You and Your Money.
What they don’t teach you in music school!
For the Hamilton Musicians’ Guild, November 2017
Dear colleagues and fellow musicians;
Well, we have received our first snowfall today and by time this article goes to press there will be about six weeks left in the tax year. Now before you skip this article I would like to take the opportunity to share with you some experiences and observations over the past few months from helping musicians with their tax returns and personal cash management.
I am both surprised and alarmed at how anxious and fearful some of our members get when the conversation of personal finances and income taxes comes up. I do want to say at the outset that:
The CRA is not your friend but the folks at the CRA are also not your enemy!
We need to remember this very well. We live in a wonderful country with so many benefits and freedoms that are taken for granted and not available in many areas of the world. We have neighbours in our area who can’t believe that they don’t have to lock their doors right away as soon as they get home because they come from areas where they had bars on the windows and people live inside their houses and are afraid to venture outside. We have so many benefits here because we have a stable government and we fund that government through the payment of taxes. Our roads, schools, universities, medical plans, and pension plans and with tomorrow being Remembrance Day – our armed services and security services – are all funded by the taxes we contribute as working people. Your payment of taxes is simply a financial component of your civic pride and duty.
Just keep some basic records – simple straightforward records of your earnings and your expenses and if you make more than $30,000 a year as business income, then track your HST. If you find this to be onerous, just remember that the HST never belongs to you and make sure that your bank account does not below fall below the level of HST that you expect to have to pay to the government. You are just a temporary custodian of this money.
I have also had a significant amount of experience just in the last year where individuals have taken their files to have their tax returns prepared by people who are not accountants. I suggest that, if required, you find a local accountant who charges fees according to the amount of work required. A simple tax return shouldn’t cost very much but at least you know that it will be done properly and that your information will be secured. A good accountant will also warranty his/her work. Avoid anyone who raises their fee according to the amount of refund that your completed return indicates that you are to receive. From my perspective this is simply unethical behaviour, but I find it to be a frequent practice. In my opinion the fee for providing you with a tax return should be the same if the same effort provided you with a refund of $500 or a refund of $5,000. Your tax preparer should also provide you with a full copy of your tax return should you need to reference it at a future date. Some well-known tax preparers do not provide you with this feedback thereby ensuring that you are forced to always rely on them for information.
Over my career I have learned that a little money paid to accountants and lawyers up front can save you many hours of frustration and wasted time and effort that could have been avoided in the first place. Pay for professional advice and take it. On this note the Board of Hamilton Musicians’ Guild is considering offering a session in the new year to help members broaden their knowledge of personal financial management and financial planning to help them alleviate their fears and concerns in these areas and to help them be financially more successful over the years ahead. I hope that you will take advantage of this and benefit from the experience.
Although it is a bit early yet, I would like to extend my best wishes to you and your families for the upcoming holiday season and in the New Year.
Any comments or viewpoints expressed in this article are those of Kevin Mann Accounting. Copyright Kevin Mann Accounting, 2017.