Complex laws, time constraints and uncertain results forcing people to turn to the pros
Despite the advent of computerized tax return preparation software and Internet filing, more Quebecers than ever are shying away from doing it themselves, and are turning their files over to tax professionals.
According to the Canada Customs and Revenue Agency, the number of people who reported they paid someone else to calculate their income taxes rose from 1.41 million in 1996 to 1.76 million in 2000.
That's a jump of 24.8 per cent in just four years. And those statistics do not include people who did not respond to the non-compulsory question, nor those whose returns were prepared by friends, family and volunteers.
The numbers are a clear indication of what tax professionals have long known: that Canadian and Quebec tax laws are increasingly incomprehensible to average citizens, many of whom who no longer have the time, energy and shear cranial juice to hack through the legislation.
"If you have the software and are technically inclined, doing own taxes can seem easy, especially if you are single and have just one T4," said Sonny Bernard, a tax partner at Bessner Gallay Kreisman a Montreal accounting firm. "But if you have special circumstances, you could run into complex tax issues without realizing it. But the real problem is that once you are done, how do you know you haven't missed anything?"
That's the kind of answer you would expect from someone whose business consists of giving tax advice. Besner Gallay Kreisman staff will produce between 1,500 and 1,600 returns this year
But Bernard isn't trying to drum up business. The personal tax returns that Bessner Gallay Kreisman staff prepare are mostly those of the managers and owners of its audit clients, and other high net worth individuals. In fact the company discourages people coming in off the street, and often refers them to H&R Block, and other tax preparation firms. So Bernard's words carry a certain weight.
According to the veteran chartered accountant, the complexity of federal and provincial tax legislation one of the main reasons that fewer Quebecers are filing their own taxes.
"The Canadian Income Tax Act is now close to 3,000 pages," said Bernard, thumbing through a huge brick written in telephone book-sized print. "It's very hard to read. There are sections, sub-sections, paragraphs and sub-paragraphs, clauses, and sub-clauses."
Each segment of the act comprises one sentence, some of which are a page-and-a-half long, and filled with convoluted structures, triple negatives and cross-references.
But that's not all. Other than the act itself, CCRA produces mounds of interpretation bulletins, information circulars and regulations.
Worse, Quebecers have to file two income tax returns. That means they need to know provincial rules as well, which in many cases are different than the federal version. On top of it all, both sets of rules change each year. So someone may be up to date one year, yet completely out of the loop the next.
But Bernard doesn't just tell you that doing your own taxes can be complicated, he takes you into a small room and shows you. "This is our tax library," said Bernard. "That shelf has some auditing books. But all the rest are all related to tax laws, regulations, court decisions and so on."
The upshot of all this complexity is that tax returns are taking longer for the average Joe to prepare, which increases the incentive to give the job to someone else. Even more so since if you have any questions, both CCRA and Revenue Quebec are essentially unreachable during tax season, with both agencies relying on the assumption that all the information you need is on their Web-sites.
"Doing it yourself can be OK if you enjoy the process," said Bernard. "But people often underestimate how much time it takes. Even if you decide to use software, don't forget, you still have to buy it, install it, learn how it works. And then you have to do it all again next year."
Photo Caption: According to Sonny Bernard, a tax partner at Bessner Gallay Kreisman, preparing your taxes can be difficult, if your particular circumstances run into some of the law's gray areas.
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