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How aggressive should your
accountant be?
"As aggressive as you want
him to be," says Mr Davari. "The accountant's
responsibility is to tell you of the potential
consequences of the route you want to take, but
at the end of the day, you make the last call,"
he adds.
For example, perhaps your
accountant thinks paying corporation dividends
to your pet budgie is a great way to save taxes
but you don't want to take the risk. Or maybe
you're convinced you can claim your vacation to
Greece as a work expense because you had a look
at Hippocrates' plane tree on the isle of Kos,
but your accountant says no can-do. Always make
sure you and your accountant are on the same page
when it comes to grey areas like these.
"The basic rule of the tax
game is that you have the right to pay as little
tax as you legally can," Mr Kurtz explains. "That's
called tax avoidance, not tax evasion."
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"Finding the right tax preparer
depends on how complex your tax situation is and how
much tax-planning advice you want," says Shy Kurtz,
president of Sintax Consulting Group in Montreal. To
help you on your quest, here are 10 questions you should
ask before you hire your next bean counter:
1 "May I see your credentials?"
Accountants, like MDs, are not created equal. So, don't
hesitate to ask for and check their credentials. "Chartered
accountants [CAs] have the most complete background
in terms of experience and studies," says Sina Davari,
tax consultant at accounting firm KPMG's Montreal office.
"Other types of accountants may be geared towards management
accounting, and that's not what a physician would need."
2 "Do you have other clients
like me?" It's about comparing apples with apples.
If the accountant has experience with others in your
tax bracket or profession, they'll be better equipped
to deal with your file. "They'll know the particularities
that a doctor faces, that, say, an actor doesn't face,"
says Mr Davari. "They'll have plans about how to reduce
taxes, do income splitting and know what to do with
certain fees, if they should be deducted or claimed
for instance."
3 "What's this going to cost
me?" Whether it's a flat fee or an hourly rate,
ask for a range and have them sign a contract specifying
what they're responsible for, recommends Mr Davari.
Ask them what their physician rate is, and verify with
colleagues if this jibes with what they're being charged.
4 "Are followup questions and
visits included in your fee?" That's something to
clear up right off the bat, says Mr Davari. Some accountants
will charge for any extra time you require, but either
way, they should be available to answer your questions
or get back to you within 48 hours.
5 "What's your typical approach
for someone like me?" "I'd beware of someone who
wants to incorporate you right away, or says 'Let's
do this and that' instead of looking at your needs,"
says Mr Davari. Your accountant should look at where
you stand in your career and what you see for the future
before planning a good tax strategy.
6 "How do you plan to reduce
my tax bill?" Since this will be one of your biggest
aims, make sure you find out what they can do for you
on this front. RRSPs, income splitting and incorporating
are the typical places an accountant would look into
for a more tailored approach to your taxes, according
to Mr Davari.
7 "Will you talk to my broker?"
"An accountant provides full service, so if it makes
the client more comfortable, we can have a three-way
meeting," says Mr Davari.
8 "Will you prepare my taxes
yourself?" If you're dealing with a large firm,
chances are some of the data entry and leg work will
be delegated to 'juniors.' "But the CA will always review
everything and make the last call," says Mr Davari.
If you don't want anyone else looking at your affairs,
you can have the CA handle the whole thing, but their
hourly rate is much higher than a junior's, so it'll
cost you more.
9 "What happens if there's a
mistake in my return?" "If the accountant made a
mistake, he shouldn't charge to fix it," says Mr Davari.
But it doesn't hurt to check your return yourself before
you sign the cheque and put it in the mail, he suggests.
"You can do a quick analysis based on last year's return.
If you made the same kind of money, but you're paying
more taxes, then alarm bells should go off."
10 "Do you offer any guarantees
against audit?" If they say yes to this one, be
suspicious. Mr Davari is adamant: there's no way to
guarantee you won't get audited. "There are always routine
checks, so even someone with a simple T4 can get audited
sometimes," he says. Shy Kurtz agrees. "A CA's job is
to help you pay tax properly," he adds. So while they
can't guarantee against an audit, they can at least
assure you your return's been done by the books.
You need to take the long view
when hiring an accountant, says Mr Davari. "With some
people, it just doesn't click," he says. "And then with
others, you get a better feeling, they understand what
you need and you can see them as a financial partner."
And when that happens, you know it's the beginning of
a beautiful tax friendship.
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