It must be that time of year. Every day, I am getting at least a couple of emails from local accountants, asking for tax information for our mutual clients. Adjusted Costs of stock that was sold, dividend information on stock or income trust positions. It keeps us (mostly my assistant) busy.
The accountants are working day and night because literally every Canadian investor gets these summaries within at most 60 days of when their return is due at the end of April. I am notorious for collecting all my receipts, tax slips, forms, etc and just putting an elastic band around it and handing it off! I even apologized to my accountant this year because he had to email me; turns out I was missing about 4 things that he needed. Awesome.
It brings me to the point of this article; the importance of an accountant. Yes, I called the post 'tax' because that's a subject that affects us all (along with death, the only two things in life that are certain) so I wanted to make sure people read on. It would be pretty hypocritical of me to do anything other than recommend that everyone uses an accountant. And I understand that some of our tax situations are simpler than others. But I would strongly urge you consider hiring an accountant to do your taxes.
If your return is really that simple, then this will cost you very little. But in the long run, your accountant can likely save you hundreds, if not thousands of dollars. They live and breathe tax. They know all the things that you should be looking out for on your return. They are up to date on the changes that happen every year in our tax system. They wear golf shirts to work, so you know they're not distracted by uncomfortable suits (not that I should talk).Seriously though, consider what you have to lose.
For most of us (unless we own a business), our tax situation will be for ourselves and our spouses. A good accountant can process this type of return for as little as a few hundred dollars. But what if you miss one of the valuable credits by filing your own return? What if you bought your first home in 2009 and didn't know that you could claim the one-time-only first time home buyers credit of $5,000? Or what if you had major losses on your investment portfolio in 2008 (not that I or any of my clients did... yeah RIGHT)? Would you have known that you can carry back those capital losses to the beginning of 2005 and use them to reclaim any capital gains tax you might have paid in those years? These are just a few ways that accountants can make us (or save us) money.
Unfortunately, there is no benchmark for accountants to measure themselves against. I guess that's why the exams to become a Chartered Accountant are some of the most difficult exams there are.
Our tax system in this country is generally fair, as I think I've talked about before. It rewards entrepreneurs and researchers. It is fair to those who do not earn a monster pay cheque. It even allows us to save money tax-free for retirement. There are ways that we can save a lot of tax by being smart. I would urge you to think about using an accountant to make sure you have all your bases covered.
Where can you find one? I think the best way is to ask people you know and trust. Who do they use? Are they happy? If so, are their accountants accepting new clients? To me, a good referral is the best way to go.
With my soapbox speech out of the way, I will leave you with some things to consider when you get your return ready this year (to hopefully drop off to your accountant);
We talked about the first time home buyers credit. Don't forget that freebie.
Home renovation tax credits. I think we can claim up to $10,000 worth of home renovations this year. There is a form to fill out. Your accountant will have it or you can find it on the CRA website.
Capital Losses. This is where we use losses from this year against gains from previous years. This form is called a T1-A form. You can also carry forward capital losses from past years against gains from this year.
RRSP vs. TFSA. Make sure you consider which vehicle makes the most sense to contribute to. Your accountant can offer advice here too.
Professional fees. If you did decide to use an accountant or you pay investment management fees on your stock portfolio (not including mutual fund fees), then you can claim these against your income.
Those are just a few of the ways that our government is fair about us getting our hard-earned tax dollars back. Consult with your accountant to make sure you are doing all you can.
Thanks again for reading. To all you accountants out there, happy tax season. Santa comes on May 1st.
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