Beurocracy 101 and Compliance 101

Many years ago I went to a tractor pull. I’m not a huge fan but wanted to see what the noise was all about, and noisy it was! The dirt was flying and the fumes were fuming. For me, however, the real interesting part was the mechanism that the tractors pulled. For every yard the tractor pulled, the weight was shifted closer to the tractor (multiplying the effective resistance/friction). Finally the multiplication factor made it virtually impossible for the tractor to drag the weight. Even with the most powerful of tractors the gears and shifting burden will eventually make it impossible to continue.

Canada Revenue Agency is designed the same way. The primary goal of the agency is not to administer the income tax act justly and fairly but to manage the population of the country in such a way as to collect taxes from virtually everyone with the relative same degree of intensity. The more aggressive the citizen is in reducing taxes (apart from the norm) the more incremental burdening obstacles CRA shifts to the tax payer. It’s the “policies”, forms, requests and explanations that slowly weight down the citizen or actually it’s the accountant that gets weighted down.

Accounting firms constantly evaluate their clients compliance, punctuality and financial stability (including whether they pay their accounting fees or not). The clients compliance and punctuality are critical to the level of risk a firm is able or willing to absorb. For instance we rate each of our clients about twice a year for compliance to subsistence. If they fall short they are either encouraged to higher compliance or (eventually) we find them another accountant.
Using subsistence allowance is not for the slackers. The immense savings it provides comes with a cost, compliance. A word to accountants, if its used by your clients make sure they do it right, the last thing this opportunity needs is a rejection because of “non-compliance”. On the road the word would be the “entire opportunity” failed and the industry would battle disinformation for years.

Working within the CRA system requires clear definitions to avoid a continual tsunami of weight/restrictions.