About Heather | About CTF |
Hello to all CTF members—
Happy New Year!
The change of year is often a time for reflection. I have been thinking about all of the profound, ongoing changes that have affected tax advisers and their clients over the last few years.
Some of these changes are technical in nature—for example, the myriad private corporation amendments, enhanced transparency and reporting requirements, US tax reform, BEPS, and digital tax proposals. Other changes are redefining the way that tax practitioners operate—for example, automation, artificial intelligence, greater collaboration and enforcement activity among tax authorities, cloud-based solutions, and disruptive new entrants into the professional services market. Many organizations, including the Foundation, have devoted considerable time to advancing the understanding of these matters. Change can be challenging, but it is also a familiar factor that makes the practice of tax dynamic and engaging.
It strikes me that there is one area affected by all of this change that may require more attention. Last year, I participated in several interesting forums and had many conversations with colleagues, in Canada and elsewhere, in which the central theme was practice management and professional responsibility for tax practitioners. In this regard, there seems to be a lively debate (not just within Canada, but across many jurisdictions) about whether the familiar rules of professional conduct are sufficiently robust to address emerging issues or whether an updated approach is required. Consensus on this point is not yet apparent.
With respect to practice management and professional responsibility, there are, of course, important shades of difference among professions (an obvious example being the duty owed by an auditor as opposed to the duty owed by legal counsel) and among countries, but it is also true that many common concerns have emerged—perhaps unsurprisingly, given the globalization of business and the increasingly coordinated multilateral activity by governments. Some intriguing questions centred on these issues include the following:
In an era of increasing global transparency and tax-reporting obligations, how can an adviser best protect a client from the unauthorized use or unintended disclosure of sensitive information, particularly in jurisdictions where corruption may be a concern?
- In the context of private clients, there seems to be a particularly lively discussion regarding the right to privacy—a concept that is distinct from those of confidentiality, privilege, and secrecy. Is there such a right, and, if so, how does it harmoniously co-exist with robust tax compliance? Are there mechanisms that should be put in place to provide greater assurance in this regard?
- Many view tax professionals as having a dual role—they are “gatekeepers,” “guardians,” or “trustees” of the tax system, helping to maintain its integrity by ensuring client compliance, but they are also advocates for their clients, protecting the latter’s interests against inappropriate actions by the state. How should the inherent tension between these roles be resolved, particularly as the line between acceptable and unacceptable tax avoidance becomes increasingly blurred and as legislative complexity increases, along with uncertainty in planning and filing positions? This problem is further exacerbated when an adviser is dealing with multiple jurisdictions that have varying standards and expectations.
- Another intriguing question concerns the future role of the tax professional in the face of dramatic advances in automation and artificial intelligence. With the growing dependence on automation to perform many traditional tasks (starting with basic tax compliance and document review), are the education and on-the-job training of younger professionals evolving at the pace necessary to position them for success? Owing to these technological advances, established professionals also face new challenges in their roles as mentors and leaders; many of these challenges are external, related to the evolving expectations of clients and other stakeholders. I was struck by a recent (non-tax) case in Ontario in which a lawyer in a successful proceeding was denied certain costs because he had employed a junior colleague to undertake research instead of having used the (presumably less expensive) alternative of a digital research tool.
It is incumbent on the tax community to raise these issues and debate the path forward. I am confident that solutions exist, and I am encouraged by the ongoing dialogue within the various professional disciplines. I look forward to supporting further discussion here at the Foundation.
Finally, I hope that you have had a chance to try out the new TaxFind. Starting on January 29, in a number of 30-minute webinars offered in both English and French, we will be offering you the opportunity to learn more about the platform’s key features and to get answers to any questions that you may have. For more information, or to register, click here.
See you next month.
Heather L. Evans,
Executive Director and CEO