Advisors Do Important Work

By Evelyn Jacks

Every year I have the privilege of travelling across the country twiceóin November and Januaryóto host the Knowledge Bureau's Distinguished Advisor Workshops for tax and financial advisors who require continuing education credits and updating for their professional practices.

This teaching tour always results in inspiration about the important work these highly informed and engaged people do. As an education company, we are privileged to spur on their enthusiasm for personal and corporate taxation matters, and then watch the lights go on throughout the room as both tax and financial advisors start thinking about how working together can help them get better results and ultimately, peace of mind, for their clients.

Peace of mindómy definition of "affluence"óoccurs when you stop worrying about whether your money will cover the necessities plus emergencies, and focus instead on how to use your money as a tool to build wealth for future generations.

If advisors could get more people focused on the twin goals of filing annual tax returns and minimizing their tax bills with fully funded RRSP contribution room, we could be more impactful in helping families build sustainable wealth for the future.

Here are some simple, but critical action items, stemming from the discussions at the Distinguished Advisor Workshops, for you to impart proactively to your clients at tax time:

1. Many Canadians are behind in filing their tax returns. This means they are likely missing out on tax refunds and refundable credits like the Child Tax Benefit and GST Credit. What to do about it?

a. Advisors should ask whether prior returns are missing and if so, encourage their clients to file to recover missed refunds or avoid penalties and interest charges.

b. Advisors should inform clients that they are not building RRSP or TFSA contribution room and that can have a big impact on their ability to build and grow family wealth.

c. They are likely also missing out on reporting capital losses, which help average income taxes downward by offsetting capital gains of the current year, three years back and indefinitely into the future.

2. Most Canadians are still underfunding their RRSP contribution room, giving up double-digit tax savings which could be leveraged into TFSAs or used to pay down non-deductible credit card debt. Show your clients the folly of missing these important opportunities.
3. Many Canadians are still not benefiting from pension and investment income splitting opportunities that come from filing tax returns as a family. Tax and financial advisors can show their clients the benefits, working together. They can also review prior filed returns and adjust them if income splitting has not been maximized.

February is an important month when tax and financial advisors do some of their most important work in the pursuit of their communities' financial well-being. You are celebrated for your leadership!

Evelyn Jacks is President of The Knowledge Bureau and author of Essential Tax Facts 2010, Master Your Taxes, and Make Sure It's Deductible; all available from the Knowledge Bureau bookstore at bulk purchase pricing for advisors and their clients.