TaxCycle | Products | Pricing | Training | Documentation | Support | News

Every Year New Engagement to file Tax Return?

Do we need engagement letter every year to file Tax return for a continue client?

According to what efile help desk told us, yes as they can ask for all documents requiring a clients signature which are submitted electronically.

Respectfully,

image001.png

GABE BAKOS
senior accountant

cell |1.403.800.1605

fax |1.587.317.7470

amtsolutions.ca

accounting | mortgages | us & cdn taxes

84 MacEwan Park Green N.W.

Calgary, AB T3K 4E5

Canada

image003.png

Click here to upload files

Counsel is mine, and sound wisdom: I am understanding, I have strength. Prov 8:14

Thank You Gabe, for clarification.
Do we need Signature on on Claims for Meals Expenses under simplified method by Truckers.

I have several truckers as clients and in over 40 yrs been audited twice and 0 requests for signed copy.

Respectfully,

image001.png

GABE BAKOS
senior accountant

cell |1.403.800.1605

fax |1.587.317.7470

amtsolutions.ca

accounting | mortgages | us & cdn taxes

84 MacEwan Park Green N.W.

Calgary, AB T3K 4E5

Canada

image003.png

Click here to upload files

Counsel is mine, and sound wisdom: I am understanding, I have strength. Prov 8:14

Depends how much you fell like taking personal responsibility and exposing yourself to getting either sued by the client or charged by the CRA for submitting potentially incorrect or false claims to CRA… :wink:

1 Like

Thank You Gabe for your help

Yes, I agree with you, 100%, for me I can’t, just for few bucks, why to take a risk and responsibility for that which can be avoided by taking some extra steps.

1 Like

@gabe
Is this a CPA requirement? Or CRA? Or just the opinion of the EFILE Helpdesk?

If a client brings me their slips/receipts/etc, and asks me to do their taxes, and signs a T183 after I have explained everything that I’ve done and printed for them, why would the EFILE Helpdesk want to see the Engagement letter? The only thing they have ever asked me for is the T183s. By signing it, the client confirms my work is acceptable and takes responsibility for whatever information they didn’t give me.

I suspect the CPA association might have some policy about this, but I am not a CPA. I used to work at a CA firm, then a CGA firm, neither of which required practitioners to obtain Engagement letters for T1 preparation. I have been a sole practitioner for several years, and I like using the Engagement letter included in Tax Cycle, but I don’t make clients sign one EVERY year.

2 Likes

The Engagement Letter is usually an insurance thing more than a CRA or a professional association thing.

However, it is wise to have it signed every year as this is your proof that the client asked you to perform the work. If the engagement goes south, you will need this for the courts to collect on your fee.

2 Likes

Yes, Tim I am agree with you, and a lot of Tax practitioner do this practice for safe side.

I’m of the same opinion Tim, however, time spent dealing with the Ontario Small claims Court are just not worth the effort. In my opinion it’s grossly biased in favor of the “defendant” and you’re seen as the big bad profiteer.
“Settled” one 2 years ago, for a final verdict, “sentencing” the said (ex)client to a $11/month settlement until balance owing is paid.
I figure we should be even by 2023…

@TimParris
I agree with you from that perspective, if you are expecting to put in a lot of work on a T1 (i.e. > $1,000 worth of revenue) . For most of my T1 clients I spend less than an hour per year preparing their taxes, including printing and meeting with them. I’m not too concerned that they are going to change their mind half-way through, and I don’t file their T1 until they pay my bill, so I don’t consider it a big risk.

So far, in my practice, I haven’t had any T1 clients that didn’t pay their bill.

1 Like

The engagement letter isn’t just about paying your bill. It lays out expectation of what work you are performing. And if you have crafted a good engagement letter, not just used the default you will have a clause limiting your liability. If a client gets reassessed and is charged $5,000 in penalties and interest for example you can legally be on the hook for it whether it was your fault or not. I have heard of several accountants being sued and had to pay. With a a clause limiting liability like to a maximum of fees charged, you would not be on the hook for much. Now hopefully your errors and emissions insurance covers it. But that is the last point, my errors and emissions insurance insists on engagement letters for all work performed.

1 Like

@tim1
Wow, that certainly is a good reason. But, I don’t understand how I could be on the hook for penalties and interest, unless it resulted from my incompetence (i.e. the client gave me the information and I didn’t report it). Can you explain how this could happen?
Or are you saying that such a paragraph in the engagement letter would absolve me from liability stemming from my own error? I don’t think that would be ethical.

1 Like

@tim1
just fyi…
When I signed up for my E&O insurance they wanted a copy of my engagement letter used for NTRs, but they didn’t ask for any re: T1 engagements.

“Wow, that certainly is a good reason. But, I don’t understand how I could be on the hook for penalties and interest, unless it resulted from my incompetence (i.e. the client gave me the information and I didn’t report it). Can you explain how this could happen?”
.
One way I can think of is:
::: The client goes to the courthouse, fills out a claim form, which states: “I was reassessed. It’s the accountants fault, he didn’t do a good job, I want $5,000 plus costs from my terrible accountant, plus another $5,000 for my aggravation…” :wink:

1 Like

In ontario if it is under $25,000 it goes to small claims court and the courts think of us as money pits. They tend to side with the client suing. I don’t think covering your “ass” is unethical. If you feel you made a mistake you can still pay the fines if you want. This just covers you if you go to court.

1 Like

Ah. Ok. Thanks for the advice @tim1. It certainly wasn’t something I was worried about. But, I see your point.

1 Like