What Do Income Tax Folios Mean To You?

tax folios and tax laws

As a Canadian tax payer you know that the ultimate responsibility of filing and paying your taxes rests entirely with you. Now for those with a very simple tax return this may not be that much of a challenge. Unfortunately there are many couples with families or those who also own small business, or are self employed who find their tax return obligation far from being simple.

The Canada tax law is a matter of interpretation. As an average citizen it is unlikely that many would be able to actually read the tax laws in their legal format and be able to understand or apply them. This is why there is such a great demand for tax lawyers and highly experienced accountants.

The CRA wants it to look as though the average tax payer can complete their taxes on their own accord and are not being forced into obtaining professional help. To assist with this they product all kinds of tax information through tax guides for the lay person. So, one would think that these should be accepted as tax problem solvers right?

Well, it doesn’t work out that way meaning that this tax payer information is all that is needed for one to be able to complete their tax returns and address their tax matters easily and hassle free.

To prove this point, in addition to this type of tax payer information the CRA used to create tax bulletins for the more advanced and knowledgeable to utilize if needed in handling a tax matter. These have now been replaced with what are becoming Folios, which are gradually replacing any previous tax bulletins.

The Folio S1-F2-C2: Tuition Tax Credit is an example of a Canada Tax Folio. The CRA has made it clear that income tax folios are designed to provide technical interpretations and positions the CRA has taken concerning a specific tax law.

So in this mentioned Folio it deals with Tuition Tax Credits. Now if you as the tax payer finds that this credit is applicable to you, then naturally you would assume that everything that is outlined in the taxpayers guide for this is all that you need to know in regards to this particular credit. So why in the world would there be a need for a folio that is only understandable by tax specialists. However, in the explanation of what folios are by the CRA it does mention that folios are technical in nature and are usually used by tax specialists AND other individuals who have an interest in tax matters. Well who would have more interest in tax matter outside of the tax payer himself?

It just comes back to what we have talked about before in that a lot of the tax information and tax correspondence we receive from the CRA is extremely complex and difficult to decipher.

This is one of the reasons why utilizing the services of a quality tax accountant is to your benefit. It really is evident that the average Canadian tax payer may have a need for professional help if they want to be sure they are remaining compliant with the tax laws, and to also ensure they are getting all of the tax breaks they are entitled to according to what the tax laws really say, and not just the way they are being interpreted.


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Sam Seidman, CPA, CA, LPA
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Toronto, Ontario
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