10th March 2017
Canada’s economy grew at an impressive 2.6% annualized rate through the fourth quarter of 2016, better than the US (at 1.9% growth) and significantly higher than expectations. December brought a $900+ million trade surplus to the country, its second consecutive month of a profitable trade balance. Canada’s unemployment rate has also dipped to 6.8% in January, thanks to a higher-than-expected addition of 48,300 jobs in January.
Moreover, the apparent failure of the Trans-Pacific Partnership, together with moves toward a breakdown of global trade norms thanks to victories for Brexit and Donald Trump, have prompted Canada to begin discussions with China for a possible free trade agreement, in a signal that Canada’s businesses may be looking to benefit from political turmoil in other Western countries. Many observers expect trade between Canada and Mexico to also increase if relations worsen between Mexico and the US.
A closer look, however, reveals warning signs and hints that such indicators of growth may not tell the whole story, and may suggest more optimism for the future than is actually warranted. The 2.6% rate of GDP growth from December is impressive indeed, but was largely prompted by an increase in household consumption and spending on financial services, rather than sustainable growth engines.
The Bank of Montreal reported that it made about $1.5 billion in the past 3 months, a 40% increase over the same period the previous year. Others such as the Royal Bank and CIBC also experienced double-digit growth. As Canada’s GDP enjoyed its recent 4th quarter rise, overall business investment declined by 2.1% over the same period.
The $923 million trade surplus came despite a 1% increase in imports and a 1.4% decrease in volume of exports. The bulk of the surplus came as a result of higher global oil prices, giving Canada a better profit margin on its sales. Increasing revenue numbers are all to the good, but such deep links between a country’s fortunes and world commodity prices may not always turn out so well.
Meanwhile, moves toward alternative energy systems continue to gain steam. Tesla Motors has spurred much of the auto industry toward production of electric cars, while SolarCity (owned by Tesla) is pursuing its ambitious plans to connect much of the US to solar grids. Successes here will mean replication elsewhere, as countries and consumers looking to wean themselves off of oil could see their opportunity.
Regarding employment, of the 48,300 jobs added in January, 67% of them were for part-time positions and 88% were in the services sector. Trends in Canada, as elsewhere, have seen increased participation in the “sharing economy”, coinciding with the rise of companies like Uber, Lyft and Airbnb. Between November 2015 and October 2016, 2.7 million Canadian adults reported participating in the sharing economy, whose critics complain of low wages for workers as well as a distortion of real estate prices.
Canada remains hopeful that its continued positive relationship with the US and with other world powers lead to strengthening economic numbers in the years and decades to come. As with all countries in this changing economic landscape, however, success will most likely depend on how well Canada focuses on anticipation and adaptation, as new industrial and political realities unfold around it.
(primary source: http://www.cbc.ca/news/business/canada-gdp-q4-2016-1.4006233)
25th January 2017
One of Donald Trump’s first actions as president was to remove the US from the Trans-Pacific Partnership, the controversial trade deal he criticized as a candidate, along with NAFTA. Some potential member nations are urging a resumption of talks and a new iteration of the deal, absent any US involvement, while others seem less sanguine about their hopes.
While the TPP’s future is highly questionable at this moment, it does seem certain that NAFTA will receive new scrutiny and very likely significant changes, as a revitalized focus on trade deals was a clear theme of Trump’s inauguration speech upon entering office.
The free trade agreement linking Canada, the US and Mexico has been at the center of much debate, and the economic priorities it represents have still not been accepted by its critics. The deal, like the proposed TPP and other trade deals over the years, aimed to boost trade between these countries to integrate their economies and allow business development to accelerate between them.
The most common criticisms are that such deals allow larger companies to prosper at the expense of smaller ones, that workers in the more developed countries lose jobs due to offshoring, and that the relative absence of workplace regulations in some countries (such as Mexico) increases pollution and other externalities.
Whatever the merits of NAFTA, clearly some kind of agreement needs to be in place for these countries as they move forward. For its part, the new US administration has signaled to Canada that, despite its frequent mentions of imposing tariffs in other contexts, it foresees no significant changes in the economic relationship between the two countries. The US posture toward Mexico, by contrast, may be up for realignment.
The Canadian economy – and indeed the US’s – relies heavily on positive trade outcomes between them. No country buys more American goods than Canada, which is the top purchaser of goods made in 35 of the 50 American states. In the other direction, 70% of Canadian exports go to the US – numbers that illustrate the close bond (and near-dependence) that develops between countries whose economies are tightly linked through free trade.
Given the economic ties binding the two nations, Canadian businesses on the whole will lose if the Trump administration leads the US into a recession the way that some analysts fear. It is also worth closely watching how America’s relationships change with other countries. If the Trump administration presides over a notable deterioration in trade relations with Mexico or other countries, Canadian companies may either suffer (if they use the US as a geographical intermediary for the transport of goods) or succeed by undercutting two countries whose tariffs are aimed at making each other’s goods less competitive domestically.
13th December 2016
A $70 million tax change that has members of Canada’s medical community fuming has received the support of the country’s highest ranking finance officer. Finance Minister Bill Morneau has come out in defense of the change, saying that it is aimed to simplify the tax rules for all professionals who run small businesses.
Mr Morneau appeared before the Senate National Finance Committee in early December where he received a tongue-lashing by Senators as he attempted to defend his latest budget bill, C-29. Mr Morneau was summoned to address concerns lodged by physician organizations about a tax change that limits how professionals working in a grouped corporate structure are eligible for small business tax deductions.
The government argues that professionals should not be allowed to claim they are a stand-alone small business if they are operating under one corporate entity. The measure was announced in the March budget to quell the ability of ‘high-net-worth individuals to use private corporations to inappropriately reduce or defer tax.’
“We believe the approach we’ve is fair across small businesses. We are not treating physicians in any way different from other professionals or other small businesses”, Mr Morneau told the Senate. “What we’re saying is one small business is able to have one small business deduction, he continued.”
The Finance Minister also affirmed that the tax change related to the small businesses will raise $70 million in new revenue per year. The change applies to a gamut of professionals, but physicians have rallied in an aggressive campaign, arguing that unlike other professions, they can’t pass the higher operating costs onto the consumer. They also contend that having many specialists operating in the same facility, the very reason they’ve been singled out as working within a corporate structure, leads to better healthcare. These joint medical partnerships were created to pool income to cover the costs for healthcare that is needed but not covered by provincial plans.
Many Senators voiced concerns on behalf of a multitude of physicians’ and medical professional’s associations, that such a tax change would have a negative impact on Canada’s ability to keep physicians and specialists in the country.
One medical association has said that the change would lead to some physicians owing tens of thousands in addition taxes. Another organization warned that the change is a tipping point which, in conjunction with several unresolved financial matters with the provinces, could have many of the most talented Canadian specialists jumping across the border to the United States.
Furthermore, many physicians feel like the lack of talented doctors and other healthcare professionals will impede support for research and education in addition to hampering the range of care and expertise.
15th November 2016
The Senate finance committee seeks to add an amendment to Bill C-2 that if enacted would make substantial changes to Canada’s federal tax brackets. Conservatives control a majority within the committee including the committee’s chair, Larry Smith of Quebec, who proposed the amendment. After heated debate, the motion to move the amendment to a full Senate vote passed 9-3.
The amendment would give Canadians making between $45,282 and $52,999 annually a larger tax break. The changes would have the effect of raising taxes by $1.7 billion in an attempt to address a funding shortage in the original plan.
Although it is not common for the Senate to amend a government bill, especially a tax bill, if the Senate passes the amendments, the bill goes to the House of Commons for a vote there. The Senate can’t initiate legislation that brings about new taxes or new spending which is part of the reason the committee’s debate grew heated.
The original bill, Bill C-2, applies the tax changes Justin Trudeau’s Liberal government made which came into effect on January 1. The original reduces the second marginal tax rate from 22 percent to 20.5 percent on yearly earnings between $45,282 and $90,563 and creates a new tax bracket with a tax rate of 33 percent on income over $200,000. The government can apply tax changes after voted on in principle in the House of Commons without approval from the Senate.
According to Mr Smith, the government’s changes aren’t revenue neutral and higher-income citizens are set to receive weighted benefits from them. He claims his committee’s changes benefit more of the middle class and would achieve income neutrality.
The committee’s changes would make a new, reduced tax rate of 16.5 on income greater than $45, 282, but less than $52,999. It would retain the 20.5 percent rate on income more than $53,000, but less than $90,563. According to documentation provided by Mr Smith’s office, ‘a transition as an individual moves to the third bracket for income above $90,563 which would make the tax plan revenue neutral.
If Mr Smith and his fellow Conservative committee members are to have success, it needs to come soon. The Senate will soon welcome a new wave of Senators appointed by the prime minister. Mr Tredeau’s appointments will outnumber the Conservatives 44 to 40, although committees will not be changed to reflect this majority. Thus the Conservatives will continue to have a majority in committees.
Most of the existing Independents on the finance committee, who represent a minority, and those throughout the Senate, expressed strong disapproval to Mr. Smith’s amendment. Some Independent Senators argued that the committee’s plan would discourage Canadians from earning more for fear of triggering the transition clause.
Canada’s Finance Minister Bill Morneau called the move ‘surprising’ because the liberal party had promise changes to the bill in the election campaign, but didn’t say much more about the issue.
14th October 2016
Earlier this month, Canadian Prime Minister Justin Trudeau announced his government’s plans to introduce a tax on carbon emissions beginning in 2018 in an effort to meet the guidelines set forth in the Paris Climate Change Agreement.
The announcement came October 3, 2016 as Trudeau addressed parliament. Politicians started debating whether Canada should approve the agreement made in Paris. The House of Commons ratified the Paris accord by an overwhelming majority just two days later. The agreement will attempt to keep global warming below two degrees centigrade in the 21st century and will come into effect on Nov. 4. Canada joins 60 other nations that have ratified the agreement to halt climate change.
Applying the carbon tax will fall on individual provinces and territories, as is stated in the Vancouver Declaration, either by setting up a direct tax on emissions of at least $10 Canadian per ton or by imposing a cap-and-trade system. Either way, each province and territory must apply one of these methods for taxing carbon emissions by 2018 or the federal government will enforce a tax of $10 a ton with an ascending scale of $10 per ton per year until it reaches $50 per ton by 2022. The prime minister said that although past inaction regarding climate change cannot be undone, a ‘real and honest’ effort to protect the health of the environment and the people of Canada can be made.
Mr Trudeau believes that a carbon-based tax gives the country a leg up on other nations toiling with the decision. He argues that pricing carbon pollution, as it is called, will give business leaders motivation to find new and cost-effective ways to reduce emissions and provide the country with thousands of jobs in the clean energy sector all while making Canada’s economy cleaner.
The prime minister isn’t the only one who feels this will be great for the country. Also in favor of the carbon tax is the Minister of Environment and Climate Change, Catherine McKeena. Of the day Canada voted to ratify the Paris Agreement she said it was ‘a great day’ for Canadians and that it marked a step forward after years of doing nothing under the previous government. The ratification of the Paris accord also signifies support of the Vancouver Declaration. McKeena also believes that the ratification will improve the Canadian economy.
Still, the enthusiasm Mr Trudeau shares with some of the members of his cabinet isn’t echoed by all throughout the House of Commons with criticism coming primarily from the Conservative Party.
There has also been stinging comments made from province premiers, namely Saskatchewan premier Brad Wall, who criticized the prime minister for making the announcement suddenly and unilaterally without seeking common ground or a sensible timeline with the provinces. Wall believes the tax will impair his province’s already reeling economy due to lowered commodity prices and that Saskatchewan will be among the hardest hit by such a tax because of its trade expose resource industries.
15th September 2016
Some of Ontario’s greatest economic minds have found themselves in a debate over the rising housing costs in and around Toronto. Some economic experts came out in favor of a 15% foreign buyer’s tax similar to the one in British Columbia. But those in the real estate industry warn moving ahead with such a tax without first understanding the possible negative economic effects could be harmful.
The heads of two of Toronto’s most influential real estate bodies have each submitted written objections to increases in Ontario’s taxation of foreigners buying property in the Greater Toronto Area (GTA). The leaders of the Toronto Real Estate Board (TREB) and the Ontario Real Estate Association (OREA) both wrote letters to the Ontario Finance Minister Charles Sousa and Toronto’s Mayor John Tory asking for more time to analyze and understand the effects the tax could potentially have on the economy if implemented too hastily. These groups and some others have called implementing the tax at this point ‘premature.’
On the other side of the coin, economists and politicians have said that the province’s leaders will have limited options other than implanting the foreigner buyer tax. These experts said that the Great Toronto Area’s (GTA) high land prices are caused by laissez-faire land supply policies and that a tax is one of the only ways to level the playing field. A 15% tax on purchases made by foreigners or non-residents of residential property could quickly achieve the stability needed in the market.
Ontario Finance Minister Charles Sousa has stated that there are no plans to implement a foreign buyer’s tax as of now. In addition, he said that both the Toronto and British Columbia housing markets will be monitored closely in the future to see how effective the tax works in British Columbia and if it could work in Ontario too.
Since British Columbia introduced its 15% tax on foreigner’s purchasing land in and around Vancouver over the summer, it appears to have slowed down housing activity significantly. According to the Real Estate Board of Vancouver, house sales have dropped more than 25% in August 2016 compared with a year earlier. However, Vancouver’s housing prices rose with the benchmark prices of residential properties increasing 31.4% from last year.
The assumption many have made after the tax arrived in Vancouver was that foreign money aimed at real estate would land elsewhere, such as Toronto, which saw a considerable rise in prices in the tax’s wake. Some real estate experts believe Toronto’s luxury market will also see a boon in response to British Columbia’s foreigner buyer’s tax.
18th August 2016
Canadian banks have received one more year to implement global reforms introduced by the Basel Committee on Banking Supervision in the wake of the 2007-2008 worldwide economic meltdown. The changes would attempt to improve risk disclosures and the time would allow lenders to devote time and resources to adopting new accounting standards before adopting the changes.
The Basel Committee on Banking Supervision (BCBS) was founded in 1975 and promotes regular cooperation on banking supervisory matters by providing a forum for banks across the globe. Its mission is ‘to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide.’ The committee members are banking experts and professionals from across the world. They come from countries such as Argentina, Australia, Brazil, Canada, France, Germany, Hong Kong, India, Italy, Japan, Mexico, Switzerland, the United Kingdom, and the United States, to name a few.
Canada’s financial supervisory body, the Office of the Superintendent of Financial Institutions stated that the back would have until October 2018 to make the changes to strengthen disclosure agreements. The additional time will give the country’s largest lenders more breathing room to focus on installing ‘high-quality’ global accounting standards.
Originally, the Canadian banks were supposed to be some of the first from any nation to adopt the latest version of the International Financial Reporting Standards (IFRS) in November 2017 with the vast majority of other countries adopting the standards in 2018. The supervising body said on its website that a ‘significant level of effort’ was required to implement the new international standards. The banking watchdog seems content to postpone the changes while the banks bring the accounting side of things up to snuff.
The big reason for the extension, according to experts, is because bringing in the new international accounting standards has been considerably more work than most expected. Banks have been buried in the implementation of IFRS and so the extra allotted time will give them some wiggle-room when it comes to the Basel disclosure requirements, experts said.
The new disclosure requirements would usher in several new and improved practices and guidelines. For example, the new risk disclosure guidelines would require banks to provide notice of expected credit losses earlier than before. Accounting firms across in Ottawa, Toronto, and across Canada realize the substantial impact this rule would have on the way financial institutions account for losses on loan portfolios.
As of now the Office of the Superintendent of Financial Institutions’ decision to extend the timeline to adopt the new reforms won’t affect the requirements on Canadian banks to hold certain levels of capital and liquidity.
Experts in tax law believe the Basel disclosure requirements and new accounting standards will each require banks to be more assiduous and thorough when providing details about the existence and extent of any risks coming from financial instruments.
As always Accountancy Insurance is here to not only provide its clients with the best in tax audit insurance, but also updates on current events occurring across the world in real time. If your accountancy or auditing firm is in need of tax audit insurance, contact Accountancy Insurance.
25th July 2016
Brexit—the United Kingdom’s vote to leave the European Union—shocked the world.
Many thought the referendum didn’t have a chance of passing. Some believed the majority of Britons saw that the benefits of staying in the European Union (EU) far outweighed its shortcomings. Other’s thought it was some politicians’ half-baked solution to a growing immigration crisis. Other saw it as the status quo which wouldn’t be shaken.
Whatever insignificance was attributed to the referendum before the vote on June 23rd, 2016 is now moot. Those in favor of leaving won by a 52-48 margin and now the UK and its strongest trade partners must deal with a period of uncertainty in its wake.
Here in Canada, like most other places, it is too early to tell how exactly the Brexit vote will pan out in the long or even medium term. The short term effects thus far have been fairly minimal. In a time of many permutations—simply put—Brexit can go one of three ways for the Canadian economy—good, bad, or neutral. Since a neutral result wouldn’t change anything we’ll leave that possibility out. Let us explore some of the positive and negative impacts this historical decision could have.
The immediate impact of Brexit saw stocks in Canadian companies with firms and investments in the UK drop as many did not foresee a departure from the European Union (EU) as plausible. This was because a strong push to Bremain—the campaign to remain in the EU—was making tracks leading up to the vote. Because the UK was Canada’s gateway to European trade and having previous trade agreements in limbo, some Canadian companies are considering relocating their UK operations elsewhere. Canadian workers in the UK have legitimate concerns regarding their future if the Canadian companies they work for decide to leave. If Canadian companies decided to leave due to uncertainty in the market or lack of conduits into Europe, the property values of the Canadian businesses that stay in London, for example, could fall a whopping 15-20% within five years.
Believe it or not, Brexit may not spell all the doom and gloom for Canadian companies as some experts predict. The uncertainty and anti-globalization sentiments present in the UK at present could have foreign investors re-evaluating doing business there and looking toward other markets such as Canada. Also Canada could strike new deals that benefit its economy better than the Comprehensive Economic and Trade Agreement (CETA) it has with the European Union (EU) while negotiating a new, more comprehensive, and now separate trade agreement with the UK, one of Canada’s biggest trading partners. The Canadian companies that do leave the UK in search of other countries to set up roots for European operations could resettle in markets such as The Netherlands, France, or Germany. This could be seen as a positive step into building new foundations and reaching further into Europe which as a collective in the largest economy in the world.
22nd June 2016
Choosing an accountant isn’t usually something most people think about. Often times, it’s something they don’t think about until it’s leading up to tax day (or the day before). When the time comes to see an accountant, some people simply go to whoever is closest and don’t consider any of the qualities that make a good accountant in the decision process. However, most of these people don’t realize is just how much the person they trust with their financial and tax matters, well, matters.
At the same time there are quite a few things an accountancy firm can do to keep smiles on their current customers, who know and trust them, while herding in new clients, who are finally looking for a quality accounting experience. There are the obvious things: an assiduous work-ethic, a good tableside manner, and overall professionalism are all traits that come with a good accountant. Here are a few more ideas for how to improve your accountancy business and give your customers, whether old or new, exactly what they want.
Communication is the key to any great relationship. While it is obvious that communication will happen naturally throughout the process of working on your client’s taxes, it is nice to set a few ground rules when it comes to when and how frequently each party should hear from the other. If the expectations aren’t made clear early the chance of a communication breakdown increases and may result in either or both refusing to work with the other. If a client calls every day with time consuming questions, it might cause problems. On the other hand, if there’s no communication until the day before the return is due, that won’t work either. It is important to discuss how you expect to communicate with your clients and to solidify a timeline you can both live with.
Clients are often drawn to the whole package—comfortable office, knowledgeable people, and a personalized touch. Another thing customers are becoming more and more attracted to is tax audit insurance. Firms using Audit Shield from Accountancy Insurance are able to give their clients a little bit more peace of mind that while everything will probably be fine, in case it doesn’t, they are covered. Having tax audit insurance in place is a huge selling point for informed clients.
3. HAVE YOU MET THE MAN?
Another question a lot of customers have for their accountant is ‘how much experience with the Canada Revenue Agency (CRA) do you have?’ Being contacted by the Canada Revenue Agency can be a nerve-racking experience full of uncertainty. Clients want to know that if they are ever issued a notice, that they will be in the hands of an experienced and professional accountant who knows what they are doing. They need the consul and expertise of an experienced and knowledgeable accountant in their corner.
Some other qualities an accountant might want to push to the forefront when courting new clients is their experience in business, their tax planning experience, and their relationship to other clients.
18th May 2016
Since expanding from Australia and New Zealand to Canada, Accountancy Insurance has established itself as a growing presence in the insurance field, especially in our specialty area of insuring accounting firms. The dedicated focus of our staff of professionals to the particular business needs of accountants has generated enthusiastic recommendations from our clients and helped us to emerge as a growing, exciting new player in the insurance industry in Canada.
The leading product offered by Accountancy Insurance is coverage for audit activity related expenses under Audit Shield. For modern, forward-minded businesses, the risk of unpredictable or variable expenses can be managed suitably with insurance products to remove uncertainty, streamline cashflow management, and generally eliminate risk. Just as liability and fire insurance assure confidence to businesses and homeowners, so firms can rest easier by insuring against unexpected costs associated with their clients' audits. Because the need for audits can come without warning—at times from a random drawing or the snap decision of a supervisory authority—the costs associated with complying with an audit can materially affect a firm's cash balance, sometimes with unfortunate timing. Firms already have the unwelcome choice of absorbing the cost themselves or passing it on to their client—a decidedly unappetising pair of options—but now have a third and starkly preferable option, thanks to tax audit insurance coverage with Audit Shield.
The Canada Revenue Agency (CRA) has indicated on its website that construction, retail, and hospitality and food service firms are the most likely Canadian businesses to be audited by the CRA. For business firms in these sectors, the exposure to auditing expenses can be an especially pertinent financial line item. Other businesses need to perform or conduct an audit in accordance with non-tax regulations or under contractual terms of their lenders. No matter the source, an audit is always an important business event, and one that needs to be handled in the right way.
But it's not just companies in those industries that need to think ahead: Every business that pays taxes can be required to undergo an audit. Every firm can be required to comply, on behalf of their clients, with a government audit for this year or years past. And that means that every firm providing accountancy services to their clients can benefit by managing risk and protecting your business. And our business bears that out: 95% of clients who have engaged Accountancy Insurance for tax audit insurance say that they would recommend their friends and colleagues to use Audit Shield.
Contact us to find out what Accountancy Insurance can do for you.
12th April 2016
Most Canadians have already filed their tax returns this year, but perhaps not everyone; those who have self-employment income have until June 15 to turn in their tax reports – following several significant changes in how Canadians must organize their finances at tax time.
This year saw general income tax breaks for the middle class, and a rate hike for the top 1%. Families with children are able to claim additional expenses ($8000 for each child aged 6 and under, and $5000 for kids aged 7-16), and the child fitness tax credit is now refundable.
Other policies are coming to an end, with this being the final time that the Enhanced Universal Child Care Benefit will be in effect, as it is set to be replaced by a new, tax-free Canada child tax benefit. Income-splitting between spouses earning different income levels, for the purposes of averaging out those incomes so as to stay within lower tax brackets, is also on its way out after this tax season.
Additional upcoming changes have been announced for next year and more are surely on the way. The complex nature of taxation in the modern world means that predicting the future is hard – and tax returns for companies or diversified individuals are likely to be examined more closely from now on.
With the possibility of an official audit, enquiry, investigation or review hanging overhead if the government suspects there might be a wrong number or statement on a tax form, one could be forgiven for feeling anxious about getting through tax season unscathed, even on the strength of an entirely competent accountant.
With all the variables at play in the tax code, and the reality of human error to consider, it’s a relief to know that Audit Shield is available from Accountancy Insurance in Canada and beyond. Holders of Audit Shield can rest easy in the knowledge that even if the government does single them out for special attention, the resulting long hours of preparation work that their accountants will need to do for them will be covered by our policy. In short: We pay for any extra accounting work made necessary by government demands.
We’ve heard from countless accounting firms that Audit Shield makes a big difference when marketing their services to clients, who are grateful for the optional protection that this special form of insurance can offer. The fear and dread that accompanies tax season loses much of its potency when Audit Shield is bundled together with a professional accounting firm’s promise of quality service.
New years are traditionally the time of new beginnings, and a new tax year is an excellent time to recalibrate one’s finances. Smart structuring of investments, clear and organized record keeping, as well as a mature investment in stability and security are all hallmarks of a balanced move forward.
Many people (and companies) are right now just one audit away from a massive and expensive headache. But with Audit Shield coverage provided by Accountancy Insurance, you can be on firm ground once again.
12th February 2016
Businesses and ordinary taxpayers use the services of professional accountants because they want to reduce a complex process to simple, manageable steps – while minimizing the risk of costly audits, enquiries, investigations or reviews by the Canada Revenue Agency.
For true protection against the myriad of financial advisory costs associated with government scrutiny, Audit Shield is a necessary addition to the services provided by professional accountants. Underwritten by certain underwriters at Lloyd’s, Audit Shield has a proven track record of covering the unanticipated financial services costs made necessary by the government singling out individual people or businesses for detailed examination of their records – whether they find mistakes or not.
Here’s how it works. When a professional accountant signs off on a financial statement for tax purposes, that may or may not be the end of their involvement in the issue. If all goes well, life moves on for all parties involved. But if the CRA decides to take a closer look, they have the right to demand proof for every part of that statement. The exacting standards of their official reviews often make it necessary for teams of accountants (and sometimes other experts) to spend a great deal of time preparing that proof – time which often needs to be billed, and must in the end be paid by their client.
What started off as a way to minimize risk, could therefore end up with costs spiraling out of control even before the CRA pronounces its verdict on the actual content of their audit or review.
That’s where Audit Shield steps in. Client accounting firms of Accountancy Insurance’s flagship offering are covered for those additional professional accounting costs, in the event of government investigation. As long as the government opens its enquiry while you are covered by Audit Shield – even if that enquiry is aimed at examining previously-filed financial statements – Accountancy Insurance will cover those additional fees for accountants and experts.
Accounting services which do not offer this extra protection are essentially offering partial coverage: Their clients may be less likely to be investigated than they would be if they’d prepared their statements themselves, but if they are investigated anyway, they will likely be exposed to significant additional accounting fees nonetheless.
Over 2500 accounting firms across Canada and Australasia have taken up Audit Shield and are now offering it to their clients. The number continues to grow, as more and more accountants agree that by offering complete coverage against risk, they are indeed looking out for the best interests of their customers – who in turn appreciate the associated benefits.
Security needs to be backed up by solid financial resources. Accountancy Insurance’s Audit Shield, which is underwritten by certain underwriters at Lloyd’s, allows for us to be there for our client accounting firms when they need it.
With recent changes in government and in Canadian law, taxpayers and businesses in Ontario deserve the comfort of knowing that their own tax filings can be prepared simply, professionally, and without any unwelcome surprises. Contact us at Accountancy Insurance to find out more about how we can help.