Dispelling 3 myths of Tax Preparation

By Gennaro De Luca

Special to the Financial Independence Hub

Most people pay a lot of attention to how they invest in order to build a portfolio and maximize their returns. But when it comes to doing their tax returns, things tend to be different. Many of us – entrepreneurs, business owners and managers – keep doing it the same old way. We hand over all our pertinent documents to an accountant or tax-preparation service and fork over hundreds or thousands of dollars in fees. Well, May 1st, 2017 is the tax deadline this year.

Today, 80 per cent of the 14 million plus tax returns filed every year in Canada are processed digitally and that figure is increasing. This means accountants and other professionals file digital returns on behalf of their clients or, what is also happening with more frequency, people opt for DIY (Do it Yourself) tax software and do it on their own.

As a long-time wealth-management advisor and Certified Financial Planner, I know that a few myths persist about tax returns. Here are three:

MYTH 1: If you’re self-employed or own your own business, you need an accountant to do your tax returns.

MYTH 2: Preparing tax returns is expensive, especially if you have a small business or are self-employed.

MYTH 3: DIY tax software is easy enough to use for even very complicated tax returns.

The answer is a digital return combined with the services of a tax professional. That’s what we do at TAXplan Canada and we just added a new feature that takes tax returns into the modern age. You can download our new app Sidekick to your mobile device. It allows you to take photos of all your documents and then you send them in. The tax professional does the rest. There is no other service like this in Canada.

Most of us don’t like doing taxes

Most people don’t like doing their taxes and prefer to hand everything over to a professional who will do it accurately and get you the greatest possible refund or lowest possible amount owing. But old ways die hard. What with the new world of CRM2, investors are now beginning to learn what their advisors actually earn when managing their portfolios. By the same token, people should start asking questions about the value they receive for having their tax return done.

Our client base consists of small business owners and managers, families and students. Based on feedback to date, they like this new process, especially the new mobile app. It’s easy, inexpensive, and fast. Here’s how it works:

  • You visit https://taxplancanada.ca, set up an encrypted account, and complete a short questionnaire, which establishes your profile.
  • You receive a quote for your tax-preparation fee.
  • A tax professional assesses your eligibility for tax credits and deductions.
  • You download the Sidekick app to your mobile device and take photos of your documents, which are automatically uploaded to your account.
  • The information goes to the tax professional, who crunches the numbers and reviews the completed tax summary with you.
  • You pay the fee and sign an authorization form to TAXplan to represent you and file on your behalf.

The benefits? For starters, you don’t have to stuff receipts into that proverbial shoebox or visit the offices of an accountant or tax-preparation service. Next, the fees are much less: as little as $69.95 for an employee and $149.95 for an unincorporated small business. Students we don’t even charge because we are building our client base.

What’s more, from beginning to end, the whole thing takes under 48 hours, and the photo feature can be used year-round because you upload documents to that secure encrypted account, thereby keeping track of your expenses. This way everything is ready for tax season.

When we started our company in 1999 we did tax returns as a value-added service for our financial clients, but soon recognized that existing options for tax filing were not meeting the needs of the public. We figured it’s better for us to adapt to the needs of the client than make them adjust to outdated practices for filing taxes. Now tax preparation has finally reached the digital age.

Gennaro De Luca is the Founder of TAXplan Canada, a Certified Financial Planner, and Senior Partner of Redwood Capital Management, a financial advisory firm that offers services in all areas of financial planning including tax, insurance, wealth management and mortgage planning. Before starting his business he was with Investors Group, rising to the position of Associate Regional Director in Toronto. He has a B.A. from York University.


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