"CIBC profit jumps as tax expense falls" WHY?

[Tuner1]

The Globe and Mail December, 2, 2011

"CIBC said net income climbed to $794-million, or $1.90 a share, from $500-million, or $1.17 a share.
Revenue was little changed from the year-ago period but the bank said that its income-tax expense plunged to $249-million from $742-million."

http://www.theglobeandmail.com/globe...rticle2256172/

Can someone please explain what would cause the income tax expense to drop so dramatically?

[LollerBrader]

Originally posted by Tuner1
The Globe and Mail December, 2, 2011

"CIBC said net income climbed to $794-million, or $1.90 a share, from $500-million, or $1.17 a share.
Revenue was little changed from the year-ago period but the bank said that its income-tax expense plunged to $249-million from $742-million."

http://www.theglobeandmail.com/globe...rticle2256172/

Can someone please explain what would cause the income tax expense to drop so dramatically?

Ummm... because the richer you are, the more you can afford to employ complex strategies to avoid paying taxes?

This is the kind of corporate fraud that the "occupy" movement is trying to highlight.

Ikea reincorporated as a charity so they pay negligible taxes.

[CapnCrunch]

Originally posted by LollerBrader




This is the kind of corporate fraud that the "occupy" movement is trying to highlight.

What's fraudulent about what CIBC is doing? I'd like to hear your thoughts.

[hampstor]

Originally posted by LollerBrader


Ummm... because the richer you are, the more you can afford to employ complex strategies to avoid paying taxes?

This is the kind of corporate fraud that the "occupy" movement is trying to highlight.

Ikea reincorporated as a charity so they pay negligible taxes.

Originally posted by CapnCrunch


What's fraudulent about what CIBC is doing? I'd like to hear your thoughts.

I suspect he's using that word to sensationalize his statement.

I'm definitely not an expert, but from reading their report, it looks like last year they paid taxes up the ass because they repatriated capital back to Canada and paid taxes on the gains from foreign exchange. This year, they didn't do that and so they didn't pay any tax on it. I'm not sure how that is fraudulent.

Non-interest income of $1,597 million was down $12 million from the fourth quarter of 2010.
The prior year quarter included foreign exchange gains of $411 million on capital repatriation
activities.

https://www.cibc.com/ca/pdf/investor...ewsrelease.pdf

Edit: I love how by becoming a charity, the 'GREEDY CORPORATIONS' argument can't apply and then it comes 'not paying taxes'. Lollerbrader you might as well just say 'I think we should all become fully self sufficient by going back to becoming a hunter gatherer society that was naked and living in caves'.

[JRSC00LUDE]

Originally posted by LollerBrader
Ummm... because the richer you are, the more you can afford to employ complex strategies to avoid paying taxes?

This is the kind of corporate fraud that the "occupy" movement is trying to highlight.

Ummmm.....this is why no one around here (ie. Canada) of any real intelligence gives two fucks about the "occupy" movement, the "movers" don't have a clue. How the hell is that fraud?!

You realize that, in any number of different lines of work, you could incorporate and mitigate all kinds of tax costs at a level proportionate to your income. You don't have to be a muti-million dollar corporation to take advantage of tax benefits but if you ARE one, you'd be an idiot not to.

Grow up.

[rage2]

Originally posted by JRSC00LUDE
You realize that, in any number of different lines of work, you could incorporate and mitigate all kinds of tax costs at a level proportionate to your income. You don't have to be a muti-million dollar corporation to take advantage of tax benefits but if you ARE one, you'd be an idiot not to.

The Occupy Movement guys can take advantage of such tax loopholes too. For instance, most of them make less than $10,822 a year, so they qualify for paying $0 taxes living in Alberta.

[JRSC00LUDE]

Originally posted by rage2

The Occupy Movement guys can take advantage of such tax loopholes too. For instance, most of them make less than $10,822 a year, so they qualify for paying $0 taxes living in Alberta.

Can you imagine if one of them had a big-kid job to qualify for a mortgage and another dozen of them got together? They could live in a collecitve, pool their money, and enjoy over 120k a year TAX FREE! No one would even have to work more than casual part time!

I bet they wouldn't call it fraud either!

[bspot]

Paying wildy different tax year to year for a corporation is not news. Hell, running my own corporation for consulting I can do the same thing and my taxes were infinitely simpler than these giant companies. You can defer all sorts of things and move money around all sorts of ways. You can save some by being smart about it, but you will always end up paying, just like they did last year to repatriate all those $

[desi112]

i don't know if there are any accountants here, but perhaps the year before cibc and expensed a large amount under future income tax liabilities.

[Sugarphreak]

....

[tenth]

Originally posted by hampstor
I'm definitely not an expert, but from reading their report, it looks like last year they paid taxes up the ass because they repatriated capital back to Canada and paid taxes on the gains from foreign exchange. This year, they didn't do that and so they didn't pay any tax on it. I'm not sure how that is fraudulent.

I am actually an expert, and you're exactly right. The Reconciliation of Income Taxes in Note 22 tells the whole story. The 38% rate of effective tax in 2010 (which differs from cash tax) is highly abnormal. They should hover around their 28% (likely 26.5% next year due to federal rate drops) statutory tax rate, with abnormal one-off items swinging things one way or the other.

https://www.cibc.com/ca/pdf/investor...al-results.pdf

Originally posted by bspot
Paying wildy different tax year to year for a corporation is not news. Hell, running my own corporation for consulting I can do the same thing and my taxes were infinitely simpler than these giant companies. You can defer all sorts of things and move money around all sorts of ways. You can save some by being smart about it, but you will always end up paying, just like they did last year to repatriate all those $

A little different because future/deferred tax recognized in the financials of public companies take into account deferrals to normalize out the financial statement effective tax rate from one year to the next to prevent management manipulation and huge swings in results. Current year cash tax liability is only part of the expense recognized in their financials.

Where you get swings from the stat rate (28% for CIBC) are for one-off abnormal items that you don't recognize deferred tax on, and CIBC being as big and complicated as they are, have quite a few sizable differences.

Nothing to see here folks.

[JRSC00LUDE]

Originally posted by tenth
<snip>

Thank you.

Even though anyone with a thimble full of brain matter and a bit of common sense should be able to figure that out, it is nice when we have local experts in fields chime in and verify things for the LollerBraders of the world....

[bspot]

Originally posted by tenth
<snip2>.

Hah, and the one guy on this site that probably ACTUALLY understands all this chimes in and shuts the hippies up. Beauty!