inspire others. 

The candidate chosen by Council will be appointed third VP of the ICABC in early 2010, and must seek 

election to Council if they are not already a Council member. If elected, this individual will subsequently 

be appointed second VP in June 2010. Then, provided that they remain an elected member of Council, 

they will be appointed first VP in 2011, and president in 2012. 

Nomination steps: 

• Submit a nomination form. Forms are available on the ICABC website at www.ica.bc.ca under Member 

Centre>Forms>Member Recognition>Nomination Forms>Presidential Nomination Form. You can also 

access the form by direct link at www.ica.bc.ca/pdf/presidentialnominations.pdf, or by contacting 

Sandy Parcher, the manager of the Executive Office, at parcher@ica.bc.ca 

or 604-488-2602. 

• Be aware that candidates, proposers, and seconders must be members 

in good standing with the ICABC. 

• Tell us why you think the nominee should be considered for election 

to the ICABC presidency. Please note: Candidates should have 

demonstrated leadership in one or more of the following areas: 

The work of the British Columbia or Canadian Institute 

The pursuit of his/her career 

Voluntary service (with business, charitable, civic, community, 

political, or professional organizations) 

Research, teaching, writing, or speaking on professional matters 

• Make sure the nominee will accept the position if selected. 

Nomination forms should be marked 

“Confidential” and addressed to: 

Attn: Chair of the Presidential Nominating Committee 

c/o Chartered Accountants of BC 

Suite 500, One Bentall Centre 

505 Burrard St, Box 22 

Vancouver, BC V7X 1M4 

All nomination forms must 

be received at the ICABC 

office by January 4, 2010. 


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At Your Service 

quinellaauto.com 

Save on the purchase and lease of new and used vehicles 

Call Greg Huynh for your best possible price 

WE MAKE YOUR VEHICLE PURCHASES HASSLE-FREE 

Phone: 604.929.GREG (4734) or 1.800.300.GREG (4734) 

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Dealer: 8262 

Serving BC Professional Associations since 1973 

Classifieds 

Employment 

SURREY CA FIRM LOOKING TO PURCHASE A BLOCK OF 

CLIENTS 

A well-established accounting firm is looking to expand its 

operations by way of a purchase of an existing block of 

clients from a sole practitioner or small partnership. We are a 

firm with a wide range of experience, a personal touch, and a 

focus on owner-managed business and personal taxes. If you 

are looking for a succession opportunity, we would be happy 

to see if we would be a good fit for your clients to make the 

transition as smooth as possible. Every opportunity will be 

explored, including the possibility of keeping existing facilities 

and staff. Please feel free to respond in confidence care of 

Beyond Numbers, Box 09091. 

DYNAMIC FIRM ON SUNSHINE COAST SEEKING CA 

Looking for a real West Coast lifestyle for you and your 

family? We are a growing and dynamic firm located in Sechelt 

on BC’s beautiful Sunshine Coast, and we are looking for a CA 

with 3-5 years experience specifically in assurance 

engagements for small business and NPOs to take on a 

manager’s role within the firm and potential partnership down 

the road. If interested, please send an email in confidence to 

richard@thecoastgroup.ca. Website: www.thecoastgroup.ca 

ACCOUNTING PRACTICES WANTED - VICTORIA AND AREA 

We are a well-established, independent, progressive, and 

growing CA firm on Southern Vancouver Island looking to 

expand. We are currently offering succession opportunities 

and options or will consider the purchase of a block of 

accounts. If you are looking for a retirement/succession 

psst... Want a Job that Doesn’t Suck? 

All work and no play makes Jack a dull boy – and it 

makes you downright miserable. Wouldn’t it be nice 

to work for a firm that pays well, values your opinion 

and recognizes that your job isn’t your life? 

We’re looking for a qualified CA to grow with 

our Comox Valley firm. Consider a few of the 

BENEFITS OF JOINING OUR DYNAMIC TEAM: 

FLEXIBLE HOURS 

Because no matter what your current boss says, your 

personal life is more important than your job 

A HEALTHY SALARY 

You’ll get competitive pay, full medical and dental 

benefits and a Professional Development fund 

A LIFESTYLE ACCOUNT 

We’ll help pay for your healthy living purchases, like gym 

fees, ski passes and golf memberships 

PRIDE IN YOUR WORKPLACE 

We’ll ask your opinion on all major decisions, and we’ll 

actually listen to your feedback 

TECHNOLOGY 

We’re often the first ones to use innovative new 

software, and we’re proud of our paperless office systems 

Email Colleen Ellison your resume and cover letter today to 

cellison@presleyandpartners.com and discover how good it can get. 

Tel: 250-338-1394 / 1-877-338-1394 

You’re an experienced CA with 

a positive attitude and a good 

head on your shoulders. Why 

settle for a boring job and a 

50-hour work week? 

www.presleyandpartners.com 

opportunity for your well-run practice and are interested in transitioning your practice and potentially remaining involved in 

an advisory capacity, please forward a summary of information about your practice to: accountant.victoria@gmail.com. 

ACCOUNTING PRACTICES WANTED - NANAIMO AND AREA 

We are a well-established, independent, progressive, and growing CA firm on Southern Vancouver Island looking to expand. 

We are currently offering merger and succession opportunities and options or will consider the purchase of a block of 

accounts. If you are looking to merge your practice to benefit from the depth and opportunities provided by a larger group 

of professionals or for a retirement/succession opportunity for your well-run practice, please forward a summary of 

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Ethical Dilemmas 

Don’t Abdicate 

Your Professional 

Judgment 

By Chris Utley, CA 

Director of Ethics 

When in doubt about professional 

matters, it’s often a good idea to 

seek legal advice. That said, if the 

advice you receive runs contrary to your training 

and instincts, you should question its validity. 

This is especially true when the advice pertains 

to an area that falls within your particular realm 

of expertise. One such situation recently led to 

an investigation into the conduct of a CA named 

Carol.* 

The situation 

Carol works as the CFO of Control Irrigation 

Ltd (CIL), a company that sells and maintains 

water sprinkler systems. 

Mark, the company’s CEO and majority 

shareholder, launched CIL in BC in 2000, with 

some initial financing help from two associates. 

These associates, Alexandra and Bruce, each 

loaned the company $200,000 for 20% of the 

shares, becoming CIL’s minority shareholders. 

Mark’s lawyer and personal friend, Dave, helped 

draw up a shareholders’ agreement, which stipulated 

that the two minority shareholders would 

be bought out after ten years according to a formula 

based on earnings. 

By the time Carol joined CIL in 2004, the 

company was making profits. One of her first 

tasks was to review the shareholders’ agreement to 

determine if the terms were fair to the majority 

shareholder—Mark. She concluded that the 

agreement was unfair to her boss, as it effectively 

gave 50% of the company to minority shareholders 

who owned only 40% of the shares. 

Mark subsequently attempted to renegotiate 

the shareholders’ agreement with the help of 

both Carol and Dave. 

What happened 

Before renegotiation efforts could get underway, Alexandra negotiated an early buyout, leaving Bruce 

as the sole minority shareholder. Bruce refused to renegotiate, insisting that he be bought out after ten 

years, as per the original agreement. Carol and Dave attempted to renegotiate the shareholders’ 

agreement several times, and provided Bruce with the company’s financial information to help him 

with his decision (as per his request). When it became clear that Bruce could not be convinced to 

renegotiate, Carol stopped providing him with financial information. 

By this point—late in 2004—Bruce had been repaid all but $40,000 of his investment in CIL. As 

part of a bank financing agreement Carol had helped CIL arrange earlier in the year, Bruce had signed 

a postponement of claim on this $40,000, in favour of the bank. But when Carol stopped providing 

him with financial information, Bruce believed he was being shut out and requested repayment. Under 

Dave’s advisement, and without objection from Carol, Mark refused. 

Bruce filed a lawsuit against CIL for repayment of his loan plus interest. 

Shortly thereafter, the bank became aware of the shareholder dispute and put the company on 

collection notice. Concerned, Mike asked Carol to repay the bank $40,000 to reduce the outstanding 

balance of the bank loan. At the same time, Carol informed the bank and Bruce that the company was 

releasing Bruce’s postponement of claim. Carol further advised Bruce that in reducing the indebtedness 

to the bank in exchange for Bruce’s pledge of security, CIL had repaid him in full. 

Bruce contacted the ICABC, accusing Carol of having orchestrated the theft of his $40,000. In his 

complaint, he also said that Carol had signed an affidavit in the lawsuit that contained false and 

misleading information. 

The outcome 

Following an investigation, the PCEC found that Carol had indeed been party to the misappropriation 

of the loan payable to the minority shareholder, and determined that she had violated Rule 202 

(Integrity and Due Care). 

The PCEC told Carol that repaying the $40,000 loan to the bank was not equivalent to repaying the 

minority shareholder. Carol explained that Dave had devised this plan, and said she’d merely accepted 

and carried out his advice. She argued that her responsibilities as CFO were to communicate and/or 

account for legal positions developed by counsel, and to obtain legal advice where necessary, as she was 

not qualified to practise law nor to pass legal judgment on positions taken by competent legal 

professionals. The PCEC disagreed, pointing out that accounting was entirely within her realm of 

expertise, and told Carol she should have seriously questioned Dave’s legal advice in this regard. 

Moreover, the PCEC found that Carol had made false statements in her affidavit—statements that 

directly contradicted the shareholders’ agreement. Again, Carol pointed to Dave, saying that he had 

drafted the affidavit. His strategy, she explained, was to deny the existence of the original shareholders’ 

agreement on the basis that it was so unfair as to be null and void. 

The PCEC concluded that Carol had breached Rule 205(a) (Association with False and Misleading 

Documents) and Rule 201.1 (Maintenance of the Reputation of the Profession). Carol paid a fine, 

accepted a reprimand, and paid the costs of the investigation. 

The message 

Carol let her allegiance to Mark cloud her judgment, leading her to neglect her duty—as CFO—to the 

company’s minority shareholder. No matter how unfair she may have deemed the original shareholder 

agreement, this did not justify her signing false or misleading statements or failing to properly account 

for an outstanding loan. In addition, she chose to follow the advice of legal counsel even though it 

conflicted with her own training and judgment. Why she did so is still unclear. 

Comments or questions? Contact me at utley@ica.bc.ca. 

*Please note: This fictionalized account is based loosely on an actual case before the PCEC (Professional 

Conduct Enquiry Committee). Names and circumstances have been changed to preserve anonymity. The 

contents of this article are intended only for the general guidance of readers. The PCEC deals with each case 

individually, based on its specific facts and circumstances. 


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Rough seas for BC economy - Institute of Chartered Accountants of BC

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