This year was not as bad as 2010 for late issued T-slips. I think in part, because many Income Trusts became corporations and thus issued T5’s instead of T3’s.
Notwithstanding the conversion of many income trusts, several clients still did not receive their T-slips, especially their T5013’s until the week of April 9th. Thus, between clients using the Easter long weekend to put their income tax information together and clients waiting for their final T-slips, we received a substantial portion of our firm's income tax returns last week. Our tax season for all intents and purposes is therefore condensed into three weeks. The CRA needs to look at the T-slip deadlines and move them all up two weeks IMHO.
I have been surprised by the number of my clients who still have not made TFSA contributions. We have advised them to make TFSA contributions since Day 1, but many have still been slow to make contributions. This is very surprising considering most of my clients would have little trouble catching-up in one fell swoop. I think many people still feel TFSA’s are small potatoes and not worth the hassle in a low interest rate environment.
For some reason I have seen several RRSP over-contributions this year. Over-contributions in excess of $2,000 are subject to a 1% a month penalty. I am slightly baffled by these over-contributions. If you have an accountant, they provide you with your contribution limit in the covering letter that accompanies your income tax return. Whether you have an accountant or not, you receive your RRSP contribution limit on your income tax assessment and if you have misplaced your assessment or don’t remember your limit, you can go onto your personal CRA account and find out your limit. There is really no excuse to over contribute.
Investment Advisors- The Good and Bad
Many of my clients use private investment managers or the private client arms of the major Canadian institutions for their stock investments. I assume when determining the fees for these accounts, the decision makers include a cost for not only the investment management aspect, but also a cost component for the administrative functions associated with the account, such as providing a realized capital gain/loss report at year-end.
The administrative function becomes an interesting issue where my clients have individual investment advisors apart from the private client programs. In these cases, my clients typically only receive a yearly trading summary from the institution and no realized capital gain/loss report.
As many of my clients have significant funds with individual advisors, it is amazing the variance in assistance I receive from these advisors. Some fall all over themselves providing information, including realized gains and loss summaries for which in theory they have not been paid. We even had one advisor this year that kept track of all of his client’s income trusts, month after month adjusting the adjusted cost base of each trust fund for the return of capital component.
On the other hand and definitely in the minority, I sometimes receive a very cold shoulder from some advisors when I request adjusted cost base information, like it is not their responsibility. Well I can tell you, it is certainly not my job to maintain my clients ACB’s, it is my job to report the gains/losses unless I am paid during the year to write up their investments and track the ACB of their investments.
What is especially galling to me is; where the advisor has sold my client several flow through tax shelters (in some cases for well in excess of $100,000) and yet they provide no assistance in trying to track the complex history of the original purchase, the conversion of the flow through units into a mutual fund and the related ACB adjustments. Suffice to say, it is probably not in the advisors best interest to alienate a client’s accountant.
So what is your expectation of assistance if you have say $300,000 to $500,000 or more with an investment advisor? For the advisors reading, am I being too harsh on the advisors for not providing assistance when they are not paid management fees?
Question: who tests the professional tax software programs before they are released and why can’t the flaws be fixed in season? [This is a rhetorical question, I will not comment on it]
What happened to last year’s dividend? Frank Gorshin did not steal it :).
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I agree with the tax software situation, I don't believe they do a good job with some of the nuances that some taxpayers have. Several times I had to do overrides, shouldn't have to if the software better understood where I was coming from.
As for Frank Gorshin, take a look at his performances on the old Dean Martin Roasts. Fantastic. He was well known for his impersonations, his best being Richard Burton.
Anon: I hate to admit it, but I actually remember the Dean Martin roasts, boy am I getting old :(Delete
I think your analysis of investment advisors is correct. There is a wide disparity in the industry. One of the things that really irk me is the actual statement for the fees that they issue to clients, and often with a footnote that it should be attached to their tax return. They don't disclose what the heck these fees represent and whether they relate to registered or non registered accounts. Or they include a clause that the client should consult their tax professional to determine the deductibility of the fee. But without a description of the service, how are we to know?ReplyDelete
Unc: I know what you are saying; I think in some cases this vague treatment is done on purpose so we claim everything, even the non deductible RRSP, IPP etc accounts. However, I must say I found the statements this year to be more descriptive than ever.Delete
I overcontributed to my RRSP last year, as did my husband... Completely stupid: we used the *previous* year's numbers by mistake. So - it is easy to do, if you reach for the wrong letter/form! Getting the years mixed up is a poor excuse, I know, and we fully deserve the penalties, but at least it is a rational explanation.ReplyDelete
JMN, that is big of you to admit to your mistake and also I appreciate the rational explanation. You raise two interesting points (1) Be careful you grab the correct years numbers, as it does get confusing (2) CRA's assessment notice is somewhat confusing especailly when you have made a partial contribution in Jan-Feb of say 2012 on account of 2012 and have a carryover. You have to be careful to only pick up the remaining contribution room for 2012, not your actual limit.Delete
I'm an associate for a Financial Advisor. Although I have limited experience with other advisors, from what I can tell there seem to be two groups. The first group is very proactive during tax season and the other is reactive.ReplyDelete
Providing an annual gain/loss report is a standard any financial advisor should meet - frankly, they should be prepared well ahead of the time accountants request them so streamline the process. T3s come in late but there's no reason anyone should there should be a delay.
I think in general, advisors realize an accountant has influence and can be an asset in the future. We deliver a gain/loss with an electronic copy of all tax documents when they first become available. We then follow up close to filing deadline with a notice of any amendments that have been made. We also allow accountants to use us as a resource for other clients for issues that we may have familiarly with.
Obviously these practices aren’t the standard but I believe we are moving in that direction. Client and advisors are becoming more educated… fees, planning and service are paramount, these are things we can control.
Anon, thx for writing.I thought this topic might invite more comments. First of all, you are lucky to be learning from someone who appears to do it right. Secondly, by the way you express yourself and your expectations, someday you wil be training someone to be like you, since you seem to be on the right track for your own success. Best of luck to you.Delete
I wonder if you're generally seeing over-contributions for clients when it's the first time they've used up all their contribution room? That's what happened to me: I wasn't really accustomed to thinking about contribution room and I don't have an accountant, so I neglected to account for my pension amount. Fortunately the over-contribution never exceeded $2000 (which was pretty lucky because my pension amount was more than that).ReplyDelete
Yes we see them but we provide a RRSP summary to clients so not that often