Give your accountant a hug — you may not find another one

Kim Moody: Incomprehensible new tax legislation combined with fewer accountants may crash in a horrible wreck

There’s a shortage of accountants. That’s not news if you’re an accountant like me. I’ve been recruiting and hiring accountants for almost 30 years and there’s been many ups and downs throughout that time. However, we’re now in a tough part of a challenging cycle.

The number of graduating accounting students in North America is down overall. There’s been no shortage of articles and studies to confirm that simple fact. But why? Well, it appears the ancient profession is not all that appealing to many youngsters today. Some of the factors that often appear as issues when dealing with recruiting youngsters into the profession are:

Financial Post
THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY

Subscribe now to read the latest news in your city and across Canada.

  • Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, Victoria Wells and others.
  • Daily content from Financial Times, the world's leading global business publication.
  • Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
  • National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
  • Daily puzzles, including the New York Times Crossword.
SUBSCRIBE TO UNLOCK MORE ARTICLES

Subscribe now to read the latest news in your city and across Canada.

  • Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, Victoria Wells and others.
  • Daily content from Financial Times, the world's leading global business publication.
  • Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
  • National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
  • Daily puzzles, including the New York Times Crossword.
REGISTER / SIGN IN TO UNLOCK MORE ARTICLES

Create an account or sign in to continue with your reading experience.

  • Access articles from across Canada with one account.
  • Share your thoughts and join the conversation in the comments.
  • Enjoy additional articles per month.
  • Get email updates from your favourite authors.

Sign In or Create an Account

or
View more offers
If you are a Home delivery print subscriber, unlimited online access is included in your subscription. Activate your Online Access Now

  • The profession, especially in public practice, demands long hours and is often perceived as a grind.
  • Accounting is often considered boring.
  • The pay, especially at the start, is not as high as some other areas in commerce/management such as finance, marketing, technology, etc.
  • Some of the work can be particularly mundane (think auditing).
  • The cost of obtaining the education is perceived to be high compared to the eventual return.

There are elements of truth in many of the issues above, but it’s fair to say that, overall, the accounting profession is a challenging and rewarding career. I’d certainly recommend it — and do — to many youngsters. Is it easy? Nope. As most know, the road to success is filled with challenges.

In Canada, accountants dominate the practice of taxation, especially in the area of tax filings. Frankly, if there were no accountants (yes, an exaggeration), the entire tax filing system and the vast majority of the tax advisory availability would collapse. Canada — like many other countries — relies heavily on accountants to ensure its tax administration systems work.

Top Stories
Top Stories

Get the latest headlines, breaking news and columns.

By signing up you consent to receive the above newsletter from Postmedia Network Inc.

Canada over the past few years has released a host of incomprehensible new tax legislation. Recent examples include the split income rules, restrictions on the use of the small business deduction, massively complex restrictions on the ability to deduct interest and a host of changes to taxing foreign sourced income.

In addition, there have been several significant reporting changes, including expanded reporting for foreign income verification (via form T1135) and ownership of foreign affiliates (via form T1134), and, most recently, the pervasive and dense mandatory disclosure rules.

In addition, the new trust reporting rules are complex, dense and require tax preparers to assess various legal relationships (which many accountants are not wholly trained to do) to determine if reporting is required. The ridiculous new Underused Housing Tax Act also requires tax preparers to assess various legal relationships and file returns that can be complex to prepare.

With many of the new filing requirements, the penalties on taxpayers are very high for foot faults and other forms of non-compliance. In the case of the mandatory disclosure rules, such penalties could be financially ruinous for tax professionals who do not diligently comply.

The above does not even include some very silly new tax legislation such as changes to the taxation of short-term rentals and the duplicative and unnecessary anti-flipping tax for residential properties.

It’s left to the tax specialist community to interpret all the above rules and assist the general accounting, legal and taxpayer community to apply such legislation. But it’s generally left to the accounting community to help taxpayers comply with all the new reporting requirements.

In my view, the system is very close to a tipping point of massive non-compliance in a number of areas of tax law. Put simply, if taxpayers and their advisers (and even tax specialists) have a hard time understanding new legislation, it can and will lead to non-compliance. The system then breaks down.

Combine the challenges of finding new talent to enter the accounting profession, interpreting massive new and complex legislation and reporting requirements, and the increased attrition (because of older accountants retiring and some outright leaving the profession because of the above issues) and there is a significant shortage of accountants that may leave some people having trouble finding one when needed.

Where does all of this leave us? The taxpayer community, particularly the business community, can ill afford to have long-term problems trying to adhere to complex tax legislation by not having available talent to help comply or properly plan.

Many in the tax community, including me, believe a comprehensive tax review and reform is long overdue. A key objective of this should be to simplify many aspects of our taxation system (to encourage compliance) and increase the number of qualified tax advisers who are able to advise on taxation matters without increasing their financial risk to being such advisers.

Otherwise, I’m concerned that this slow-moving train of incomprehensible new tax legislation combined with a decline in the number of accountants will eventually crash in a horrible wreck. Obviously, this would not be good for Canada.

In the meantime, the accounting profession has work to do to bring back the allure to prospective students. It’s a great career.

If you work with a good accountant, give them a hug this tax season. They’re valuable, important and dealing with very difficult issues. And it may be tough for you to find a replacement.

Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is www.linkedin.com/in/kimmoody.


If you liked this story, sign up for more in the FP Investor newsletter.