You can visit my home website at www.nilsonco.com/lectures_seminars.htm to see a list of courses I deliver through fyi seminars.

These courses are variously booked for delivery by different professional organizations.  You can see the current scheduled list of deliveries at www.nilsonco.com/events.htm.

If a seminar that you are particularly interested in is not being offered on the current calendar, you can consider booking it yourself for private delivery in a smaller group. The event can be hosted either here in our Board Room or in some other private location. The fee for the group will be $750 per half day and $1,500 per full day, and shared amongst the participants. This will provide an intimate PD environment where the small group can set their own appropriate pace and ask all the questions they wish. Full printed materials will be provided. Lunch will also be provided where the group can discuss matters of mutual interest.

If you cannot form a small group yourself, then you can make a blogpost here and indicate what course(s) you are interested in.

fyi seminars will contact you to coordinate and organize the event.

Webcasts can be delivered for interested parties outside of the Vancouver region.

Effect of CPP changes on those aged 60 to 69 who presently are collecting CPP Benefits and still working, as of January 1, 2012

Age 60 to 64:

Employees:

Employers will have to begin deducting CPP contributions from employment income and remit accordingly to CRA along with their matching contributions. This is mandatory for people in this age group.

Self-Employed:

Self-employed people will fill out Schedule 8 on their tax return commencing for the 2012 personal tax year to calculate the CPP due (both employer and employee portions) on their self-employed earnings. This is also mandatory.

Age 65 to 69:

Employees:

Making CPP contributions in this age group is optional; however, the default is to opt-in. In order to opt out of having to contribute, an employee must fill out form CPT30, give a copy to the employer and send a copy to CRA at the following address:

            Winnipeg Tax Centre

            Specialty Services Section

            66 Stapon Road

            Winnipeg MB R3C 3M2

If the employee continues to make contributions, the employer will have to continue with the matching contributions.

The election to opt out becomes effective the month following receipt of Form CPT30 by the employer.

Self-Employed:

Contributions for this group are optional as well, and will be calculated on Schedule 8, as above.  Schedule 8 will be used, starting with the 2012 tax return in the tax filing season of April 2013, to elect out. 

In All Cases:

These new contributions to CPP starting in 2012, made by people still working but already collecting CPP benefits under the “old system”, will go into a new Post-Retirement Benefit (PRB) fund.  After the first year of contributions under the “new system”, an extra, separate monthly benefit will be paid, as per a formula, which will be in addition to the amount presently received under the old system. Each extra year of such new contributions into the future similarly will result in an increase to the separate benefit paid out commencing in the year following.

Draft merger documents are hitting several provincial professional websites, so the clock is ticking on the reorganization of the profession. I have submitted my earlier Merger Paper to various of the organizations and also to the Press; however there has been no acknowledgment whatsoever. I have invested more time on the Web further researching the structures and conducts of our brethren professionals in other fields. I believe that this additional information only fans the flame more, in calling for a hiving apart into parallel regulatory and membership orgs. I have pasted this new material onto the previous blogpost. Please note what I see as flagrant conflict of interest when you read in my new table the accounting declarations vs those of the other professions.

As all of the designations are empowered by cross-country provincial statutes, I have concluded that the next step is to communicate this important issue to the legislators, which I have done here in BC.

If you agree with my need for “separation of church and state”, I ask you to communicate with your own provincial ministry accordingly… and do so soon….the snowball is rolling!

Finally, I think it may be necessary that there exists an off-site site (meaning one not attached to the Institute, Association and Society sites) for dialogue on any and all matters related to merger.

And so I call upon CANFPA members to weigh in as they see fit, in an independent and anonymous milieu.

And please…go ahead and rant if you must… but be civil about it.

If you can assist and save me some time… I need to know what Ministry and Department oversees each province’s jurisdiction over our profession.

 Please start by reading the following table:

(This list has been compiled based upon membership in the “Executive Directors and Registrars of Professional Organizations”. Given the structure of society here in Canada, some of the proper names listed above might have either “Canadian” or a “province name” before or after it to correctly describe the organization. Also, given our provincial orientation here in Canada, some of the provincial organizations may have slightly different naming in that particular jurisdiction. Lastly, I apologize to any organization that I over-looked in my research on this topic.) 

 Note that in every profession listed above, the left-hand column represents the regulatory body for that group. This body owns, controls and grants the mark, and monitors its members through some combination of code of ethics, mandatory professional development reporting, etc. Membership in good standing in this body is required to practice in that profession.

 Note that in every profession listed above, the right-hand column represents the separate and independent membership body. This body delivers membership services of professional development, practitioner assistance and, where needed, advocacy, etc. Membership in these organizations is voluntary, not mandatory, and thus it behooves those membership organizations to deliver value in order to promote membership and sustainability.

 The twinning of regulatory and member services organizations in each of these professions brings both and commonality and duality of goals. There are occasions where the two organizations see things differently, creating conflict within the profession. However, ultimately, this is good, as isometric tension and tensile strength are often a positive force in finding equilibriums in controversial aspects of practice.

 Now, please read the following table:

You will notice “N/A” in the right hand membership column. This is because each of the accounting organizations has been constructed since their inception to house regulatory and membership in one organization. As you can see, this structure is contrary to every one of our fellow professions.

I have researched further on the web to draw commentary from various relevant professional websites, to seek the kinds of language and mission statements declared by these professions:

It would seem fairly apparent that there is a disconnect between the fundamental structures of the accounting professions and the others.

You may have seen a TV ad a few years ago, in which the tag line is spoken by a teenage girl who exclaims “That is SO not the question”. Bi-partite or tri-partite merger, of course, has been formally on the agenda or at least on the radar screen forever in this country. While it indeed is very relevant, in my opinion, it is SO not the key question. It is fundamentally important in decision-making and problem-solving to get the question RIGHT. And that RIGHT question is to address what the tables above highlight. WHY is the accounting profession structured differently to every other professional organization structure?  Do professional members even realize it? (Most do not!) If they DO, and believe that is is right and all of the others are wrong, what is the basis for this authority of position? And if instead the answer is that their structures are right for their professions and the other is right for accounting, again, what is the authority of that position?

As a Committee Chair within the accounting profession, I had the occasion a year ago to be obliged to review an IFAC document on “Independence Standards” for Public Practice. This document itself was 94 pages long, and an ancillary document was another 58 pages long….all dealing with independence and conflict of interest. The document opines of representing “the best interests of society” and, further, says that “Members must strive for their observance of the Code, both personally and professionally, and individually and collectively” (my emphasis). It is time for the collective to face the issue. And yet, the accounting profession, which can produce 152 pages on this topic, cannot see that it itself is fundamentally in conflict of interest. The Member Services Departments, for instance, within the accounting profession cannot “serve members’ interests” and simultaneously defend the public and the integrity of the mark. Revisit the CICA and CGAC quotations above, which are drawn from their public website strategic documents. The CICA document quotes “(serving) members the way they want to be served”! Note how both the Engineer and Physician sites acknowledge a duty to the members, whilst clearly identifying subservience to the regulatory role… and each has a membership counterpart.

The Thought Leaders in this profession need to come forward now and contemplate this point. If we “get it” now, then we first must turn our minds to the restructuring… into the classic separation of “church and state”… of “regulatory and membership” before we address merger. This is indeed a big task. However, it is NOT threatening, except to the extent that it represents change, which we humanly resist. All of the functions that are currently served likely still need to be done-they just need to be divided. All of the salaried people on the various provincial and national associations, institutes and societies likely still will have a job.

 All three of our organizations have wallowed a bit in the diffuse pursuits of our members – public practitioners, industry members, educators, government and not-for-profit employees, etc. At the practitioner level, there is also the omnipresent issue of Big Four (Six, Eight… whatever it was historically) dominance in public practice. Perhaps, in morphing to a dual structure, we will finally find out that each of these constituencies of our membership needs its own strong and viable advocacy organ. In other words, maybe we have a National Industry org… and a National Practitioners org, etc, all answerable to a regulatory body that owns and controls the mark(s). Visit the site of the Engineering Institute of Canada to see how all of the different kinds of engineers work separately and together.

If the speedway to merger precludes addressing this critical and fundamental issue now, then the profession ought to promise to bear witness to it after the marriage and during the honeymoon. However, I personally believe that there is no valid call to hit the speedway. Feverish, shotgun marriages have a low success rate. There should be an immediate cooling off and regrouping, to dig deeper into a re-organization, which will build a much stronger structure and, I believe, more happy and successful professional accountants.  

 I firmly believe that this is right. And I hope that the government regulators across the country and accounting professionals can have the insight and courage to see that the profession will be stronger, and ultimately serve the public better, in this re-write of the structure.

 January 29, 2012

You might find interesting reading in this survey report conducted by U.S. Trust with High Net Worth and Ultra High Net Worth individuals.

 http://www.ustrust.com/ust/Pages/Insights-on-Wealth-and-Worth.aspx

Financial planning certification gained profile when the international mark “CFP” came to Canada from the U.S. in the late Nineties. Prior to that, the Canadian turf for financial planning was occupied by the Canadian Association of Financial Planners, who later joined forces with the insurance industry, leaving the legacy “RFP” designation held by a few planners.

As a result, the financial planning profession includes the FPSC which owns and grants the CFP mark. Unlike our accounting profession, FPSC is not a members’ org. Its job is to grant and control the mark and contribute to building the financial planning industry through regulatory lobbying and marketing to the Canadian public. Again, unlike our accounting profession, there then are various “members’ orgs” which compete to gather voluntary membership and attempt to deliver value-added to practitioners. Notably, this includes the Canadian Institute of Financial Planners (CIFPs) and the insurance industry org “Advocis“ - the Financial Advisors Association of Canada.

I have served on the national boards of both FPSC and CIFPs.

In our own practice, we sort of self-invented financial planning way back in the early Eighties, before the field had much official recognition. We developed an add-on programme which we delivered to our personal tax clientele. It was based upon an extensive checklist of financial planning possibilities. We would phone each of our personal tax clients out of “tax season” and initiate these financial planning conversations. This was very  well received, and not all that common then (maybe not even now!) It contributed to significant growth in our personal tax practice.

We embraced the CFP when it came to Canada, and presently 4 of us in the practice hold the mark.

If you are not familiar, since inception, FPSC has permitted a “fast track” for professional accountants to pursue the CFP designation. Overall, there hasn’t been a significant take-up of this opportunity, and some who do so ultimately decide to surrender the mark later. That said, when I speak at national financial planning conferences, there is always a loyal group of practitioners who attend and participate.

All of this background is intended as a seque to the questions: Should practitioners embrace financial planning?  How will they benefit? How will their clients benefit? How will practitioners deliver financial planning? “Six step” full-on financial planning engagements? So-called “modular” financial planning to address the relevant issues that crop up across the life cycle? Estate planning?

In our firm, we attempt to deliver all of the above. This is frought with some difficulties…. most notably in the issue of fee collection for producing full Six Step financial plans, which run from $2,000 up. Many “competitors” in Six-Step planning come from different spaces in the financial services industry – the money management side or the insurance side. The financial compensation there often permits those participants to deliver the financial planning component at loss-leader pricing… in the extreme for free!

So, my point of this blog post is to open dialogue on the matter of delivering financial planning, since accounting practitioners have a ready market in their tax practices. If successfully integrated, it delivers new “out-of-season” revenue streams to the practitioner, brings significant (and unbiased) value-added to the client and deepens the relationship between both parties. Last-but-not-least, it moves the practitioner into open space beyond the commoditized tax preparation business.     

So… who is making this work? How are they doing so?

The migration several years ago to “TONI” caused the division of T1 tax credits into a multiplication of federal plus 10 provinces worth of credits. In the intervening years, all of those legislators have enacted new credits as they deemed appropriate for social and/or political reasons. 

Thus, the “tax break” on any particular credit “depends” – depends upon whether there are one or two credits attached to it. As tax advisors, we have to remain cognizant in advising our clients as to what the “tax break” is for a particular incentive. Even the “pension credit” analysis gets silly! the feds and provinces give credit on $1,000, while the feds give further credit on a second $1,000… so how do you tidily explain to your client what the tax break is? Or do you even bother trying?

Also, TONI has allowed the various legislators to go their own ways on the size of the credits that they choose to share. And the COLA adjustment varies to those credits as well as to the mtr brackets. Before TONI, we had  a period when we only had three tax brackets. How delightfully simple to explain and tax plan through! Now there are typically 7-8 brackets in any given province… and the overlap of federal and provincial law often creates a bracket that is only a few hundred dollars wide!

So the point is…. what is the value to society of the manifest destiny of each provincial Finance Department to micro-control these matters?

The Fitness Credit was added a few years ago at the federal level. I don’t if any provinces have picked it up as well. Thus, the resulting tax break amounts to a maximum of $75.  While the spirit of this measure is admirable to the extent it aspires to getting the couch-potato, video-gamer generation up and active, the practical matter is that the value of this credit is way too small at $75. By the time resources are expended a) in the creation of the tax receipts b) in the retaining and organizing the receipts by the taxpayer c) in the cost of processing the receipts by taxpreparers and d)  in the cost of processing/spot auditing the receipts by CRA, the $75 incentive is largely negated.

The investment by Finance in this “tax expenditure” will have a large payback, if successful, by mitigating downstream health costs of the next generation; therefore, today’s “investment” needs to be more substantial, and less “optical”.

The “floor” calculation for medical expense claims – 3% of net income, etc – has long been in place in our law. Also, taxpayers only receive the lowest mtr on whatever expense amount exceeds the floor. We are all well aware that our societal burgeoning health costs are causing governments to push down more and more health costs to the taxpayer. I think it is time that the “floor” calculation be withdrawn, thus allowing every dollar of health costs incurred to receive some tax advantage.

We are big fans of soliciting feedback from our clients. We do this annually each May… on a quadrennial cycle of four different aspects of our practice – corporate, personal, investment and communications. We have been doing this for 20+ years. Historically, we have prepared a paper-based survey and attached it to the delivery of our T1 preparation invoices, and encouraged people to return it along with the payment for said services. This keeps it easy and not burdensome. Nowadays, survey processes need to contemplate Constant Contact, Survey Monkey or blog polls  to do this. We aggregate the feedback and compare it to previous cycle results for trends. I honestly can say that the feedback over the years has directed our corporate efforts. Good results say that we’re doing fine… mixed results highlight things that need “fixin’”. We literally have seen the improvement from one survey cycle to the next of things we have changed in response to previous critique! We “pay” for the information by sending $x per response to some charity. We also publish the results to our clients through our communications media. 

As we are in T1 season, you might want to implement a survey right now to get some feedback for next year. Here is what ours looks like. Feel free to make yours even better! 

Question #11 is key. The answer to that question is the BOTTOM LINE of everything we do! (It may even open the door to raising rates!)

“Dear Client

We are conducting a survey of our professional practice in the area of personal tax services.  We would appreciate your taking the time to complete the survey and return it with your bill payment.  We thank you in advance for your assistance in helping us to serve you better.  A charitable donation will be made for every survey completed to Opportunity International, which provides micro financing to Third World entrepreneurs.

Other comments?”