Tax laws are one of the most complex and keep changing yearly. These changes are also complex. Individuals and companies must comply with these laws without flaws, as the cost of non-compliance is hefty. While the Canada Revenue Agency (CRA) assesses your past three years’ filings, a legal notice to you or any party associated with you could extend the review period until the time notice is outstanding.
While an accountant can help you claim tax benefits, understanding and complying with the tax laws requires a tax advisor who is well-versed in them. Instead of approaching a tax advisor when faced with a notice or a CRA audit, you can seek their help to mitigate the possibilities of such a situation.
Why Do You Need a Tax Advisor?
Tax advisors are professional accountants who undergo rigorous training and education on tax laws. They are certified professionals and understand the complexities of the Canadian tax system. Individuals and companies are different in many ways—their state jurisdiction, the source of income, the financial situation, dependents, assets and liabilities, and more. The tax depends on how the individual and/or company is earning money, from where they are earning, how much they are earning, and how much they are spending.
Reduce tax liabilities: The tax is like a puzzle of various pieces. A tax advisor puts together those pieces to prepare a personalized tax plan to help you reduce your tax liabilities while staying compliant.
Stay tax compliant: You can also consult a tax advisor for your past transactions for tax compliance. Even if you are not compliant, the advisor can help you find a way to become compliant with a minimum penalty.
Mitigate the risk of a tax event: Prevention and preparation can come in handy in case of a tax assessment. A tax advisor can help you prepare for a tax event and, if possible, mitigate the risk of a CRA tax assessment.
Support in CRA audit: If you face a CRA audit or receive a notice of non-compliance, a professional tax advisor can be your advocate, represent you before tax authorities, communicate on your behalf, and build a strong defence strategy.
When Do You Need a Tax Advisor?
A tax advisor plays a vital role in personal and business financial planning.
Personal Tax Consulting
Personal finances can attract significant tax bills if you plan to buy a house for investment purposes, transfer your estate to your family, or plan your retirement. Your every substantial financial decision will have a tax implication. You might want to consult tax advisors if you are a business owner earning money from dividends, an employee, or a dual citizen with properties/investments in the US and Canada. They can help you understand your tax implications and minimize taxes.
Estate planning: Many families use trusts to protect their assets, defer taxes, and plan for the future. The CRA has several reporting requirements for trusts, which a tax advisor can efficiently navigate.
Investments: A tax advisor can help you diversify your portfolio, rebalance your investment, and manage risks to reduce investment tax.
Corporate Tax Consulting
Companies can adopt various tax strategies to reduce taxes. Any financial decision is looked upon from a tax angle. Would you be better off buying or renting equipment? Should we take debt or use cash reserves to fund capital spending? Should you incorporate your business? Which corporate structure is most tax-effective? Should you hire employees or contractual workers? Should you use employee stock options or other compensation alternatives?
Beyond these strategic decisions, tax advisors also help in the opening, transfer, and sale of business and how to claim relief from capital gains tax. For instance, the CRA offers business owners a long-term capital gain exemption (LCGE) of $1,016,836 in 2024. However, to avail of this exemption, you or your family must own the company’s shares, and more than 50% of the business’s assets should be in active business two years before the sale. There are several other eligibility conditions. Maintaining this eligibility for two years needs stringent business and tax planning.
Corporates pay corporate tax, GST/HST, dividend tax and more. Tax advisors play a crucial role in preparing all these taxes.
Since the CRA reviews the last three years of filings, you can get them reviewed by a professional tax advisor. They can guide you on rectifying your mistakes before the CRA assesses them. It can help you save on penalties.
Contact Black and Gill LLP in Toronto to Help You Stay Tax-Efficient and Tax Compliant
Talk to a professional tax consultant to help you with financial decisions and minimize tax liability. At Black and Gill LLP, our tax advisors can provide services such as tax planning and filing for companies and individuals. To learn more about how Black and Gill LLP can provide you with the best tax expertise, contact us online or call us at 416-477-7681 to learn more about how we can help you and your business.