The stereotypical view of the accountant crunching numbers in a dark office simply no longer holds true. Accountants are becoming trusted advisers that clients rely upon for insight into improving profitability. Accountants’ jobs are more than just preparing financial statements; they analyze complex situations and interpret applicable laws. Every accountant in Canada needs to be aware of these five laws in particular.
The Income Tax Act
The Income Tax Act is, of course, the most important law that all accountants need to be familiar with. There are complex provisions regarding many different types of situations, and there are hundreds of changes to the ITA every year.
While it is impossible for an accountant – especially one who specializes in bookkeeping and financial statements – to know every detail of the ITA, it is of the utmost importance to keep up with trends and tendencies so that you will know when you need to refer your clients to specialists.
The Excise Tax Act
From its name, one might guess that the relevance of the Excise Tax Act is waning in the days of free trade, but that is not the case. Indeed, hidden in plain sight in Part IX of the ETA is the entirety of the goods and services tax. Much like the ITA, the GST is becoming increasingly complex, and many GST transactions are in the realm of specialists. Still, accountants need to be acutely aware that the ramifications of the advice they give goes beyond income taxes.
Provincial Sales Taxes
In much the same way, if you are advising clients that are doing business across Canada, you must be aware of the local sales tax issues that may arise in the provinces where they are doing business. British Columbia, Manitoba and Saskatchewan all have distinct provincial sales tax legislation, while Ontario and the Maritime provinces have joined the federal government under the harmonized sales tax.
Speaking of provinces, accountants should know that the province of Quebec has many unique laws and, with the Civil Code, an entirely different legal system from the rest of Canada. Courts, business registration, language laws and sales taxes (with the Quebec government administering the GST in addition to its own QST) are all different in Quebec.
Professional Limitations Laws
Where do you draw the line between lawyers and accountants? While it is generally accepted that an integral part of an accountant’s job is to interpret tax laws when preparing financial statements and tax returns, it is illegal in all provinces for accountant to render legal advice.
Different bar associations may interpret the notion in their own way. If you feel uncomfortable about the advice that your client is seeking, it is probably best to work in conjunction with a lawyer so you can make sure you are not overstepping your legal boundaries as an accountant.