Tax technology changes landscape for SMPs

The rapid acceleration of technology is putting significantly faster and better resources in front of small and medium tax practitioners (SMPs) and their clients.

“Many tasks that were once difficult and tedious to perform can now be completed within minutes,” says Jay Goodis, CPA, CA, co-founder and chief executive of Tax Templates Inc. in Vaughan, Ontario.

“For example, if we look at common calculations, such as for GST/HST returns, they are easy to complete using cloud-based accounting platforms,” notes Goodis, who stresses the importance of getting tax matters correct.

More reliable data can translate into better decisions about everything from cash flows to tax-planning strategies.

“I think that’s the real win when it comes to technology,” Goodis says.

Ben Alarie is chief executive of Blue J Legal of Toronto, whose software provides predictive analytics to SMPs by analyzing court decisions in complex cases involving tax law.

“It’s feeding off a database of results to get very high-quality projections of how judges would resolve those cases,” explains Alarie, who is also the Osler Chair in Business Law at the University of Toronto.

For instance, the software could be used to analyze various factors to provide a confidence rating on whether a person is an independent contractor or an employee for tax purposes.

“Practitioners can tap into that expertise in a way that’s super valuable for them,” Alarie adds. “Their clients are ultimately the beneficiaries.”

“The tools and information that we have available today are absolutely amazing,” says Jason Kingston, a principal with DSK LLP in Kitchener.

“When I started in ’99, you basically had the Income Tax Act on a folio. You might also have had some government documents and maybe some court cases, if you were lucky,” he adds.

Conducting research is also much quicker and easier today, as a result of the Internet. Practitioners can find what they are looking for with rapid precision. That also makes it easier to generate reports, Kingston says.

Gabriel Baron, a tax partner with EY’s Private Mid-Market Practice in Toronto, says an increasing number of his firm’s clients, including small and medium enterprises (SMEs) are migrating their internal accounting platforms to the cloud, enabling seamless access to, and sharing of, internal tax reporting data with their external advisors.

“Much of what we do as advisors is driven by knowledge and data about our clients,” Baron says. “Having that seamless access allows us to more efficiently and more quickly get the data we need.”

He also notes that electronic access to Canada Revenue Agency has evolved, enabling SMEs and the practitioners serving them to access documents such as corporate income tax returns and regulatory tax compliance data online.

“It’s very easy to check on the status of compliance,” Baron notes. “And we can now have instant confirmation of transmission.”

“This is an opportunity for us as advisors to recognize and say, ‘Let technology alter the functions as we know [them],’ so we can focus our time on more value-added advice, as opposed to more routine or repetitive data functions,” Baron adds. Moreover, tax packages are becoming increasingly sophisticated tools to assist businesses make key operational decisions.

“The software packages have definitely improved as far as having help diagnostics and other warnings,” says Kingston.

“The diagnostics are not just limited to things like efile errors or processing errors. They will say things like, ‘Non-refundable tax credits exceed taxable income. Consider reducing RRSP contributions.’ So they throw out little planning tidbits, if you will, that draw our attention to things like that,” he elaborates.

This reliance on technology is not without its challenges, however. Today’s sophisticated tax packages can sometimes blur the line between the do-it-yourself work that SME practitioners or their staff may be capable of handling, compared to the more complex tax work that has traditionally been completed by professional accountants.

“At the end of the day, we still need to have the managers, seniors and designated accountants who understand tax because software can’t replace knowledge, experience and wisdom,” stresses Kingston.

“Tax is still an incredibly complex monster.”

Baron recommends taking a custom approach to selecting a software package or application.

“There’s no cookie-cutter approach that works for everyone,” Baron says. “It’s very easy to say, ‘Let’s go buy some technology.’ But the danger is, ‘Have you appropriately assessed your business needs before investing in that technology?’”

Pros and cons of tax software


  • speedy access to data — reduced administrative tasks
  • tax-planning prompts


  • may lead some people to believe they are more qualified or capable than they are
  • sheer volume of data collection can overburden companies and/or advisors