The Grumpy Accountant – Book Review and Giveaway

The Grumpy Accountant – Book Review and Giveaway

Ya, I’ve met a few accountants in my day and they can be grumpy.

Yet contrary to the jaded façade that Neal Winokur wants you to believe, he’s not really that grumpy.

In fact, he’s quite pleasant and very bright.

He’s just exasperated like I am, like many of you are probably, with our unnecessarily complex tax act and system.

From Neal’s book, The Grumpy Accountant:

“I have seen how honest, hard-working people get ensnared in the maze of an uncompassionate and faceless bureaucracy. Canadians spend approximately $7 billion every year to file their individual income tax returns, averaging $501 per household.”

I mean, that’s a staggering number unto itself. Let alone the colossal financial waste that goes into maintaining such a beast at multiple government levels.

I could go on this, but I’ll let Neal do all the talking. I mean, he wrote a book all about it. A tale in The Grumpy Accountant to propose ideas how to streamline our tax system once and for all.

Neal, welcome to the site and happy to interview you and understand your book better: The Grumpy Accountant.

Great to be here Mark and I admire your site. You’ve written so much great content over the years to help Canadians, not to mention, support your own journey! I hope you keep it up!

That’s the plan Neal, I enjoy running the site and it’s a nice hobby for me.

OK, now to you. Can you tell readers a bit about yourself? What you currently work at and what your qualifications are for slashing our tax system?

Sure thing Mark.

I wrote this book based on my own experience as a tax accountant over the past 10 years. The past 7 years I have had my own practice. As my practice has grown, so has my grumpiness!

I have filed hundreds of tax returns for individuals, self-employed, and small business owners each year. Although I don’t consider myself an advanced specialist that knows every word of the Income Tax Act, what I do know is how the system generally works and how people are suffering under it. That is what I see every day in my role. Just the other day, for example, I was trying to change the address for a client and the service is down for maintenance. It has been two weeks that I have been trying to do a simple thing – change an address! I advised the client to call the CRA but he cannot get through on the phone. I have experienced frustrations like these daily, for years. The book is based on my experience and that is where my credibility comes from. I have had years of experience and realized that there are much simpler ways we can do things.  

When it comes to taxation – heck ya. I try not to complain about it too much on my site but I think navigating our tax system is an absolute nightmare, and I only understand the basics unlike yourself. So, I assume the grumpiness inspired the book?

Yes, it did.

As a tax accountant I am able to help a few hundred people or so each year, but I felt by writing this book I could help millions of Canadians. In my job I see how frustrating and complicated the system is (to your point Mark) and how it even affects people with modest incomes. The current Canadian tax filing system causes much unneeded suffering. I realized that instead of assisting only a few hundred complete their tax filings each year, I could share my tips and a vision that could change the system so that it is simplified for everyone.  

One of the worst tax nightmare stories that I experienced that really inspired me to finally write the book was when I was working with two women who owned a small business. They had a corporation for their small business and paid themselves $30,000 per year. They were unaware that they had to give themselves a T4 slip and their corporation had to deduct CPP and income tax from their own pay as the owners. They showed it as self-employment income on their tax returns and the corporation showed it as consulting expenses. Well, the CRA audited them and made them go back for two years and redo all their tax returns, issue T4 slips and make the corporation pay the payroll tax that had already been paid from their personal tax returns. So, all the tax and CPP was paid! They just happened to follow the wrong bureaucratic procedure. 

It was that story that really pushed me over the grumpiness edge. I could not believe that the CRA made these hard-working small business owners go back for two years and redo their tax filings. It actually took about two years to sort out because the corporation could not pay any additional payroll tax because it was already paid on the personal side. They had to wait to receive the personal tax refunds, deposit the money into the corporation, then pay the payroll tax. It was a bureaucratic nightmare. In the end, the CRA collected no additional money. It was all a waste of time for nothing. I thought, can’t we just make it simple. If we combined the corporate filing with the personal filing this could all be avoided. 

Well said, so on that note Neal – I’ve started the incorporation process myself. I’m not intending to pay myself a salary (nor dividends) from the corporation at this time since I still have a full-time job that I enjoy. What advice do you have for me? I’d be curious if I still have to pay myself a salary (I certainly don’t think I do!)

You’re right Mark, you don’t. And I think you’re wise to incorporate if your blog or other business ventures are making some money and increasing your personal taxable income.

Without knowing all the details on your corporation, but assuming it’s a transfer from your small home-based business to a corporate structure for tax purposes (Mark – it is); and assuming you don’t need the income from the corporation right now, then the ideal would be to leave as much profit as humanly possible within your small business corporation. If you already have a full-time income that shows up on your personal tax return, then you are likely in a decent personal tax bracket. By leaving profit in your corporation, you will save a lot of tax over time. The corporate income tax rate on “active business income” for the first $500,000 of profit is only 12.2%, which is the combined federal + Ontario rate for 2020. This is extremely low when compared to the high rates of personal income tax. So as long as you don’t require the funds within your corporation for personal use, leave them in the corporation, pay the low corporate tax, and invest the after-tax profit. Keep in mind, as soon as you withdraw the funds for personal use, you will have to report that as a salary and/or dividend to yourself and you will pay the high rates of personal tax at that time. Rule of thumb: if you don’t need the money, leave it in the corporation!

Exactly my plan Neal.

So Neal, I feel soooo many Canadians get this wrong….I’ve written about this on my site many times, why are CRA tax refunds not desired?

In plain language for people that haven’t gotten the message yet – what does that really mean if you get a fat tax refund?

By the way Mark, that post you did with Robin was excellent and you’re both spot-on.

I’ll be more blunt since you were too kind in that post Mark: if you are receiving a big fat juicy mouth-watering tax refund each year, it means that you are a sucker!

You are loaning the government money and not charging them interest on the loan. I hope you never start a bank because if you lend money without charging interest, you won’t last very long.

A big juicy tax refund indicates way too much tax is being deducted from your pay cheque and then the government is returning it to you each year in one lump sum. There are ways of requesting less tax to be deducted from your cheque if you are in this situation every year. 

The tax refund is probably the greatest evil genius that the government came up with. It makes people look forward to filing their tax returns! The majority of Canadians receive tax refunds. The federal government refunded approximately $32 billion of income tax in the 2018 tax year!  Sadly, it’s the minority of tax filers – those who are self-employed and owners of businesses that are responsible for physically paying all the tax to the government. They feel the pain of actually physically paying tax whereas employees, who have tax deducted from their cheque don’t really see it or realize it. In fact, it’s the opposite, because they receive nice juicy tax refunds. So we have a two-tiered tax system. Those who physically are responsible for making tax payments and those who get nice juicy refunds. 

Just wow and really makes you think Neal.

Last but not least, since your tale in The Grumpy Accountant covers a lot of ground, what key takeaways (maybe 3 or 4 below) would you say most Canadians should really be mindful of when it comes to our tax system, CRA scams, death and taxes and more?

For sure Mark, the book with Jerry (a fictional character representing the average Canadian with our inefficient tax system) and his grumpy accountant, George, covers many subjects.

If I was to distill key tips and tricks down to a few essentials for Canadians that would be the following:

1. Use technology! CRA My Account online, CRA My Business Account online, and scan in your receipts throughout the year so you’re ready to go at tax time. The CRA’s online system, although not perfect, are a lot better than using their telephone systems and waiting on hold forever! So, make use of the technology that’s already out there. In “My Account” you can access your notice of assessments for the past 10 years, see your account balance, your TFSA+RRSP contribution room, and a LOT more.
2. Use your registered investment accounts! If you are not maxing out your TFSA each year, if you aren’t contributing to your RRSP, or RESP for a child, it’s never to late to start. Small amounts do add up over time due to compounding. If you have cash or investments that are not in a registered account (TFSA, RRSP, RESP), then consider investing within these registered accounts first to save the tax on the investment income.
3. Anyone who is self-employed MUST ABSOLUTELY speak to a tax advisor before going on the adventure of self-employment. There are so many ways to make mistakes and forget things. There is a HUGE burden of compliance placed on those who are self-employed. It can be very frustrating and costly. My # 1 tip: SET ASIDE ALL GST/HST you collect and a certain percentage of your revenue so you will be able to pay your GST/HST and income tax when the time comes. I’ve seen so many people fail to do this and it causes huge problems. I know it’s difficult but it’s a must. That is until we put enough pressure on our politicians to change these archaic laws to make the system simpler!

(Mark – further reading, why I believe managing the RRSP-generated refund is the linchpin in any TFSA investing debate.)

Great stuff Neal and it was a pleasure to have you on the site.

As always, when I review the book and talk to the author, I have a copy to giveaway! 

Check out those giveaways details below, enter to win and enjoy a copy of The Grumpy Accountant with thanks for Neal Winokur. Neal will continue to lurk my site but he’ll also subscribe to comments below in case you have a question about the book or anything tax-wise in general terms. Neal can reply and provide any follow-up resources as best he can.

Neal Winokur, CPA, started his practice in 2013 and his grumpiness has grown ever since. An active blogger, several of his articles have been published in the National Post. Neal feels a moral obligation to speak out against the inherent flaws, unfairness and needless complexities that define Canadian tax. His dream is for the Canadian tax system to be massively simplified to the point where his job as a tax accountant would no longer exist. His wife won’t be too happy about this, but it’s for the good of the nation. Ha, we can only hope 🙂

You can find Neal online here.

Thanks for reading everyone, and go get a copy of the book to improve your tax acumen.

I’ll email the winner of this giveaway early in the New Year at the start of tax year. I’ll have more giveaways, interviews with experts next year of course, much more free stuff as always. 

Mark

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