Part 2: Gender inequity in Canada's tax system

May 10, 2022
Federal tax Business tax

The RSM Canada National Tax Centre is pleased to present a five-part series on the role of taxation in promoting economic gender equity. This series focuses on consideration of gender bias in taxation and its potential impact on both individuals and the economy, highlighting key challenges amid the COVID-19 pandemic, the path forward, and what we as tax practitioners can do to assess and check our own gender biases in the tax system.

1900: Women can own property. 1918: Women can vote at the federal level. 1929: Women become “persons” under the law. 20??: Women achieve economic equity.

From personal income tax to sales tax, the Canadian tax system data indicates that disproportionately favours men. This is no secret: A 2019 study by the Canadian Centre for Policy Alternatives found that of 45 personal tax government expenditures examined, including pension income-splitting and capital loss carryovers, only eight paid out greater amounts to women than men, and most of those were related to child care and  dependants.

What the stats say

Despite the Canadian government’s efforts to narrow the gender pay gap and promote women to leadership positions, women continue to reap less from the Canadian economy and tax system:

  • Feminine hygiene products were not recognized as an essential item until 2015. Previously GST/HST was charged on those products—while baking ingredients, including cocktail cherries, were GST-exempt.      
  • Deductions are typically available for unreimbursed work expenses predominantly borne by men, such as the purchase of uniforms or tools—but not for expenses predominantly borne by women, such as the cost of child care or safe transportation after dark.
  •  Women typically own fewer corporate shares and earn less in dividends and capital gains.
  • Women are underrepresented on corporate boards and in senior management.
  • Because they generally earn less, women are less likely to benefit from certain tax planning endeavours or capital gains deductions provided in the Income Tax Act.
  • Under joint assessment regimes, higher effective tax rates apply to secondary earners, most often women.
  • The COVID-19 pandemic has been found to disproportionately affect women economically. For example, women make up 63% of applicants for the Canada Recovery Caregiving Benefit—suggesting women are nearly twice as likely as men to miss work to stay home and care for dependants affected by school closures or illness.

Unfortunately, the disparities are not unique to Canada. A joint blog from representatives of several international entities, including the World Bank, have highlighted gender inequity in tax and how economies can take action to remove explicit and implicit biases in tax systems that unfairly disadvantage women.

Now what? Economic equity, hopefully

Governments around the world should consider how tax policies and practices can promote gender equity vs. gender equity. Often used interchangeably, equity and equity are quite different. Equity means everyone is treated the same way, regardless of individual needs or differences. Equity, on the other hand, means everyone is provided what they need to succeed, while acknowledging that men and women may have different needs.

A focus on equity is needed to level the economic playing field for women.

More from this series: