By: Carol Trudell
With the 2020 tax season coming to an end in Canada on April 30th, both payers and preparers have experienced a collective sigh of relief. While it may take no more than a few hours to formally file a tax return, soliciting tax advice and tax planning to prepare your return can take months or even years to compile with your lawyers and accountants. As any taxpayer knows, the services of these specialized professionals can add up quickly. While the advice of an experienced professional is invaluable and should always be sought, using legal tax technology, or suggesting the usage of such technology to the advisors you hire can increase efficiency and efficacy. So, to save you time and money, we have researched three helpful legal tax technologies Canadians should know about for next income tax season.
Since the 2017 tax year, CRA has permitted Canadian taxpayers to file their prepared tax returns online through NETFILE. To use CRA NETFILE, one must pick a certified tax preparation software connected to the CRA NETFILE program. One can choose between “pay what you want” services or, alternatively, paid services. If you are willing to spend more time planning, there is the ability to use software from the former category and then leverage some of the free programming associated with the paid services. These offerings from the paid software will vary based on an individual’s tax situation and income.
A major benefit of the software is its continuity. Once you have prepared and successfully filed a return using a CRA NETFILE certified preparer, you can use the REFILE, Auto Fill, and Express Notice of Assessment programs for your subsequent returns. Whether you decide to file independently or seek the advice of a professional, ensuring usage of the NETFILE service can make your future filings more expedient, particularly if your income tax information changes little from year to year. As an added bonus, having your returns saved with CRA NETFILE is ideal documentation to use as proof of filing or taxable income if dispute resolution is necessary.
To reduce money owed, each taxpayer should always investigate credits for which they may be eligible. Each year credits are allocated and outlined in Canada for both the provincial and federal budgets. Tax preparers and planners have a deep knowledge of what could be available to any client and how to apply for credits properly. This expertise is often costly, so handling research and applications independently may be a way for some to save money. For those working with tax scenarios involving businesses, Boast AI is a tool that allows one to explore these types of corporate tax credits.
A great feature of Boast AI is its application to international tax scenarios for those doing cross-border business. The Boast AI algorithm examines credits, majorly from federal governments, offered by both the US and Canada simultaneously to provide users with a fuller picture of how to maximize their refund opportunities. Nonetheless, consulting a tax lawyer, in this case, would be beneficial to ensure any cross-border implications are dealt with effectively.
Should litigation arise with research and development credits be relevant to the matter, Boast AI also provides other services. The research Boast AI conducts is audit protected. Thus, when you depend on their advice, they will have professionals ready to defend the analysis you have relied on to make tax decisions. Boast AI also provides users an interface to keep track of data relevant to audits (e.g., timesheets, payroll). Boast AI can use this information to prepare audit documents. Not only will this decrease time spent on an audit but, the preparation of documents can save business owners money as well. As a fail-safe, if one’s claim for credits is unsuccessful or pending litigation, Boast AI has an in-house team of tax experts ready to aid clients if tax disputes arise.
For tax complications beyond preparation and filings, Ontario-founded and based in Toronto, Blue J is an excellent resource. One would benefit most from Blue J when they anticipate tax litigation pursuant to the Income Tax Act, likely at the tax court of Canada. By entering some basic facts about their tax matter, users give the Blue J algorithm the necessary information to find related precedents. From there, the user can measure the effect of different facts to discern if intervention to change the likely outcome of litigation would be possible.
While the product may only be useful for a specific type of filer, the algorithm offers ample benefits to tax practitioners. Although a seasoned practitioner may be able to identify relevant cases and authorities with ease, the volume of cases Blue J applies to a client’s scenario quickly saves time. At a projected 4 times faster than a human at identifying precedents, Blue J is a way to save practitioners time and their clients both time and money. It is a better way of doing business for all involved.
Further, Blue J’s ability to synthesize and summarize the implications of different tax scenarios is highly valuable. This key feature explains how leading legal tests in the tax law field are interpreted and applied. Crucially, this feature of Blue J also quantifies the impact of different fact scenarios. This measurement can help litigators frame their arguments and provide lawyers the ability to notify clients and advisors of when situational changes may be prudent. Even if one prefers to conduct their own research, with a 90% accuracy rating, Blue J could act as a powerful verification tool for those not ready to cede the precedent search to AI just yet. Nonetheless, a tax law firm should always be hired to help a taxpayer evaluate case law interpretations.
While April 30th will inevitably come and go again, we hope these three legal-tech tools make you less apprehensive for next year. If not, at least it’s only June – for now, enjoy the sigh of relief and, hopefully, fewer tax issues in the year to come.