Narrow viewing point
If you are a tax expert, everything is a tax problem. If you are a doctor everything has a cause. If you are a lawyer, the rules of court prevail. We all see things from our particular and strongest viewing point.
Experts see things we don’t
But at the same time they focus too much on what they know. No lawyer is willing to say there is a perfect agreement. That assessment would be right, too. The problem is the viewing point sooner or later dominates common sense.
They sometimes don’t see things we do.
An example from my life
I once created a tax structure that was clearly punished by a provision in the act. After careful review with the client, we decided the tax consequences were less than the potential risk to do it in a more conventional way. The structure involved a foreign property that was rented net-net and so generated passive income. The corporation was untaxed in the somewhat unstable foreign jurisdiction and the client wanted to use all of the income to reduce the debt on the property. A tax in excess of 50% would have been payable in Canada if done conventionally.
What the expert saw.
A tax quality control reviewer in the firm was astounded. You can’t do it said he. I claimed, I think you meant we can do it if the penalty is paid. The penalty tax amounted to $12 annually. A fair price to pay to permit the extinguishment of the personally guaranteed debt in a third of the time
The conversation went to narrowness from there.
The tax act is imperfect. They make the rules and apply them, practitioners fit their plans to them. Tax people often see everything as a tax problem or a tax rule and ignore the other possibilities.
If I had a way to legally print $50 bills, a tax specialist would be likely to explain the tax consequences of doing so. In my view a useless concept, because I could print the money to pay.
Keep the big picture front and center
When organizing your financial affairs beware of rules that may apply only a little to your case. Get the general concept clear and then decide what the price will be to apply the options you have available. If the price is less than the benefit, carry on.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario.
In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. email@example.com 866-285-7772