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Bank of Montreal
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Close 2021-04-01 C$ 113.00
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Globe says Big Five banks facing higher U.S. tax bills

2021-04-05 09:31 ET - In the News

See In the News (C-RY) Royal Bank of Canada

The Globe and Mail reports in its Monday edition that some of Canada's largest banks are facing higher tax bills if U.S. President Joe Biden's administration raises corporate tax rates. The Globe's James Bradshaw writes that all things being equal, increasing the federal corporate tax rate in the United States to 28 per cent from 21 per cent, as Mr. Biden has proposed, would knock an average of about 2 per cent off Canadian banks' earnings per share in 2022, according to a report by CIBC World Markets. The greatest impact would be to Toronto-Dominion Bank, which earns nearly a third of its profit in the U.S. and could see earnings per share decrease by 2.7 per cent next fiscal year. Earnings per share at Bank of Montreal, which makes about 27 per cent of its profit in the U.S., could decline by 2.5 per cent. Among Canadian lenders, Bank of Nova Scotia has the least at risk because of its smaller presence in the U.S., with just 1 per cent of earnings per share to lose. The CIBC report cautioned that those calculations assume a simple increase of seven percentage points in the effective tax rate for each bank. The U.S. tax code's complexity makes the precise impact after offsetting factors hard to predict.

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