A Canadian payroll dependency chart

https://www.daemonology.net/blog/2023-12-31-Canadian-payroll-dependency-chart.html

by djha-skin • 3 years ago

335 218 3 years ago

"except anyone resident in Quebec, Nova Scotia, Yukon, or Ontario"...it is essentially 75% of Canada!

munk-a2• 3 years ago

Quebec is essentially a different country altogether - there are a legion of strange HR rules and requirements that are entirely specific to QC.

tharmas2• 3 years ago

Yes, and heavily subsidized by other parts of Canada via transfer payments.

cperciva6• 3 years ago

To be fair, Nova Scotia, Yukon, and Ontario each only add a handful of extra nodes. I just didn't want to bother with those because I'm in BC.

Quebec is a different matter; far more complicated to calculate payroll deductions for there.

cmrdporcupine7• 3 years ago

And if the crazy proposal from the UCP in Alberta to divorce from the CPP and have their own pension system (like Quebec) is successful, it will get even crazier.

Imagine the complications of moving back and forth between provinces. Or seasonal work, etc.

bigdict• 3 years ago

Would be nice to have an open source implementation of this.

jqpabc1234• 3 years ago

Yes but unlikely because this is an example of the Open Source "black hole" where nothing escapes because developers don't find such specialized business applications very interesting.

This requires constant updating and maintenance because tax laws are always changing.

busterarm2• 3 years ago

This kind of thing is the bread and butter of SaaS companies though.

It's also exactly the kind of thing companies _wouldn't_ use open source for because if the code gets the tax law wrong they have nobody to transfer liability to. Once you have a corporate entity backing a subscription service, insurance underwriters can understand what's going on and you can finally manage your risks.

mmastrac• 3 years ago

It's a shame that we don't have open formulas in code form published by the government. The only way that I know how to do this reliably is using the web form provided by the CRA here: https://www.canada.ca/en/revenue-agency/services/e-services/...

As you can imagine, doing this by hand is quite painful and error-prone.

Topgamer7• 3 years ago

I want something similar for my mortgage calculation. For example I cannot get my bank (TD Canada) to inform me of how much each payment goes towards my principal. I'm pretty sure I've calculated it properly, however the number is often in the 10's of dollars off from what the bank reports my outstanding balance is after a payment is made.

Also don't get me started that I can't use an api to get my account details and statements in Canada.

MattGaiser• 3 years ago

Anecdotally, the bank often cannot tell you how much. It has come up multiple times on /r/personalfinancecanada that the bank isn't really sure or generates a few different calculations. I also worked for a mid sized Canadian bank where the advisors couldn't consistently do it either.

ipaddr• 3 years ago

What is your mortgage amount and what is rate?

Say your mortgage is 300,000 and rate 5%. You would pay 15,000 in interest. Subtract from your total yearly payment say 25,000. You pay back 10,000 a year divide by 12 for months or payment period to get the amount.

cperciva6• 3 years ago

FWIW, being off by 10s of dollars sounds to me like different ideas of how to count days. Banks sometimes use calendar days, sometimes business days, and sometimes a fictitious calendar with 12 months of 30 days each.

humanlion87• 3 years ago

I was in the same boat. I ran into similar discrepancies until I realized that I was not accounting for the number of days in the month correctly.

One option is to call the mortgage department and ask them to provide the split. When I asked the agent why I couldn't see it online, she mentioned their system is not setup to show this information. No idea why. Pretty frustrating.

cachvico5• 3 years ago

    Also don't get me started that I can't use an api to get my account details and statements in Canada.

Anyone know if there's any ongoing effort to this effect - i.e. to force banks to implement a common API for querying data held in their accounts?

A brief search reveals that Canada is of course missing from https://en.wikipedia.org/wiki/Open_banking

j4516• 3 years ago

While open banking is on it's way in Canada it still might be a few years until the API is available.

Mortgage Calculators are sadly something that appear to need to be build by hand in Excel

rootusrootus• 3 years ago

Is this something particular to how Canada does mortgages? In the US, a bog standard mortgage is 12 payments a year, with all interest for the month accruing on the 1st day of each month. It's pretty trivial to put that into Excel and use the IPMT function (and related ones like PMT) to spit out the interest being paid in a given month. It's always been dead-on accurate for me.

Maybe this is just one little upside of mortgage terms in the US being dictated mostly by the gov't through fannie mae and freddie mac.

franga20003• 3 years ago

Also don't get me started that I can't use an api to get my account details and statements in Canada.

Can you do that anywhere else? Even under the EU's "open banking" system, this is basically impossible unless you use an intermediate that charges absurdly high fees, because they themselves had to pay hugr licensing and insurance fees to be granted access to the "open" APIs. The only other way is scraping, which I imagine is just as possible in Canada as everywhere else.

ape4• 3 years ago

Apologies if you're already aware... In Canada you'll get an annual statement showing how much principal is paid off. So you can interpolate future payments from that. (Of course, it could be better)

burnished3• 3 years ago

Are you using the correct date convention? That can cause small differences in both the duration of the interest accrual period as well as the daily interest rate for that period

If they aren't providing you complete information there is probably a Canadian authority you can reach out to, though you may just need to go higher up the food chain at your bank - accounting can be a little arcane and the people you are speaking to may simply not know.

That being said being off by tens of dollars is absurd, the error is likely in your calculations, and I feel it is their duty to make how they calculate your interest owed plain to you.

abe_m• 3 years ago

First of all: I fully agree with you. The calculation should be listed explicitly in the mortgage documents.

I've also struggled through figuring it out on my own, and the two things that got me to less than a dollar of difference were: 1) "Mortgage" in Canada is a specific legal term used for fixed term mortgages that compounds every 6 months. Therefore, to get your effective annual you take you have to convert it: ((1 + nom_rate/2)^2)-1 2) You then take your effective rate, divide by the days in the year to get your daily rate. You then take your daily rate, multiply it by your outstanding principle, and multiply it by the number of days since your last payment. That result is the amount of interest you pay, and the rest of your payment goes to pay down principle.

In practice, I have a monthly payment, and just divide my annual effective rate by 12, and call it close enough. The extra precision of daily vs monthly isn't worth the extra complexity in the spreadsheet.

FpUser• 3 years ago

Same here. I just take the form

j4516• 3 years ago

It could be a github repo.

There are likely some digital government projects and software providers who's software might be a good fit for this kind of thing.

yard20102• 3 years ago

Why stop there, one monorepo could hold all the laws and receive PRs from the ppl, cutting down the middle man (politicians) leaving just the bureaucracy

brailsafe• 3 years ago

It's worth noting that the Government of Canada and various other gov orgs do have GitHub repos where they already host a variety of algorithms, configs, the design system, and a few others, so it would be good to add something like this.

https://github.com/canada-ca https://github.com/statcan

The Bank of Canada even has one where they host various economic models

https://github.com/bankofcanada

Galanwe• 3 years ago

The issue is too pervasive, having a formula published won't solve it.

You will need the historical formulas, as well as all the underlying data, not even accounting for the publication delays and errors, missing informations, discretionary classifications, etc.

What we need is all that data and code in an introspectable flow of code and data:

<downvote>a blockchain, containing both your data and the smart contract used to perform the computations</downvote>.

patrickmay• 3 years ago

All laws should be expressed in code. It would quickly show how many either conflict with each other or are incoherent.

penguin_booze• 3 years ago

This exists, but I haven't dug deep enough to know better: https://github.com/CatalaLang/catala.

kelseyfrog• 3 years ago

It wouldn't even work if the universe was expressed as data.

Unfortunately there will be an input layer that requires predicates or measurements that cannot avoid ambiguity.

Ignoring that, there's Godel's Incomplete Theorem to deliver the final blow. If integer arithmetic cannot be complete and consistent, a set of laws governing society has no hope. If you disagree, you'd at least have to admit that such a set of laws could not include integer arithmetic, and could certainly be no more complex than integer arithmetic. I'd posit that such a restriction renders such a project impossible.

We've chosen completeness (every action can be rendered legal or illegal) over consistency. The alternative - consistency - would make some actions legally undecidable.

mcmoor• 3 years ago

And then there's other comments here that mocks people who think law as code hence you can cheat/glitch through it. They say law in the end is run by humans and there's something called "intent" that will still catch you. Tbf I lean more to law as code side myself and this intent thing sounds like arbitrary enforcement.

layer8• 3 years ago

Germany has been publishing standardized flowcharts with named variables and formulas for payroll calculation for a long time (at least since the 1970s — hence the notation employed): https://www.bundesfinanzministerium.de/Content/DE/Downloads/...

gorky12• 3 years ago

That's very cool, but that's taxes only.

For social security, you have to get certified by a completely different set of bureaucrats with partially incompatible requirements:

https://gkv-ag.de/

The simplifications, they are additional! (Usually.)

akira2501• 3 years ago

It's a shame that we don't have open formulas in code form published by the government.

I completely disagree. Then you're just handing them a mechanism to make this as complicated as they possibly can. Taxes should be simple enough to be fully understood by the people paying them.

I'm not some algorithmic tool for the government to abuse when it's failed to balance it's budgets and I should not _need_ software to figure out something so basic as a deduction in wages.

doing this by hand is quite painful and error-prone.

It's a shame there isn't a law forcing the government to make this possible.

ibejoeb2• 3 years ago

I don't understand what you mean. You're beholden to the law regardless of whether you understand it. The government ought to be required to create a reference implementation if for no purpose other than to prove that it is indeed possible to implement.

gorky12• 3 years ago

You're right, and it's extremely hard to undo.

Once you have that complexity, you'll always be taking away something from somebody by simplifying.

So all simplifications end up as additional "if" clauses, defeating the purpose.

lozenge• 3 years ago

Ah yes, because the current system is incentivising them to keep it simple... otherwise we'll vote for the simple taxes party... which party is that again?

amomchilov• 3 years ago

The French invented their own DSL for their taxes: https://github.com/MLanguage/mlang

sdwvit• 3 years ago

Props to the author. At this point, CRA should just post a reference implementation of all the formulas, so that small businesses can benefit from it.

betaby2• 3 years ago

They won't. They have no mandate to provide a clear answer.

j4516• 3 years ago

Bureaucracies gotta bureaucracize.

cmrdporcupine7• 3 years ago

Honestly, I've always found CRA friendly, competent, and responsive.

But, I also don't run a small business, and am just a tax payer. Though when I had a small consultancy and corporation they were also actually fine to deal with.

cperciva6• 3 years ago

It would be very nice if they would publish a libreoffice spreadsheet, yes.

Heck, it would be very nice if they would create a libreoffice spreadsheet, even if they don't publish it. If they had to read their own document, it would probably be far better written.

derefr• 3 years ago

If they had to read their own document, it would probably be far better written.

Perhaps not; I've always had a strong impression, whenever reading documents derived from tax policy, that the "architecture" of such documents is the way it is mainly for maintainability.

Which is to say: the effective tax code at any given moment, is the emergent result of the interactions of all the current tax laws on the books. And there are many such laws. And those individual laws can be updated or repealed; and new laws can also come in that, through a few simple statements, make sweeping changes to the meanings of other laws.

As such, the tax-filing instructions, ideally, have to be constructed in such a way that they cope efficiently with someone being able to pull a single jenga-block out of the tower that is tax law, that topples over a whole slew of other instructions and definitions. The team of tax lawyers and technical writers that maintain the instructions should not have to sit down and rewrite every instruction on every schedule/form, just because one of the core definitions changes. Because that's gonna happen a lot! Every year, even!

If I was in charge of a team of (automation-minded) lawyers and technical writers maintaining the tax-filing instruction repository, I'd probably, ideally, want to factor out the instructions into separate modular files per law — with each file acting as a sort of Aspect-Oriented equivalent of Javadoc. (Or, actually, something very much like Inform 7. See e.g. https://i7-examples.github.io/Bronze/source_1.html)

So you'd see:

• Paragraphs that interpolate definitions as constants from other laws' modules;

• paragraphs that have implicit AOP hooks for other laws' modules to inject additional language into;

• the ability of a law to override specific sentences or wording of the language of the laws so far;

...and so forth.

This would be hell to read, but it'd sure make the job of dealing with changes in the law easy. (And it wouldn't be something you'd really read anyway — more often, it'd be something you'd carefully poke at, while watching the compiled result change live in a split pane. Like writing LaTeX in LyX.)

---

To be clear, I don't imagine that any existing set of tax-form language is actually maintained using some weird AOP DSL.

Rather, I imagine that the maintainers are manually doing the same business process that use of such an AOP DSL would formalize.

They're maintaining a very non-intuitive "storage architecture" for all the instructions that go into these forms, to minimize re-working when the law changes; and then — mostly manually, but maybe with a bit of Excel — collating them together into new schedules and forms each year.

And it's that "storage architecture" — despite not being something as rigid as source code — that still nevertheless forces the language of the instructions into the form you see at tax-filing time, with the weird grammatical shapes, the distant definitions, etc.

ska3• 3 years ago

Another comment pointed to this web form: https://news.ycombinator.com/item?id=38843556

It’s not a downloadable sheet , looks like, but it’s something.

rozap• 3 years ago

Why would they do that? If it's all out there in the open, then everyone can find bugs/issues and then they'd have to deal with them.

Also they'd probably lose a lot of revenue they collect from fines.

Personal anecdote about how you don't fuck with the CRA. Back in college in I got "free" room and board for year because I was a resident advisor. When I, an idiot 20 year old, filed my taxes, I did them wrong and under reported by around 1k. First time doing Canadian taxes as a US citizen. A few years later I got a fine for around $5500, which was a huge sum for a college kid working part time. Turns out BC can match the fine levied by the CRA. In hindsight, I would have been better off just not having that job - I think I would have come out ahead. For the rest of the time I lived in Canada I hired a CPA.

The IRS is warm and fuzzy by comparison. At least if you screw up, the fine is proportional to the amount you under report. (unless you're super rich...but that's a different thing)

nampas• 3 years ago

That's funny, I made something similar a few years ago for the IRS

https://nampas.github.io/tax-map/

tantalor2• 3 years ago

This is the worst version of Planarity I've ever seen, congrats.

fragmede• 3 years ago

For those that haven't played it, Planarity is a graph untangling game.

https://www.jasondavies.com/planarity/

mp05• 3 years ago

Dear lord, that's frightening.

mmsc2• 3 years ago

Very very cool. Is there a word for a directional graph in this circular form? Also, is every edge unidirectional, or are there some bidirectional edges? I would hope (and assume) there's nothing bidirectional, but...

chipaca• 3 years ago

From the looks of it that's been generated by `circo`, which is part of GraphViz and describes itself as a “filter for circular layout of graphs” and

       circo  draws graphs using a circular layout (see Six and Tollis, GD '99
       and ALENEX '99, and Kaufmann and Wiese, GD '02.)  The  tool  identifies
       biconnected  components  and draws the nodes of the component on a cir‐
       cle. The block‐cutpoint tree is then laid out using a recursive  radial
       algorithm.  Edge  crossings within a circle are minimized by placing as
       many edges on the circle's perimeter as possible.   In  particular,  if
       the  component is outerplanar, the component will have a planar layout.
       If a node belongs to multiple non‐trivial biconnected  components,  the
       layout puts the node in one of them. By default, this is the first non‐
       trivial component found in the search from the root component.

Pathogen-David• 3 years ago

You can generate them using Graphviz's circo layout engine. https://graphviz.org/docs/layouts/circo/

According to them/Wikipedia, the layout's name is simply "circular layout". https://en.wikipedia.org/wiki/Circular_layout

tamimio• 3 years ago

Yet the economy is in debt with trillions

maelito3• 3 years ago

In France, these rules are available as a website, an API, a NPM package, and raw rules in the https://publi.codes language.

https://mon-entreprise.urssaf.fr/développeur

spydum2• 3 years ago

thats pretty cool, I wonder though what the implication is if there is a bug or package hijacking? Are you expected to cross check the calculations and they are only offered as a convenience, and not authoritative?

cbarrick• 3 years ago

The formulas are published in a programming language called M. There is an open source implementation [1].

There is currently no legal guarantee of any kind about the correctness of the code produced by the Mlang compiler, or by the results produced by the interpreter of Mlang. However, authors have been in contact with DGFiP to validate Mlang, and the system passes all the private DGFiP tests as of Sept. 2022 for the version of the source files responsible for computing the tax on the 2018, 2019, 2020 and 2021 income.

[1] https://github.com/MLanguage/mlang

MrPatan• 3 years ago

Do you also worry that rogue employees or literally anybody with the keys to the office of a printer could have been changing the texts of laws as printed in official publications and books for the past few hundred years?

If not, why not?

ingenika• 3 years ago

There is also a canada version for simulation: `https://www.canada.ca/en/revenue-agency/services/e-services/...`

Or Quebec Version

`https://www.revenuquebec.ca/en/online-services/tools/webras/`

simonw• 3 years ago

Here's that NPM package: https://www.npmjs.com/package/modele-social and https://github.com/betagouv/mon-entreprise

This is incredible. I absolutely love the idea of official, government-supported machine readable versions of these kinds of rules.

woobar• 3 years ago

Is this a toy? I get this warning on the English version of that website:

"Calculations are indicative. They are not a substitute for actual statements from Urssaf, the tax authorities or any other organization."

[1] https://mycompanyinfrance.urssaf.fr/developer/iframe?module=...

maelito3• 3 years ago

The code of this relatively recent project wasn't promoted (yet ?) as the internal official closed-source calculator.

choeger• 3 years ago

This demonstrates how any algorithm, software or not, works: Start with something desirable or necessary and add complications until you end up with a mess that can be used to yield arbitrary results, drive outsiders into madness, and summon some lesser demons if read in a chanting manner.

Now what could be done about this? The obvious answer is refactoring. That's what politicians promise in election campaigns and junior software developers demand when encountering a new code base. It's rarely ever done in practice because no one can disambiguate unnecessary from desired features and complexities. The second answer would be a clean implementation in some more formal framework (a statically typed language, a theorem prover, ...). That second solution often fails when attempted because the system is already unsound. Fortunately, no one cares about those "weird corner cases" and everything is left as-is until someone runs away with a million dollars or so.

cmrdporcupine7• 3 years ago

In actuality the CRA and recent federal gov'ts have done a lot to simplify taxes in Canada. It's way simpler these days. Though obviously this payroll stuff is an exception.

10-15 years ago there were piles of special exemptions carved out for all sorts of things (mostly to buy votes.) These days, if you don't have self-employment or foreign investments, etc and are just the typical paycheque-receiving wage slave, filing taxes is trivial and mostly automatic.

The bulk of the complication in the above graph seems to do with the fact that Canada is a highly federal system, with provinces having various relevant powers and oddities carved out as a result of that. That, and the existence federal employment insurance and pension plan systems.

switchbak4• 3 years ago

"trivial and mostly automatic" - but not so automatic that it's done for you, as in some other countries. And that's by design - Intuit still wants their cash cow providing that sweet sweet revenue every tax season.

nayuki3• 3 years ago

In actuality the CRA and recent federal gov'ts have done a lot to simplify taxes in Canada.

Sorry, as much as I want to believe this, I have loads of evidence against it:

* I have PDFs of all my annual personal income tax returns. Looking at one year to the next, each year tends to add a couple of line items (as designed in the CRA form - not talking about my personal line items), and each year has a chance of adding a page or two to the overall return package.

* Line numbers got two extra zeros appended in tax year 2019. e.g. Line 121 became Line 12100.

* Ontario has had a surtax for decades instead of rolling it into the marginal rates.

* TFSA was introduced in 2009. FHSA was introduced in 2023. Need I say more?

* The Working Income Tax Benefit, introduced in 2007, now named the Canada Workers Benefit, acts like a pseudo basic personal amount. It would be better to meld this into the marginal tax rates.

* The CPP introduced an "enhancement" in 2019 as an extra line item instead of rolling it into the existing rate table. This is a disingenuous way to present a new tax, and a way to obfuscate it.

* Canada Training Credit, introduced in 2019, adds a page to the tax return.

* Ontario health premium, introduced in 2004, adds just over half a page, instead of rolling it into the marginal rates.

In light of all this, all I can see in the tax code is an ever-expanding morass of complexity that is an enormous time and brain drain on law-abiding taxpayers.

rsaz• 3 years ago

Are there any countries with good, reasonable tax systems? I'm only familiar with Canada and the USA, both of which are a bit of a mess, though seemingly in different ways. I'd be very interested in hearing what the process is like in other places.

dkga• 3 years ago

Switzerland tax law is pretty straightforward and the cantonal (local government) tax authorities are known for being very helpful in explaining things to taxpayers in doubt, an experience I had more than once.

bradley13• 3 years ago

I dunno, the sheer size of our personal (Swiss) tax return is daunting - and we are pretty ordinary. Maybe not as insane as the US, but "simple" would be different.

jqpabc1234• 3 years ago

The EU has VAT (value added tax) which is added to each purchase.

At the end of the year, there is nothing to report and nothing to pay.

It doesn't get much simpler than this.

koliber• 3 years ago

The original post is about income tax. While VAT is a tax, it is not an income tax.

Fidelix• 3 years ago

Not even remotely correct.

Each country in the EU has different income tax systems and other types of tax. VAT is just one aspect that generally doesn't cover even half of the tax burden.

OP is talking about the overall tax system.

aftbit2• 3 years ago

The EU doesn't have income tax? I think that's false.

swamp_donkey• 3 years ago

I’ve filed a few returns in new zealand and it seemed pretty simple, I was a simple case though

michael1999• 3 years ago

Not sure what good means. Nobody likes to pay tax.

If you mean legible, common-law taxation is going to be messy by nature. Civil-law jurisdictions will be more legible. France has published formulas for theirs.

If you mean simple, Estonia deliberately chose a simplified foundation for their post-Soviet era -- a tripod of land-value tax (not a property tax); flat income tax with some basic deductions; and VAT. They are new enough that exceptions are probably modest. https://en.wikipedia.org/wiki/Taxation_in_Estonia

sira04• 3 years ago

The Faroe Islands have the best one according to this article I read recently https://prospect.org/world/best-tax-system-on-earth-faroe-is...

xnorswap• 3 years ago

Depends on your circumstances. The UK seems reasonable for most.

For the employed, you let your employer worry about it. You might occasionally get given a "tax code" which essentially equates to your tax free allowance. If that happens you just let your employer know and they'll sort it, and you can confirm by checking your payslip.

If you're determined to have over or underpaid tax (e.g. your income went down unexpectedly), your tax code for the following year will be adjusted so that you'll end up clawing back the money over time.

Unless you are self employed or have special circumstances, then you'll avoid having to file a "self assessment" form.

And to be clear, the "special circumstances" are nothing like the US' system of hundreds of different "deductions".

Even if you do have to fill in a self assessment form, you can do so with an online form, which actually takes into account answers rather than making you manually have to do things such as "Skip section 5 if you have put a number of in section 4b or a number less than 3340 in section 2a" that the US forms love to make you do.

Filing my US taxes is literally 99% of all paperwork I have to do each year, and I don't even earn enough to actually have to pay anything. Yet I still have to calculate everything, then write down the right numbers in the "foreign earned income exclusion" boxes, then tally it all up to make sure it's still zero, then make sure I've copied the right numbers to the right boxes and haven't mistakenly transposed any numbers, then copy those zeroes down to the right boxes through the rest of the 1040.

The UK has had this system for decades, it has had online tax filing since 3 July 2000. It's had PAYE (pay as you earn tax, i.e. tax deduction at source) since 1944.

The UK feels stagnant as heck, so I wouldn't recommend people actually move here, but its tax system is trivial to the point of ignorable if you're employed.

Tade0• 3 years ago

I can give you a primer on the system for independent contractors in Poland:

-Flat minimal monthly pension contribution either filed as a business expense or just deducted from gross income - subtly different, but functionally the same as long as you have income. Calculated as the pension contribution of someone making 60% of the average wage - the exact number is published on an annual basis.

-Income tax: every January you can select one of several schemes:

1. Two brackets - 17% and 32% with the first 30k PLN ($7k USD) tax-free and ability to file taxes together as a married couple, in which case you effectively average out your and your spouse's incomes and pay taxes accordingly.

2. 19% flat rate, no tax-free range, no rules like for marriages.

3. 12% flat rate, mostly same as 2., except on top of that you can't file business expenses. There a few different rates in this scheme, but IT generally falls under the group charged 12%.

Healthcare contributions depend on tax scheme chosen above and are calculated as a percentage of gross income from the previous month minus deductions and expenses.

1. - 9%, 2. - 4,9%, 3. - 3%.

That is mostly it. Regular employees have more complicated rules with employer contributions on top of gross income and small deductions like for living sufficiently far from the workplace, having an internet connection and whatnot, but they don't add up to much.

pzduniak• 3 years ago

In Poland there are some complexities when you run a company / employ, but as an employee it's relatively straightforward UX where you click through a government-operated "income tax fillings wizard" and either just OK a pre-filled declaration or add a couple missing items. Paper filling is a bit more complicated, but I think you can get help at the tax office to get 1 or 2 forms sorted out.

For self-employment I send 2 documents per month regarding my expenses (which is somewhat easy if you understand the rules), plus one or two summaries per year. Hiring is a bit more complicated, I only file simplified declarations for employing private people as contractors. Otherwise I'm pretty much a worst case scenario as I file 7 different yearly declarations covering most possible sources of income defined in the law. It's not that bad, but it could be better.

Running a company can be practically automated with an online accounting SaaS, including payroll. Laws tend to be relatively understandable and there isn't much complicated math. Most of the recent confusion was around shitty laws poorly implemented and then partially reverted by our previous government. I did not enjoy that, but there were some decent online writeups explaining how to proceed.

narrator• 3 years ago

Being someone who has some experience with tax law, the cycle of tax complexity goes like this:

1. Tax law is passed.

2. Really smart CPAs and Tax Lawyers figure out ways to legally avoid paying taxes.

3. Tax people issue regulations intended to close those loopholes.

4. Administrations change and they want to win votes and tweak the economy so they lower some taxes and add tax breaks.

5. New administration comes in and selectively reverses previous administration's program because of politics.

6. If the tax is international tax, then add really smart tax lawyer doing multi-jurisdictional tricks to lower taxes (e.g Double Irish With a Dutch Sandwich[1]) , governments trying to encourage multi-nationals to do business there by adding incentives to their tax code, the OECD coming in and trying to standardize tax stuff across jurisdictions to prevent this, individual pairs of countries doing tax treaties with each other, etc.

[1] https://www.investopedia.com/terms/d/double-irish-with-a-dut...

cperciva6• 3 years ago

None of this complexity is from trying to plug tax loopholes. Most of it is from politicians wanting to name things.

For example, for decades Canada has had a "personal amount" tax credit -- for arcane reasons, rather than saying "the first $X of income isn't taxed", the lowest tax bracket starts at $0 but there's a non-refundable credit equal to the lowest tax rate times $X. Then a politician came along and said "we should increase the personal amount so that people can earn more money without paying taxes... but we don't want to decrease taxes on the top 1%". So now we have a "personal amount" which depends on your income. Similarly, in BC we have the "BC Tax Reduction" which is an extra tax credit given to people with incomes between (roughly) $22k and $36k.

Both of those examples could have simply been implemented as tax brackets but voters get far more excited about a "Tax Reduction" than they do about a new tax bracket.

p_j_w2• 3 years ago

Both of those examples could have simply been implemented as tax brackets but voters get far more excited about a "Tax Reduction" than they do about a new tax bracket.

Doesn't sound like the problem is entirely on the politicians here.

jessriedel• 3 years ago

None of this complexity is from trying to plug tax loopholes. Most of it is from politicians wanting to name things.

The effect you describe is very real, but "loop hole closure" is certainly a source of complexity too, e.g., the US's insane alternative minimum tax (AMT), which nearly duplicates the amount of tax work to be done by insisting you compute your taxes under a second set of assumptions. The idea was to make sure people who were using "loopholes" (or just like, reasonable features of the tax system) to pay at least above a certain amount.

Of course, the sane solution would have been to choose tax policies that combine together reasonably. As always, loopholes (in the sense of "unjustly low" amounts of tax) are much more likely to be created rather than fixed by complexity.

phpisthebest2• 3 years ago

I have a problem with calling explicit exemptions, call outs, and other things as "loop holes" as if they were no intended to be used to avoid taxation.

This is simply incorrect, organizations, people, and groups all lobby the government to include their pet line item as an exemption, deduction, or credit.

These are not "loop holes" and a CPA or tax lawyer having the knowledge to fully utilize all of them is not " legally avoid paying taxes" as those taxes where not owed in the first place.

In order to get to the point where paying the correct amount of taxes you owe by law is "using loophole to avoid taxes" one has to assume 100% of all income is belongs to the government and we are just figuring out how much the government is going to allow us to keep. I reject that

amarshall2• 3 years ago

Loopholes exploit ambiguity or complexity in rules in ways that betray the authors’ intent. Following this definition, there’s no need to conclude that “100% of all income belongs to the government”.

pembrook• 3 years ago

You could stop all of this at Step 1 by just having a flat tax. On everything. The loopholes only exist due to the unnecessary complexity of tax laws.

Preferential treatment for investments over labor? No. Preferential treatment for real estate? No. Preferential treatment for corporations over people? No. Preferential treatment for 3-legged nymphs who live in a flood zone? No. …Etc.

Then the market would be free to allocate human efforts to those which provide the most value.

The amount of human productivity wasted over this topic is insane. Millions of people devoted to creating complex riddles and then disentangling and/or manipulating those riddles—-with zero proof there’s any beneficial outcome from said complexity.

concordDance• 3 years ago

I once made one of these for HMRC's self assessment tax calculation[1], it had about a thousand nodes.

[1] https://assets.publishing.service.gov.uk/media/5dfa35f4e5274...

CaliforniaKarl• 3 years ago

It’s charts like this why payroll providers exist. See the relevant _Bits About Money_ post at https://www.bitsaboutmoney.com/archive/payroll-providers-pow...

j4516• 3 years ago

It's still math and the standardizing to ensure what payroll providers submit is correct is still checked by the government, who could provide said standard.

worik• 3 years ago

When things get complex even the payroll providers get it wrong

Where I live (New Zealand) holiday pay got complex, and quite a few civil service payrolls got it wrong (IIRC by a few different providors). It tooke years for anyone to notice, and has taken years, and billions, to put right.

Keep it simple. Please

juujian• 3 years ago

Very nice chart. Since the bubbles are wider than they are high, I would have probably changes the direction from left to right. Which in graphviz in theory (but only in theory!) takes just one line.

transcriptase• 3 years ago

The fun part about being Canadian is that you get to compete with the entire world for remote jobs with Canadian companies, but no company based outside of Canada wants to deal with hoops required to hire a remote employee based in Canada if they don’t already have a presence here.

busterarm2• 3 years ago

I know one L.A.-based company that hires tons of remote Canadians, especially in engineering, because they're cheaper...but they're essentially a payroll/business accounting company.

funksta• 3 years ago

Try finding work as a sole proprietor contractor, remotely for a US company. It's cheaper for them vs hiring an in-office employee, and with higher US tech salaries and currency conversion, you'll generally come out ahead too

j4516• 3 years ago

A foreign company doesn't need to make it easy to hire an employee who is a Canadian.

If there is an advantage to a Canadian to be employed from a foreign company, it's maybe a bit more up to them if they want to do a bit to stand out a lot.

A single person corporation in Canada akin to a professional corporation like a doctor or lawyer may have is not out of the question, especially with the advantages it can provide.

ska3• 3 years ago

This is pretty true most places, hiring non contract (e.g. full time) employees in a different country is a pain in the ass. Europe is trickier than Canada, fwiw, on average at least.

These days there are a number of companies that specialize in simplifying this, including liability shields, but of course for a fee.

Honestly it’s easier to do it as consulting or freelance contracts, but that puts the employee in exactly the same position as OP. Still, for e.g. typical tech jobs an account to sort it all out for you will be maybe 3k or so, many will opt for that.

1letterunixname2• 3 years ago

This sounds like an under-exploited business opportunity for Canadian staffing and consulting companies. Where there is difficulty for some, there is defensibility for others.

dangerboysteve2• 3 years ago

Last time I looked at Canadian payroll services, many were very affordable. Why bother spending the time on this ?

robertlagrant4• 3 years ago

Why should calculating how much money to give the government cost money?

dangerboysteve2• 3 years ago

Because of the time it takes to record and distribute everything and pay the government.

gus_massa• 3 years ago

He likes solving almost imposible math problems.

chrisfosterelli• 3 years ago

Paying for something helps but doesn't entirely free you from a responsibility to understand this flow. Because an employee is going to ask you why they have X on their payroll and not Y like they calculated on their end and then you have to spend an afternoon reverse engineering everything the tool did because "our payroll tool just did it like that" isn't a very professional answer.

jerf• 3 years ago

Are there any loops?

I extend this question to all the people who have posted their own graphs of other similar things.

robertlagrant4• 3 years ago

I think what's clear is that regardless of how complex this appears, we should never blame mistakes or loopholes arising from this complexity on the law makers. Only on tax payers.

j4516• 3 years ago

And the cost.

robertlagrant4• 3 years ago

It would be nice if accountancy fees were tax-deductible.

from-nibly• 3 years ago

The solution is not to automate or codify any of this, it's to remove it. This is utter nonsense. What problem could this possibly solve other than widening the equality gap?

Evidlo• 3 years ago

Devil's advocate: I have never seen a GraphViz plot that didn't look like spaghetti, so the fact that this plot looks like a mess doesn't mean much to me.

orzig2• 3 years ago

I'm in the US but I'll say for sure that things like this are about half the reason I haven't hired any employees for my LLC. I wish I could, but I'd be de facto hiring an accountant as well!

jweir• 3 years ago

If you are considering hiring and the hire is a developer or at all involved in research and experimentation make sure you are well versed in Section 174.

You could be on the hook for a large tax bill since you have to write off developer expenses over 5 years – this is true whether an employee or contractor.

Hopefully it will be repealed* – but if not it is one of those things that no one would expect to exist since it is in the words of Senator Wyden "stupid."

https://www.law.cornell.edu/uscode/text/26/174

* edit It won't be repealed but a law can be created to ignored it until a future date. Once on the books, because of accounting, it is very hard to remove a tax law.

shutupnerd0000• 3 years ago

My guy, you're replying to someone that said theyre not considering hiring

IG_Semmelweiss• 3 years ago

If you ever consider to, *given the remote work trends*, consider this:

I'd place high importance on the employee state to the state you are hiring them out of.

Some states are a nightmare to deal with. For example, NJ, CA, NY and OH. Once you are registered in X state, your company is fair game to be pursued for any kind of perceived (lack of) compliance by that state, long after that employee has left you for another job. For example, you could earn a large fine for not filing to report you have no staff in the state.

States that I found were lovely to deal with were ID, TN, and TX.

Generally speaking, its highly recommendable to hire employees from your state only for this reason. I would not hire unless you are absolutely needing to.

pnw2• 3 years ago

I got a notice for unpaid back taxes from some state agency in California for a company that had been sold over a decade earlier, merely because we had one part-time employee in California for a few months.

newZWhoDis• 3 years ago

This. I never hire anyone from NY or CA out of principle.

jjeaff• 3 years ago

As far as calculating payroll and remitting payments to the proper agencies federally and in their respective states, that shouldn't be a hindrance at all. There are countless payroll service companies that will do all the calculations and remittances for $30-$50 a month per employee. You definitely don't need an accountant for regular payroll.

danjc• 3 years ago

Doesn't a PEO like ADP make this a lot easier?

hn_throwaway_99• 3 years ago

Like another comment said, there are reasons payroll companies exist, and these days there are tons of services that make this easy to do, compliantly. E.g. there is a good reason like the majority of small/medium-ish sized business I know use Gusto because they make it really easy to add contractors or employees (and I'm not specifically pitching Gusto, there are a lot of competitors you can search for). While these products aren't free, the benefit of their SaaS model is that it's a per-employee cost that can grow with you.

pnw2• 3 years ago

This is why PEO's like Justworks are great IMHO. You can offer the big company benefits experience without getting ground to dust by federal/state/local regulations. I can't imagine going back to the old way at any small company.

pcthrowaway• 3 years ago

If the issue is figuring out payroll (rather than accounting complexities that arise from having additional expenses), you can also hire via remote.com or deel.com, even if hiring domestically, as long as your employee is either salaried or operating as an independent contractor (not actually an employee in that situation though)

Employers of record ensure compliance with all local laws and basically just bill you the employee's fully loaded cost, plus their service fee

neilv2• 3 years ago

Several years ago, I worked through my US IRS tax return forms by coding the data and calculations in Scheme. The representation ended up being that each form line value was a Scheme procedure that called other such procedures, which was one way to enforce dependencies. (Fortunately, there were no cycles in the dependencies, like the article author found in their CRA payroll deductions work.)

I don't have the code handy, but the procedures typically looked like this:

    (define (form-1234-line-22--foo-income-dollars) 234.00)
    
    (define (form-1234-line-23--taxable-bar-income-dollars)
      (max (+ (form-1234-line-22--foo-income-dollars)
              (form-1234-line-21--baz-income-dollars)
              (form-1234-schedule-x-line-10--total-blort-dollars))
           0.00))

It was a lot of work, but (since I used error placeholders for many code paths my own data wouldn't exercise) not that much more work than I had to do anyway, for doing my returns with just the PDF forms and instructions. (The extra work came when I had to enter and double-check the form data manually in the official format, for this one-off exercise.)

I did this exercise to see what it would look like, would it save me time/headache, and did it suggest anything about DSLs for this kind of work (say, for domain experts to codify and maintain something more formal and checkable than the form instructions or tax code).

cdcarter• 3 years ago

Did you take advantage of the homoiconicity of scheme to make this happen?

neilv2• 3 years ago

In this case, I was first seeing what could be done with basic Scheme algorithmic programming language mechanisms (e.g., using procedures and the magic of toplevel definitions).

Then, after seeing how tax form logic ended up that way, one direction would be to define a DSL that makes that easier to work with. For example, if we find everything can be implemented as these procedures, or with maybe with an additional concept (such as to handle cycles like in the article), a simple first step DSL might be another s-expression language that has magic variables that are more akin to spreadsheet cell references, in that the dependencies are evaluated in order. And it might also do things like populate a hashtable with the cached values for application use (e.g., PDF form-filling). That DSL might be implemented as a simple `syntax-case` or `syntax-parse` transformer. If that works and could, we could optimally make it more palatable/marketable/politic by defining a keywords-and-whitespace grammar that parses by transforming those syntax objects to syntax objects in our intermediate s-expression DSL (which transforms to the basic Scheme code approach we worked out originally).

There are other valid ways (say, you want tax law logic to be definable dynamically at run time). Though some involve `eval`, which I discourage. https://lists.racket-lang.org/users/archive/2014-July/063597...

jdmichal• 3 years ago

I used to do the same with just Excel. First sheet called 1040, one row per line. Schedules and worksheets got additional sheets, so I could easily pull in the values from and to other sheets.

sidcool• 3 years ago

How does one even begin Designing a software system for such a complex process! The impact of a bug in such system would be huge!!

jeffrallen2• 3 years ago

I once spent an hour removing a few cents' error in a salary-computation and then 2 weeks implementing the correct one-time payment to 200 staff in order to make them whole from a couple years of incorrect salaries. The whole thing cost about $2000, so each individual adjustment was small, but we had to do it with transparency and humility to maintain worker happiness.

j4516• 3 years ago

It would need to be flexible, auditable, historical (each year ran it's version).

So, basically, no software devs really at the business analysis layer. The process mapping has to be the code. Decision making in the process mapping has to be editable.

It's quite doable and present with some of the current software packages that operate in the finance / insurance / banking / government / enterprise space.

Imho, how software has historically been created for business is now broken. Software used to aim for a fixed, or slowly changing operating model, and the pandemic kind of introduced a bunch of ongoing change.

Software will become more malleable as a result.

jeffrallen2• 3 years ago

Would be interesting to have a constitutional requirement on government to be able to explain taxes to citizens in a declarative language with a max complexity of N bits of information.

Railroad unions: you want an exemption for your members? Write a diff and go to war with hedge fund managers to get the bits you need to implement your boondoggle. :)

I'm reminded of the "delta this build causes in bytes of flashrom" reports you see at the bottom of a compile job on embedded platforms.

phailhaus• 3 years ago

Graphs are terrible for visualizing dependencies. Even a reasonable system can "look messy" when rendered this way. I'd be more interested in seeing what this would look like as a tangled tree. [1]

[1] https://observablehq.com/@nitaku/tangled-tree-visualization-...

nb_key• 3 years ago

Canadian Federation of Independent Businesses (CFIB) has a more simpler template for small business. https://www.cfib-fcei.ca/en/tools-resources/payroll-deductio...

mrloba• 3 years ago

It's a running joke in our org that we should always vote for a new government. Keep making the dependency graph messy and we'll keep having a job

1letterunixname2• 3 years ago

Complexity is a signal of attempted fairness, selective corruption, or bureaucratic survival, stochastically mixed to conceal the latter 2.

Canadian and US governments have enough information to calculate taxes for you, but choose instead to impose all manner of additional complexity, cost, and time sink on taxpayers of varying degrees of sophistication because it's tradition. Norway has prepared statements automatically for taxpayers for 20+ years.

Joel_Mckay2• 3 years ago

Doing your own taxes is like doing your own dental work.

You will never be able to keep up with the legal, bureaucratic, and financial changes. Whatever a local competent accounting firm charges, they will almost always recover their cost in a commercial return.

If you have under 12 employees, than ADP payroll can work in some situation.

nayuki3• 3 years ago

Taxes are a social construct; teeth aren't. Some taxes are simple enough that a grade schooler can do it. For example, very few people would find difficulty in applying Ontario's 13% Harmonized Sales Tax to general retail purchases. Why shouldn't we aim to have an accessible and equitable tax system that doesn't require dedicated experts ("priests") to interpret?

Joel_Mckay2• 3 years ago

lol, most fail to understand there is an intricate relationship with the corporate tax and credits system. It is a full time job figuring out the retention of company treasure, handling capital losses constructively, and legal posture preparation to minimize risk.

While founders-syndrome tricks people into thinking they can do anything... they can't do everything... and often end up doing nothing when bankrupt.

You can learn the hard/expensive/painful way, or do things the easy way the first time to retain more cash to invest back into the firm,

If you are an employee filing a T4, and or a shareholder filing your T5... there is still a minefield of mistakes that can trigger taxable events. Depends how much you can legally retain, but the tax systems are often similar to a crime of omission in that it ensures you will miss most opportunities. These rules are complex on purpose.

Best of luck, and don't drop the soap =)

SurgeArrest• 3 years ago

Tax laws as well as other laws, need to have a requirement to be rewritten from scratch and re-approved every 10 years or so, such that no law or regulation is complex enough that an elected official can't describe it in full before voting on it.

AmericanChopper• 3 years ago

It will never happen. Tax law is complex by design, partially because it seeks to do things that are simply impossible, and partially because anybody with enough power to influence changing it benefits from the complex quagmire of ambiguous laws. The complexity allows the IRS to run roughshod over most people and businesses, but the truly powerful can do almost anything they want if they pay for enough advisors and lawyers. The system is in a perfect equilibrium in that respect.

I personally think that if a government fails to enforce a law to a reasonable standard, then the law should be invalidated. Which is probably quite similar to your idea, and addresses the problems created by discretionary enforcement. But that will never happen either.

chad_purposecpa• 3 years ago

CPA here. Probably can save you a lot of time, if you're in Canada, register for Wagepoint 2.0 and save a lot of grief. It's inexpensive and connects to QBO so your books are happy. Files and remits to CRA by itself. No need to deconstruct with code.

Ask me more here: www.purposecpa.ca

mensetmanusman• 3 years ago

Excited for a future where arbitrary complexity is dealt with by millions of personalized LLMs that completely simplify any regulatory hurdle by grasping an intention and figuring out the rest.

swalberg• 3 years ago

I used to run a small payroll company in Canada, everything was done in Rails.

Call it brute force but every time the rules updated I'd run scraper against the CRA calculator that would calculate payroll across a variety of provinces and pay ranges and output it as rspec. Then i could test that i was compliant and hadn't missed a rule or typoed a value.

yigalirani• 3 years ago

looks like it was made with graphviz, can we get the source code in dot format?

A Canadian payroll dependency chart

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