By Mia Ma
As a professional accountant, not only do we need to familiarize with new taxation policies to help clients minimize their tax payables, we also need to develop a firm understanding of their family environment. CCPAA was fortunate to have invited Mr. Andrew Feldstein, lawyer from Feldstein Family Law Group, and Ms. Jin Wen, CPA, CA, Manager from Domestic Tax Group of Grant Thornton to give our members the seminar about Family Law and Tax Update for the next upcoming year.
From a consulting perspective, it is imperative to understand to the background and needs of the client. As an accounting professional myself, prior to attending Mr. Feldstein’s seminar, I have never truly attempted to understand the impact of marriage upon taxations. In the seminar, Mr. Feldstein introduced the 7 Steps of Equalization to support our understanding the relationship between marriage position, personal assist and equity.
In the meantime, Mr. Feldstein discussed, from a legal perspective, the essentials to providing accounting advices. Aside from a basic understanding of family law, he also encouraged us to consider multiple perspectives in the process of assisting our clients, for instance: knowing how to protect the client’s benefit from separation, know the importance of asset transaction, and protecting their reputation as well as informing them to gain a positive position in family Court.
Family Law matters to all of us. As accountants, we should understand the distinct areas of legal advice and accounting advice to better protect our clients’ benefit. As an accounting professional, it is mandatory to stay informed of each tax year’s Tax Act updates. Ms. Wen, as Manager of Domestic Tax Group, discussed the changes and updates for 2015.
For every tax payer, minimizing tax payable is crucial to each individual. Therefore, the tax credits then becomes an even more important asset. Ms. Wen mentioned two changes to the Tax Credit system; First-time Donor’s Super Tax Credit and Family Care Tax Credit. Different Tax Credit has different condition with it, Ms. Wen mentioned that when we advice our clients, we should consider their personal situation to benefit from these new Tax Credit. For example, First-time Donor Super Tax Credit is a 5-year cumulative credit, but one taxpayer could claim this once. Because of that, we would be better to advice our client to wait until this expire year to claim Credit in total amount to maximize total deduction.
CRA’s policy towards personal tax and corporate tax has also been updated. For example, the Top Ontario taxes rate increase. Despite all changes, minimizing taxes payable for our clients should always be the top goal for any Accounting professional. To reach this goal, we must target each client differently to customize his or her tax return strategy. For those with small business, we need to consider how to reduce their personal tax while maintaining their Small Business Eligibility, such as using dividends as a tool. Also we need to consider whether they should contribute to RRSP or not, because RRSP contribution is based on individual’s annual income. In this case, issuing dividends to avoid personal income tax would not be a good advice to the person who is willing to contribute RRSP. There are numerous things to consider when trying maximizing a client’s benefit. How to reach that goal depends on not only an accountant’s solid understanding of the tax changes, but more importantly, knowledge of the clients as well.
In concluding the seminar, our speakers passionately responded to questions from member audiences. We like to thank CCPAA for providing us with the platform to exchange ideas and learn from each other.
In the new year，CCPAA will be continuously established as a accounting professionals’ platform to provide valuable seminar, networking event to enrich our members’ professional life. We hope to see you at our future events, and encourage your participation and involvement in every way possible.