When it comes to your personal taxes (or corporate taxes) in Canada, it is very important that you get to the right tax professional!
This is very common to confuse tax preparation service with a tax advisor. Whether you should hire a tax preparer or a tax advisor depends on your tax situation and needs.
Who regulates the accounting profession in Canada?
In Canada, accounting professional is regulated at the provincial level; a CPA body in each province. In the province of Ontario, CPA Ontario regulates the accounting profession.
What is the difference between a tax preparer and a CPA?
As per the by-laws of CPA Ontario, tax advice and counselling in an expert capacity (by a CPA) falls under the regulated activity for which a CPA firm registration is required. Being a CPA member is different than a registered CPA firm. However, by-laws clearly give an exception to the mechanical processing of tax returns.
Individual tax preparation is simply mechanical processing of tax returns where client provided information is transferred to tax forms and tax returns are processed.
It’s very common in tax season, more and more professional join the workforce as tax preparers every year. With adequate training, they are good enough to handle the processing of the tax returns for multiple tax situations. Some of the seasoned tax preparers really do a good job in preparing error-free tax returns based on the client provided information. However, if you are looking for tax advice on certain tax matters, have a complicated tax situation, or facing issues with Canada Revenue Agency you are recommended to consult a tax accountant or a tax lawyer always.
Like the mechanical processing of tax returns, bookkeeping which is recording accounting transactions from source documents also does not require any license. Sometimes tax advice is also part of this service.
What if I follow the advice of my tax preparer and something goes wrong?
As far as tax advice is concerned, bookkeepers, tax preparers or even the staff – virtually everyone – in your business or social circle tend to provide tax advice. It’s up to you to follow or not! You should always consider the impact of such advice and try to get an answer who do you have to sue if something goes wrong! Regulated CPA firms are required to maintain certain insurance and the firm has to go through a process to be registered. So definitely, professionals working in this regulated environment tend to provide better expert advice.