MAcc Grads Receive Tax Foundation Award

Tuesday, March 1, 2016

By Stephen A. Jones

A few weeks ago, Jacky Lai and Akhil Agrawal, two recent MAcc graduates of the University of Waterloo’s School of Accounting and Finance (SAF), were delighted to learn they had received the Canadian Tax Foundation’s annual Fasken Martineau DuMoulin award.

“We were very honored and thrilled when we heard that we won,” reports Lai, “and we were quite surprised!”

The pair took SAF professor Alan Macnaughton’s Tax Policy course in 2014. Their research paper, “Taxation of Customer Loyalty Programs,” garnered the award. “We were so focused on just our coursework,” Agrawal says, “that we had no idea it would be eligible for the competition.”

Lai is now a Senior Associate at PwC’s Concord, Ontario office, while Agrawal is a Senior Associate in EY’s Toronto Office.

An abstract of their paper, which focused mainly on frequent flyer programs, is slated to appear in the Canadian Tax Journal. The authors are already enjoying the cash prize accompanying the award. “I put the cash towards my TFSA,” Lai told us.  “I used a portion of the prize to buy a new guitar—and invested the rest!” his partner reports.

The Canadian Tax Foundation (CTF) gives high priority to its student award programs. “It’s all part of doing what we can to encourage young tax practitioners,” says Jane Meagher, Director of the Foundation’s Québec office. CTF student paper awards are sponsored by firms in four regions: Atlantic, Québec, Ontario and Western Canada. 

Tracking system needed

“This was the largest paper that we had ever written,” says Lai. “We thought the topic would be interesting because it has been debated for years and is still very relevant in our current economy.”

Among much else, the duo examined the policies of other jurisdictions to see how different countries handle the same issues facing Canadian tax policy setters. What’s needed, they concluded, is a tracking system that indicates a flight’s true value and includes a mechanism for arriving at a fair value for rewards. The onus for tracking would fall on the rewards program supplier, and this would “greatly improve accuracy and objectivity.”

“The most difficult part was thinking on both sides of the spectrum—the goal of achieving tax policy objectives, and taxpayers’ potential response and reaction,” Agrawal explains.

Professor provided feedback

Our biggest breakthrough came when we submitted the first draft for feedback from Professor Macnaughton. He helped us better understand the research process, develop a specific plan of attack, and think as if we were in the potential taxpayers’ shoes. From there, we shaped the paper into its final form. - Jacky Lai

The award winners were among “a particularly good group” taking his course, according to Macnaughton, a Waterloo faculty member since 1985. “They took my criticisms and suggestions to heart,” he recalls, “and they really responded well.”

He praises Lai and Agrawal not only for unearthing relevant studies and exploring practices around the world—“nobody is collecting [the customer loyalty program tax] though everybody agrees in principle that it’s a good idea,” he notes—but also for making concrete proposals for plugging a big gap in the tax system.

The students freely acknowledge that they couldn’t tackle every aspect of the subject. They deliberately kept their focus narrow—a mark of “a great paper” in their professor’s estimation.

Macnaughton submitted their work to CTF in June 2015. “I thought they had a pretty good chance of winning,” he says, noting that the rigorous competition attracts top accounting students, law students, and others studying tax matters.  

Fasken partner assessed paper

Long-time Fasken Martineau DuMoulin partner Bill Bies was pleased to serve as assessor of the submissions forwarded by Leslie Barrett of the Canadian Tax Foundation’s Toronto office. “They were all papers that I would keep—for instance, as a starting point for my own research,” reports the long-time tax lawyer,

He found the Waterloo students’ submission to be “a good, competent discussion, and very sound.” While issues such as taxing customer loyalty programs don’t cross his desk too often—his own work tends towards strictly technical matters—they are nevertheless important, as Lai and Agrawal convincingly demonstrated.  “The firm wants to encourage people to talk about such matters,” Bies explains.

Sponsoring the award is one way Fasken Martineau DuMoulin expresses its commitment to education. “The firm is always trying to contribute to the community,” says Bies, who lectured for many years in the University of Toronto’s Faculty of Law. Many of his 200-plus colleagues in the Toronto office regularly teach, lecture and publish on a wide range of legal topics.

Memorable experience for students

It was one of our more memorable MAcc experiences,” Lai reflects, “and we enjoyed the process.” He and his partner seized a unique opportunity to analyze a topic in depth and appreciate what tax policy setters may encounter—and to sharpen their communication and critical thinking skills in the process.

“We had never had much experience writing research papers outside of the classroom context,” adds Agrawal. “Now that we know we won, it really emphasizes the real-life applications of the work we did during our MAcc studies.”

He and Lai heap praise on Macnaughton—and on all the SAF faculty—for investing so fully in students’ success. And they hope their achievement shows other students “the importance of immersing themselves in current issues during their studies.”

New policy recommended

What will become of the Waterloo students’ proposal? Lai and Agrawal have no illusions. “We definitely foresee difficulties in trying to implement a successful tax policy on consumer loyalty programs,” Lai concedes. “These programs have been around for many years, and there’s a reason why many rewards continue to remain untaxed.”

The pair acknowledge that implementing their proposal could be costly, as loyalty program providers would need to significantly update their IT systems to track personal and corporate frequent flyer points separately. The CRA could consider providing initial taxation relief to the agencies affected, they suggest.

“We hope our paper illustrates the inequity that exists if customer loyalty programs remain untaxed,” says Agrawal. “Although we discuss an alternative that tax policy setters may consider, we also hope we have demonstrated the difficulties in balancing tax policy objectives and the impact on taxpayers.”

Overall, they recommend setting a new policy to help ensure equity and to resolve at least some of the current concerns. And Alan Macnaughton fully concurs. “I’d like to see the government implement exactly what my students have proposed,” says their Waterloo professor.


Founded in 1945, the 10,000 member Canadian Tax Foundation (CTF) provides a forum for lawyers, accountants, academics and other tax professionals to work together for the betterment of the Canadian tax system and the tax profession in general.

An international business law firm comprising more than 700 lawyers, Fasken Martineau DuMoulin has offices in Vancouver, Calgary, Toronto, Ottawa, Montréal, Québec City, London and Johannesburg. The multi-service firm traces its roots to the mid-1800s.