I sure hope the government will do more to regulate the tax compliance, but seems like they are going the other way, make it easier, and easier, phone in, virtual, turbo tax, H&R, not saying they are all bad, but after a course, you are a pro, lots and lots
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Thanks to all who chose to completely dissect every word and every sentence of my post. I can clearly see the reason only a handful of persons actually post.
I provide a service, I have no interest in stepping on a CPAs toes. When I have a client who has a complex situation, I always refer to a CPA.
My clients are most likely not as well off as yours are. They are generally very small and do the best they can on a limited budget. I kindly review and guide all my clients (teaching) on what is and is not allowed to the best of my knowledge. Yes, I have had years of accounting training, regularly take continuing education courses, worked in an accounting firm for many years and have for the past 25 years ran my own successful tax practice with focus on education and compliance ( review clients bookkeeping for errorsâ as in balancing banks, etc., prepare T4s & ROEs, HST and Tax returns)
I will refrain from posting on this forum in the future as it is clear that UNLESS you are a CPA you will be roasted.
I have no intention of being micro analyzed.
My time on this earth is limited.
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@rachelavryl Please donât discontinue posting - some of us appreciate your input. I have been reminded of the input we used to get from Joe-Just Joe. I try to be careful what I do post because of those who choose to super analyze responses. Several of the newer posters are taking it upon themselves to correct us non-CPAs in an unfriendly manner. There are posts that I just ignore, because I know that they wonât be helpful to people like us.
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Hey! I just want to say how much I appreciate the experience and care youâve shared here. Forums can be like accountants-always auditing , but your knowledge and insights are truly invaluable. I hope you keep sharing them because people like me really value what you bring.
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Donât stop posting! Itâs things like this that open up discussion to allow people to learn. And it is valuable, even if you already know the law. I had no idea some people were hiding these things in ways expressed on here, as it would not have occurred to me. I value seeing these things, because it helps me know what to look for in clientsâ books, especially new clients who have had another accountant (sometimes a CPA â you have no idea how many times Iâve had to correct things done by designated accountants).
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Donât stop posting. I always read the posts, because I learn from them.
I couldnât finish all of CGA because of health reasons. But just because I for example donât attempt reorganizations, doesnât mean I couldnât do them. I just know that you need several sets of eyes on that kind of work, so I send that kind of work to a larger accounting office. I know my limitations. I also know I take the same annual Video Tax courses many CPA accountants take. They have a title. But I have seen some shoddy work from people with titles. Shortcuts I would never take. So why canât they leave us in peace? If our works passes audits, what is the problem?
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@Nezzer you are usually spot on, but I could not disagree with this more. The Income Tax Act sets forth LAW. Courts interpret portions of that law. CRA sometimes comments on theirâŚ.âopinionsâ of that law.
Where something is EXPLICITLY denied deductibility in the ITA, I donât care what my client wants, thinks or expectsâŚitâs NOT DEDUCTIBLE. Period. End of story. (Golf facility fees are explicitly denied in Sec 18(1)(l). Claiming same could be Gross Negligence.)
Similarly, where something has been tested in a Tax Court, and the fact situation is constructed in a relatively similar manner, and deductibility was denied, itâs NOT DEDUCTIBLE. Period. End of story.
If it is NOT EXPLICITLY denied in the ITA, is the subject of a Bulletin or other CRA âopnionâ material (ie not just on the website)..that requires an examination and consideration of deductibility and the fact pattern presented, NOT on the clientâs wishes or opinion. That becomes a matter of interpretation and approach, and ultimately the clientâs risk tolerance (and mine!).
â-
Rachel - keep posting and doing what youâre doing. Your approach IMO is that of many (CPAs or not) who are competent and knowledgeable in tax. AndâŚwhen you have questionsâŚthere are people to provide comment and answers to assist and evaluate. Yes, some of us even read tax cases. (I was trained at CRA way back, in Appeals. I read more cases than I want to LOL.)
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Look, Iâm not saying golf fees âshould beâ deductible. Iâm saying: what do you do when you believe a law is wrong, immoral, or unjust? You challenge it in court. Or you vote for someone who will change it via parliament. And, if enough people believe the same as you do, the government will make that change, because this is a democracy.
If someone believes they should be allowed to deduct golf fees on their taxes, I doubt they will get a lot of support to change that law. But, that doesnât mean they are not allowed to try. When we tell clients that golf fees are not deductible, most of them listen to us, because WE know what the law currently IS. But, they can still file their taxes according to their own belief, which is the start of the process which will eventually let them challenge it in court.
If we donât want to file their taxes for them, we can refuse. But, CRA is not going to go after the tax preparer for allowing a $100 worth of expenses which the client believes âshould beâ deductible - CRA will just deny it and move on. If it was a $100,000 deduction, that would be a different story.
I guess I should not have opened this can of worms - it was just hypothetical.
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@nezzer With respect, the way to âchange a lawâ is political, not legal.
Changing how a particular portion of law is INTERPRETED is a different matter. That is a legal process (but one can attempt political pressure as well).
If you want to change or repeal Sec 18(1)(l), then you need to contact MPs and do whatever, or make it an election issue etc. Good luck with that.
If you want to attempt to have âgolfâ defined as ânot recreationalâ, well, that is a different matter, and is a legal (Appeals) process. Good luck with that, too.
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I stand corrected. Youâre right - this is more about the interpretation. (Obviously Iâm not a lawyer)
Again, it was more hypothetical. And in my experience, consulting tax lawyers on behalf of clients, I have been advised that most of the ITA is open to interpretation, and CRAâs interpretation is often wrong. But, youâre right - it wouldnât be easy (or cheap) to fight it. So, most clients wonât do that.
When/if I tell a client that CRA will deny their claim (whatever it is - not just golf fees), they usually give up and let me remove it. But, I have had a few clients insist that something was deductible (when I knew it wasnât) and after consulting a tax lawyer, I filed their taxes the way they wanted. Then, yes, CRA denied the deduction, the client objected and won, or in one case went to tax court and won (this was for about $10,000 in health food and vitamins claimed as a medical expense, and yes - the client spent over $10,000 in legal costs to gain that victory).
So, now, I am convinced that almost anything is open to interpretation if the client is willing to push it that far. And Iâm not a judge or a âtax police officerâ; my job isnât to enforce CRAâs interpretation of the law. I follow CRAâs interpretation 99% of the time, but I acknowledge that there are occasional clients who have researched and gained more knowledge about a particular issue than I have. In such cases, all they need me to do is fill out the proper tax forms to report it. Then, of course, I must asses the risk of âhelpingâ them, which generally leads to some tax research and/or consulting a tax lawyer, and/or discussing the issue here or on other forums.
I apologize for not explaining all of this earlier when I said that I might allow a client to deduct golf fees. I assumed most readers here had had similar experiences.
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Fair enough! And donât forget that (eg in the case of the health foods/vitamins) one occasionally gets âoff the wallâ decisions from the TCC. These are non-binding generally, and sometimes completely at odds with the ITA, but itâs simply not worth it for CRA to pursue it.
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Thank you everyone for the kind words but I will still take a break.
I often respond via my Email and not the portal. My sincere apologies if @Nezzer felt I was commenting on His post specifically. My comments were directed to the entire string of posts.
Wishing all a happy âBack to School Seasonâ .
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I have clients who, although they pay for a health plan for employees, also pay direct for physio for an employee who is also on the employerâs plan, but might have exceeded the annual limit for this treatment. Client claims that since their portion of the health plan is deductible, so should be the payments made to a health care provider, once the annual limit is reached. Claims the employee needs the treatment because of his work. So, why did you not open a WCB claim? In any case, since I also do their T4âs, I back out the non-deductible payments and add it to wage expense. Add the amount to the T4, increase CPP & EI accordingly, and itâs fixed. I only found this because I analyzed âEmployee Benefitsâ in the GL. The client could have been a little more creative and charged these amounts to âMaterials Purchasesâ, which is a huge account with a lot of smaller transactions. I do not do a review or audit, but thereâs always that section in the CPA code of ethics/conduct prohibiting association with financial information which you know, or should have known to be false or misleading. I look at âEmployee Benefitsâ to see if there were 12 payments during the year. Same idea with club dues. Add it back for tax and warn the client if CRA reviews your books, however unlikely, they will treat it as a shareholder appropriation and tax the shareholder accordingly. Too late at that point to move the amount to wages, amend a T4 and have it deductible. In these cases, the client do their own T4âs. Same thing with an employer-supplied vehicle. There are tons of places for a client to hide things. But, if I see something while doing their year end adjustments, Iâll address it. And, Iâve never had any pushback. And, I never concern myself with the appearance of having done too much work. I have to satisfy myself that I am comfortable with a financial statement that has my name attached. I have never had a PD course where I was instructed never to do anything except take the clientâs numbers as the absolute truth. If that were the case, the bank would never be reconciled. Bad debts would stay on the books forever. Duplicate A/Pâs would remain forever. My clients pay me to fix their mistakes, advise them on accounting questions, submit reasonable T2âs, and ocassionally make an uncomfortable entry to correct their attempt to skirt the law. In the past, Iâve had clients with debit balances in their shareholders loan account of upward of $150,000, ongoing for years. I report the proper GIGI code on the T2, and CRA have never asked questions. It would seem to be low-hanging fruit for CRA. Instead of chasing a taxpayer because they claimed acupuncture as a medical expense in a province where itâs not deductible, why not pull all T2âs with a GIFI code 1301 over say, $10,000, and see what you get?
Just because you may not be a CPA doesnât automatically mean you are an idiot at preparing tax returns. I have seen instances of medium to large accounting firms take liberties and short cuts that Iâd never try. And they seem to get away with it. And, they can get a much higher fee/hr than me. Reorganizations, or anything beyond my experience, and I go to a tax accountant and lawyer. Client is billed directly for their fees. Sometimes a tax lawyer can handle both ends, but I prefer having a tax accountant do the planning to avoid any problems with CRA, then prepare the directions for the lawyer, who makes sure all legal requirements are dealt with.
I forget, what was the question?
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