Back to Basics: Running a World Class Tax Practice

Evelyn Jacks

Tax specialists can’t ever rest on their laurels, because of the sheer magnitude of change they must address every year:  thousands of pages of tax law, hundreds of new tax forms; and endless new versions of the technology required to transmit the forms to CRA to name a few.  Yet it is the very thing that never changes that will define whether you are running a world class practice that is truly impactful: your relationship with your clients. No matter how tempting it is to drop the personal touch, knowing  and understand the changes in your clients’ lives, will help you apply tax law with greater precision to their tax filings.   Consider the following change impacts:

• Higher income levels  can affect eligibility for income-tested refundable and non-refundable tax credits or cash flow when quarterly instalment payments must be made
• New government benefits, for example, $10 a day daycare, will reduce change care expense deductions, which will in turn increase net income and decrease refundable tax credits like the Canada Child Benefit in some households
• The onset or resumption of disability (long COVID or a new cancer diagnosis) can affect employment or self-employment income levels, create the need for home ownership changes, cause new medical and caregiver costs
• Elder care responsibilties can contribute to loss of income for caregivers or contribute to the use of new multi-generational home renovation tax credit for the first time on the 2023 return
• Transitions into retirement, a pink slip or a resignation can result in the claiming of EI (Employment Insurance) benefits, and potentially an EI clawback for high income earners. Others may start a new micro business or take on a “side hustle”.  That changes the tax filing profile and requires new tax forms and more investigative work to verify tax refunds or payments due  
• Reduced asset valuations and business activity, business closure, sale or bankruptcy and how this affects the individual and family tax filing process can require more time in the interview process – have you accounted for that?
• The windfall of an unexpected but quick residence sale which could result in business income reporting on Form T2125 Statement of Business or Professional Activities for the first time this year due to the new anti—flipping rules.  
• The review of “worthless securities” lingering from the past difficult years, to be written off and applied to current or prior year capital gains to generate new refunds – have you asked about that?
• Changes in adjusted cost bases of financial assets due to a high volume of acquisitions and dispositions, may require new approaches to tax filing and planning. 

These  life, financial and economic events have caused your clients to make important financial decisions, and quite often, for their tax filing situations to change. 

Make a Difference.  With a month to go before CRA officially accepts 2023 T1 returns, this “pre-game”  warm up time may just be the right time to rethinking your tax and accounting practice, the amount of time you need to spend with your clients, how much back office staff you’ll need to support those relationships and what you can do to go “back to basics” and become a better investigator and steward of family resources.  Doing this well will undoubtedly lead to more referrals and growth of your influence in your community.