Saturday, March 10, 2007

Nailing Flaherty's BS. Check your tax return.

The Canadian income tax landscape changed when the Harper government's finance minister decided to try and prove how wonderful the Conservatives were by implementing a new set of tax credits. (You'll notice your income taxes went UP).

In any case, accountants at this time of year become a little frazzled and it didn't help that a whole new, and not so easy to understand, tax rules came into play.

Now accountants are generally pretty staid about these things. Yes, changes mean extra work and a lot of study, but they do it because it's a part of the job. They tend NOT to comment on the mechanics of a tax regulation as long as it makes sense and they can do their best for their clients.

I know this for a fact. I live with one.

Each year a publication is written to give the nitty-gritty on preparing income tax returns. It's a massive thing and, this year it is 1,509 pages of small print on bible-style paper. Amazingly enough, this consummate guide to income tax preparation is called Preparing Your Income Tax Returns® published by CCH Canadian Limited and edited by Michael G. Mallin, MA, JD. If you are suffering from insomnia you should try reading this book. It's dry, straightforward and just plain difficult. But it's got everything you need to know about income tax in Canada.

I know, you're thinking accountants would love it, being humourless, etc. And, they would never criticize the law around taxes themselves. Nor would they, in such a publication, point out something totally ludicrous.

Wrong. On page 765: (emphasis mine)
For 2006, and later years, a new "textbook" amount is added to the education amounts above. The textbook amount is $65 per month for each month in the year for which you were entitled to the $400 full-time student amount above, and $20 per month for each month in the year you were entitled to the $120 part-time student amount above. The quick-witted will observe that the same result would have been achieved if the $400 and $120 education amounts had been increased to $465 and $140, and a fair amount of ink saved in the process. It would appear political advisors felt that a new credit would sound better to the public than an increase in the old credit. Probably this is true, if depressing.
That is a comment on Flaherty's methods from the most respected tax preparation publications in the country.

Did I once say "smoke and mirrors"? Now the accountants are saying it.

Stuff that in your pocket protector, Flaherty.

Credit: Technically speaking, this should have been Cheryl's post. She, of course, discovered the pertinent paragraph. I would have no reason to actually look at a tax publication. However, during tax season she has an aversion to keyboards for any purpose outside work. Booze helps.

Update by Cheryl: LOTS of booze!!!!

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