Blurb: By investing a little time you can learn a lot about how tax law affects you.

Where to find good tax information
By Peter Diekmeyer o Bankrate.com

Although most people don't realize it, everyone in Canada has a silent, greedy and spendthrift partner, who always has his hand in your pocket, even when you aren't looking.

That partner of course, is government, to whom the average Canadian will end up forking almost half of his lifetime earnings, in the form of various income, sales, real-estate and other taxes.

In fact, the government's cut of our national income is so large, that spending a little bit of time learning about how the income tax system works can yield substantial savings. To help we've listed a couple of the common sources of tax information.

The Canadian Income Tax Act
The Canadian Income Tax Act is not the best place to get good tax information. It is big, fat and bulky. But its weaknesses go a long way toward explaining why most Canadians can't understand this country's tax system's basic elements.

One of the most common versions of the act, the 2005 Stikeman Income Tax Act, --which lists at $86 on Indigo.ca,-- runs 3,200 pages of fine print jammed with clauses, sub-clauses, exceptions and sub-exceptions. Worse, the act is written in legalese, incomprehensible to the average Canadian. That said, the act is Canada's most important piece of tax legislation, and it is studied, consulted and reviewed by almost all of the people who work in the field of taxation.

Jurisprudence and commentaries
Another important source of tax information that professionals use is the vast body of case law flowing from the tens of thousands of tax court decisions. Much of the jurisprudence can be found in university law school libraries. These are open to students, alumni and often, --though not always, -- the general public.

Tax experts also rely heavily on commentaries, opinions and articles of tax professors, lawyers and university professionals that are published in book form and sold by subscription or unit.

Evelyn Jacks
At the other end of the spectrum is trainer Evelyn Jacks, founder of the Knowledge Bureau, (http://www.knowledgebureau.com/) who over the years has published about 35 tax related books, most of which can be readily understood by someone with a little education and a bit of time on their hands.

Make Sure It's Deductible is a great primer filled with tax tips for small business owners. The book includes sections on structuring your business in a tax efficient manner, maximizing home office and car related expenses and how to put your family members on the company payroll and still write off the cost.

Another great book is Jacks' Tax Savings for the Long Run, which gives Canadians tips on how to get the most value out of the money they spend on tax professionals. The book's premise is that the more than half of Canadians who pay professionals to compile their own returns do so for a reason.

But just handing your receipts to your accountant is not enough. If you don't also give him the right information he will not be able to do his job. This book gives you some tips on making sure that you are getting sound professional advice.

CA Firms' books and Web-sites
Many of Canada's large chartered accounting firms have sponsored books written by staff members. Two examples are How To Reduce the Tax You Pay, by Deloitte, and Grant Thornton's Smart Tax Tips. These firms also typically send their customers regular tax information updates, which are often in part published on their company Web-sites,

Canada Revenue Agency publications and Web-site
Another increasingly useful tax information is Canada Revenue Agency's Web-site (http://www.cra-arc.gc.ca/menu-e.html). The site, which keeps getting better, includes most forms, tax rate tables and a variety of information services.

Unlike many Web-sites, Canada Revenue Agency's search feature seems to work well and eliminates a lot of the time wasting back-and-forth browsing that is typical among government sites. Another useful feature is the fact that CRA seems to have uploaded most of its information bulletins and circulars, which provide clarification on the agency's stance in specialized areas.

Ironically one of the most useful documents that CRA publishes is the information package that it sends along with its detailed tax forms. The oft-neglected guide provides a good overview of many of the more common deductions and tax issue affecting Canadians and it includes a useful section dealing with recent tax code changes.

Time well spent
Sadly, the startling range and complexity of tax legislation in Canada and many Western countries means that it is almost impossible for many Canadians to fully grasp the complex tax issues that affect their daily lives. That said, --educated Canadians, especially those who are willing to spend a little bit of time doing research, can learn a startling amount.

Many tax professionals are good generalists, but less strong in specialized areas. So if you are for example a musician, and you take 20 minutes to read CRA's information dealing with musicians, chances are you'll know enough to be able to remind your tax accountant about the key issues of your particular profession. And since there is so much money at stake, it will be more than worth your effort.

 

Peter Diekmeyer (http://www.peterdiekmeyer.com/) is a Montreal based business writer.

 

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