Introduction

So you’re looking for an accountant who specializes in tax? Look no further! We’ll give you the complete rundown on how to find the best tax accountant in Canada for you. And when we say complete, we mean complete. Please feel free to skip to the parts that are most relevant for you if you don’t want any of the background.

PART I: What You Must Know About Canadian Taxes

Canadian Taxes: A Look Back

The personal federal income tax in Canada dates back to 1917 when the War Income Tax Act was enacted to help finance the First World War. At that time, the federal government imposed a 4% base tax on incomes over $3,000 or $1,500 for unmarried people or widows/widowers without dependent children.

As the years progressed, so did tax rates, and the income tax became permanent in 1949. The graduated system of tax rates has largely persisted since then, and the highest federal marginal rate currently sits at 33%.

In recent years, there have been various reforms to Canada’s taxation system, including changes to personal income taxes, corporate taxes, and other areas. Today, income taxes continue to be the main source of revenue for both the federal and provincial governments in Canada.

Complexity of the Income Tax Act

In 1917 when the War Income Tax Act was introduced, it was just 6 pages long, growing to 1,412 pages 100 years later in 2017. Likewise, the tax form had grown from 23 lines long in 1917 to 328 lines in 2015. For this reason, it costs an estimated $500 per household to comply with filing personal income taxes.

In the first years of the Income Tax Act, less than 10% of Canadians had to file a tax return. Now, more than 80% of Canadians file a personal income tax return. Even those that don’t actually pay any income taxes have an incentive to file in order to qualify for refundable tax credits, such as the GST credit.

Types of Canadian Taxes

In Canada, taxes are managed by both the federal government and the provincial governments. Taxpayers are required to pay income tax on their wages, salaries, and other forms of income. This includes money earned from investments and pensions. The amount of tax owed is based on the taxpayer’s level of income. Everyone who earns income in Canada must file a tax return each year.

In addition to income tax, Canadians may be required to pay goods and services tax (GST) or harmonized sales tax (HST). Other taxes include property taxes, which are collected by local governments and fuel taxes, which are collected by provincial governments. Canadian businesses are also subject to corporate income taxes and payroll taxes on employee wages. By starting on searching Google for a tax accountant near me, you may find the best suited tax accountant for you.

2 Main Types of Income Tax Filings – Personal ands Corporate

• Personal

Income tax filings come in two main forms: personal and corporate. Personal income tax filing is used by individuals to report their earnings to the government, and pay the appropriate taxes that are due.

Typically, people can prepare their personal taxes or hire an accountant. If you work for an employer, they are responsible for deducting and remitting their employees’ income taxes and preparing a slip of earned employment income called a T4, according to the Canada Revenue Agency. If you just have a T4 slip and no other source of income or applicable deductions or credits, then you likely have a simple tax return.

However, the case is different for self-employed individuals. These individuals can file their own income taxes or hire a tax accountant. Whenever you are operating a business, even if not incorporated, or you have a high net worth, then you’re in a more complicated tax situation and hiring a tax accountant is critical.

• Corporate

Corporate income tax filing is used by businesses to report their profits and losses to the government, and pay the appropriate taxes that are due. These returns must be submitted annually and require more detailed financial reporting than personal income tax filing does. Corporate returns also involve complex calculations related to depreciation, deductions, credits, etc., which can make them very time consuming.

Whether you’re filing your personal or corporate taxes, it’s important to understand how the process works so you can accurately report your earnings.

Canadian Taxation by Residency vs US Taxation by Citizenship

Canadian taxation is done on the basis of residency, which is based on where a person lives. This means that if the individual is a resident of Canada, they are liable for taxes on their worldwide income.

US taxation by citizenship, however, is based on the citizenship of an individual. Even if a US citizen resides outside of the US, they must still report and pay taxes on all worldwide income to the US Internal Revenue Service (IRS).

Despite both countries having similar tax systems, there are some key differences between Canadian and US taxation beyond who has to file. This is why if you are a US citizen living in Canada you will have more complicated filing requirements and accordingly should consult a tax accountant specializing in both Canadian and US taxes.

Who Needs to File an Income Tax Return in Canada?

There are different tax return filing requirements between individuals and corporations. For example, corporations are required to file taxes annually, whereas individuals only need to file an income tax return if they belong to one of the categories stated by the Canada Revenue Agency.

In general, people need to file returns if their total income for the year is more than the personal amount set out by the Canadian Revenue Agency (CRA). This includes wages, salaries, tips, bonuses, investment income and any other taxable income.

If you are self-employed or own a business in Canada, you will also have to pay taxes on your earnings and should file an income tax return. Additionally, if you are claiming any credits or deductions on your taxes, such as childcare expenses or medical expenses, it is important that you include all relevant information when filing your return.

Now that you have a grasp of tax return filings in Canada, it is time to decide whether you need professional tax and accounting services or a DIY one.

PART II: Professional Tax Accounting Services: Are They For You?

As mentioned, preparing your own taxes on your own has benefits and risks. But individuals and businesses have the option to look for a professional tax accountant or accounting services.

What Exactly Are Tax Accounting Services?

Tax accounting services is a broad term used by both CPA firms and tax preparers. Typically this includes helping clients with filing their tax returns and providing some tax planning or advice, including planning for future tax years. Where business taxes are involved, this may even involve financial statement preparation and bookkeeping services in order to determine the numbers that go into the tax return, although this will generally involve extra work and cost.

Tax accounting will also include ensuring that all of the client’s financial records are up-to-date. Tax accountants can provide professional advice on how to best manage the client’s finances in order to maximize their return. They can also provide expert advice on how to minimize taxes, or even maximize your tax refund. With these services, businesses and individuals can stay compliant with Canadian tax laws while making sure they are getting the most out of their money when it comes to taxes.

Chartered Professional Accountant (CPA) vs Tax Preparer: Which One To Hire?

When it comes to Canadian tax returns, you have two options for who can prepare them: a Chartered Professional Accountant (CPA) or a tax preparer.

• Chartered Professional Accountant (CPA)

Accounting is a regulated profession and a CPA is professionally trained and licensed by a provincial regulatory body. They are able to provide a broader range of accounting and tax services than a tax preparer, such as financial advice and estate planning, while also holding liability insurance to protect clients.

Additionally, CPAs must adhere to certain standards of professional practice and are subject to disciplinary action if they fail to meet these standards.

• Tax Preparer

Tax preparers do not need any special qualifications or certifications, but they may still offer basic services like tax preparation. However, because they may not be knowledgeable about all aspects of taxation, their services might not be as comprehensive or accurate as those of a CPA, while also giving less protection to clients for mistakes or misstatements made in preparing your taxes.

Ultimately, choosing which professional to use should depend on your needs – if you’re an individual looking for someone to help you prepare a straightforward personal tax return, then an experienced tax preparer could be a fine solution, even if they aren’t a designated CPA. But if you own a business, are self-employed, then you’ll generally want a CPA firm offering accounting and tax services.

READ MORE: 10 Questions to Ask Your Accountant Before You Hire Them

Tax Accountant Near Me vs Virtual CPA: Which One Is More Convenient?

• Tax Accountant Near Me

If you’re trying to decide between a tax accountant near you and a virtual CPA, it really depends on your individual situation. A local accountant may be better for those who need more hands-on guidance or if you prefer face-to-face meetings , but most accountants offer both in-person and virtual services so you can get personalized advice and assistance throughout the year.

• Virtual CPA

With the many advances in technology, it is now easier than ever to offer services without having to be physically present. Through digital communication platforms like Skype and Zoom, accountants can communicate with clients across the country. They are also able to share information and documents electronically, allowing them to collaborate with clients on projects virtually.

With these tools at their disposal, CPAs are able to offer their services remotely and expand their reach beyond a local area. Ultimately, it’s up to you to decide which option best fits your needs.

Difference Between a Tax Lawyer and Tax Accountant in Canada

One of the tax accountant’s main jobs is to help people and businesses follow tax laws. They figure out how to legally pay the least amount of tax possible using careful planning and knowledge of the financial world. These professionals often have a title like Chartered Professional Accountant (CPA).

On the flip side, tax lawyers handle the legal issues tied to taxes. They step in for things like disputes over taxes, court cases about taxes, or complex tax planning for businesses or wealthy people. Tax lawyers know tax law inside and out and can represent clients in court if needed. They’re also the ones you call if there are issues like tax fraud or evasion.

While tax accountants and tax lawyers do similar work, they each have their own area of expertise. You’d generally go to a tax accountant for everyday tax advice, tax filing, and managing your finances. But, you’d reach out to a tax lawyer for more complex legal tax problems, disputes with the Canada Revenue Agency, or intricate estate or business tax planning. It’s not uncommon for tax lawyers and accountants to work together to give a well-rounded approach to managing taxes.

Can a Tax Accountant in Canada Help Me With a CRA Audit?

CRA audits can be an intimidating and long process, which often ends up being costly. If you are being audited by the CRA, it is best to retain the services of a professional who specializes in this field.

Depending on the scope and issue at hand, it may be wise to hire a CPA or even a tax lawyer to work with CRA on your behalf. A tax accountant will have the knowledge, experience and expertise required to help you navigate through this process and ensure that your rights and interests are properly protected. They can act as your representative to CRA and provide helpful advice regarding deductions, filing requirements and compliance, as well as suggest strategies for dispute resolution if necessary.

Additionally, they can review documents submitted to CRA for accuracy and completeness before submission. A tax accountant can provide invaluable assistance when dealing with a CRA audit and if you find yourself dealing with a CRA tax audit or dispute, we highly recommend that you get professional assistance.

Pros and Cons of Hiring a Tax Accountant in Canada

Pros:

PRO: They Know Their Stuff

Tax laws can be tricky and change a lot. Accountants keep up-to-date so they know what they’re doing.

PRO: Saves Time

Preparing and filing taxes can take a while. An accountant can do it for you, giving you more free time.

PRO: Fewer Mistakes

Accountants can help avoid mistakes on your tax return, saving you from fines or audits.

PRO: Saves Money

An accountant can find tax reductions you might have missed, which can save you money.

PRO: Helps with Planning

Accountants can give advice and strategies to help lower your future taxes.

Cons:

CON: Costs Money

Accountants can be expensive. This might be hard for individuals or small businesses on a tight budget.

CON: Might Not Be Needed

If your taxes are simple, you might not need an accountant. Many people file their taxes using online tools.

CON: Not All Accountants are Good

Some accountants aren’t very skilled. Picking one who doesn’t know what they’re doing can lead to mistakes.

CON: Less Control

When you hire an accountant, you have to share your financial info. Some people prefer to handle their money matters themselves.

CON: They Might Be Busy

During tax season, good accountants are in high demand, which can make booking one difficult.

Is it Worth Hiring a Tax Accountant in Canada?

A tax accountant is a professional who can help you organize, prepare, file your taxes and other tax obligations. They are knowledgeable in the tax code and can help you maximize deductions and credits to reduce your taxable income.

Additionally, they can advise you on long-term strategies to plan for future taxes. This is especially useful if you own a business or have complex finances. In many cases, it’s worth getting a tax accountant because they can save you more money than what their services cost. If you’re dealing with complicated investments or filing requirements, the time and money saved by having an experienced tax accountant handle everything for you will be well worth it in the end.

PART III: DIY Filing Of Corporate and Personal Tax Returns: Is It For You?

Many individuals and some businesses prepare and file their own tax returns. It’s certainly your right as a taxpayer and can save money in some situations, but there are risks to consider.

Should You Prepare Your Own Personal Tax Return in Canada?

Given the complexity of Canada’s tax system, preparing your own personal tax return can save you money in professional fees. However, there are some risks involved with preparing your own return so it could also end up ultimately costing you more. It is important to understand the Canadian tax system so that you can make sure you are taking advantage of all deductions and credits available to you.

Additionally, it is essential to make sure that all of the paperwork is filled out accurately and on time; if mistakes are made, you may face penalties and interest charges from the Canada Revenue Agency (CRA). Tax rules change every year and CRA interpretations can also shift so it can be challenging to keep up, even for a tax professional.

While every situation may vary, consider a general rule – if you have the time and knowledge necessary to prepare your own taxes and have a very simple tax return, then doing your own taxes can save you money, but the vast majority of people are better off with professional help.

Should You Prepare Your Own Corporate Tax Return in Canada?

While personal tax is a complex area, corporate tax is even more complicated. This is why we don’t recommend that you prepare your own corporate tax return unless you have an accounting and tax background.

Corporate tax requires knowledge of the various deductions and credits available to businesses, as well as the ability to accurately interpret and apply income tax legislation.

Therefore, corporate tax is an area best left to professionals such as Chartered Professional Accountants (CPAs). If you’re not sure what acronyms like AMT, QSBC, LRIP, TOSI and NERDTOH mean, never mind how to apply them, then it’s a safe bet that you’d be best off with professional help.

DISCOVER: Canadian Tax Deadline 2024: What You Need to Know

PART IV: Tax Accountant Near Me: How To Find A Tax Accountant?

Top 3 Qualities Of A Tax Accountant In Canada

When choosing a personal tax accountant, it is important to ensure you are selecting the right one for your accounting needs.

1. An extensive range of service

First, research the services offered by the tax accountant or firm. Do they specialize in individuals, small business owners, corporations, or self-employed professionals?

2. Experience and qualifications

Next, look into the experience and qualifications of the tax accountant to ensure they can handle your particular tax situation appropriately. Additionally, consider the cost of their services and compare them with other firms.

3. Reviews and references

Finally, make sure to review references to ensure that you are getting quality service for your return. By following these steps in choosing a tax accountant, you can be confident that your taxes will be managed properly.

How Much Does It Cost to Hire a Tax Accountant?

Hiring a tax accountant can vary significantly in cost depending on the services you require. The primary factor influencing the cost of hiring a tax accountant is the complexity of your tax situation. Some good rules of thumb are:

• corporate tax is more complicated and therefore more expensive than personal tax
• larger firms tend to be more expensive than smaller firms
• the more experienced the professional, the more expensive they are
• pricing is market-driven – all things equal, a Toronto accounting firm is likely more expensive than one in St. John’s

If you’re seeking a tax accountant, price is certainly one consideration, but expertise and fit with a professional you can work with are equally important.

Takeaway: A Tax Accountant For Your Tax Obligations

Indeed, finding the best tax accountant in Canada can be a challenging task. But if you need help with your personal or corporate taxes, you can always consult websites that recommend you the best accounting and tax services in the country.

CPA Guide can connect you with the best tax accountants in Canada. If you are searching for reputable accounting and tax services, find them at CPA Guide today.