Yuri Bilinsky, New Pathway – Ukrainian News.
Paul Komarnicky is a tax and accounting guru. With more than 40 years of experience on Bay Street with such blue chips as Bank of Nova Scotia, Traders Group Limited and IBM Canada, and with Jamesbridge Tax Accountants, where he is the principal, Paul doesn’t just do one’s taxes, he applies tax strategies to business operations and family finances.
Paul boasts a long list of titles. He is a Chartered Professional Accountant and a Certified Management Accountant, holds an MBA from York University and a BA in Economics from Waterloo Lutheran University. He was a founding member of and has held directorships in Canadian Management Accountants in Public Practice Inc. and Canadian Accountants in Public Practice Association; is a member of the Institute of Chartered Accountants of Ontario, the Society of Management Accountants, and the Canadian Tax Foundation, and a Fellow of the Institute of Canadian Bankers (F.I.C.B.) and Associate Fellow of the Canadian Securities Institute (Assoc. F.C.S.I.). He also helps edit the quarterly newsletter Taxing Times.
No doubt, when someone comes through the door of Jamesbridge Tax Accountants (the firm mostly serves individuals and small businesses), they can rest assured they will get the best tax advice and service possible in Canada.
NP-UN spoke to Paul to find out about his services as well as general taxation issues.
The CRA now seems to have a tougher approach to tax collection and looks at tax returns more closely than 10 or 20 years ago. Can you confirm that?
That is quite true. In the last several years, they have received increased budgets to do audit work. CRA has a two-fold aim when they perform an audit. One is to catch unreported income, therefore unreported taxes. The other is to educate the general public that they do look for people who don't fairly report. Also, they are becoming more strict with some of their interpretations of the rules for individuals. For example, quite a few years ago, people used to deduct vitamins but eventually Revenue Canada said that it’s not really a medical expense. Most recently, the CRA says they are fine tuning medical disability claims. A lot of people may have heard of a problem that people with autism ran into with the CRA. They changed their definitions and all of a sudden a lot of autistic taxpayers were denied deductions for their treatment. The CRA let up a bit on that particular item but that is the approach they are taking on a lot of medical expenses.
Different parties come into power and say that they lowered taxes for middle class. Do you think that taxes have been down for the middle class as a result of some of the recent measures like rate changes, income splitting, deductions of transit or sports expenses, etc.?
Those changes are primarily politically motivated. They are supposed to help the middle class, which for the last dozen years all governments have been talking about, but these changes have just been small items, things like those you mentioned. For example, you could deduct a few hundred dollars as a sports expense for your child but the tax relief was just a few dollars. The overall tax rate in Ontario (federal and provincial combined) is about 10 percentage points higher than a dozen years ago. For a person making $60,000 a year, it’s $6,000 which is a lot of money. For the top tax bracket, the tax rate is now more than 53% while a dozen years ago it was 44%.
Do you think that the current tax environment is beneficial for small businesses?
Perhaps it’s because of the general economic conditions, but we do see more and more people going into business and not being employed. Two years ago, the federal government, although it said it supported the middle class, changed the tax rules that resulted in less support of the middle class. And it made it much more difficult for business people to save money. Business people used to have family working for them and paid them a good salary. Now you have to prove how much work they did and show that you would not pay a stranger less. That makes it much more difficult and I think will hurt the Canadian economy going forward.
You must have had a lot of cases when people got wrong advice on their taxes and then they come to you. What is your value that you provide to your customers?
Bottom line is that we try to help our clients pay their fair share of income in taxes but not more than they are legally required. That will work for the individual client and the client’s family, so we tend to take a broader view, not just on an individual. Our small firm is not that interested in producing pages of financial statements, putting them in a binder and making them look nice. We put the numbers together in a similar fashion but our expertise is to see how you as a person or a business can arrange all of your income so that you don’t have a problem of hiring your son for example. Maybe you need a corporation in your own name or a family trust, or some other such features that might help you save your money as a family unit at the end of each year. And so our value is in our strategic approach to each client’s needs.