What Is a Tax Lawyer? When Do You Need a Tax Lawyer?
Many people including business owners have no idea of what tax lawyers do. Shea Nerland has ten lawyers and consultants in its Tax & Estate Planning group, so there must be a reason we exist!
I am often asked, “What is a tax lawyer? How do I know when I need a tax lawyer?”
The obvious example of when you likely need a tax lawyer is a dispute with the Canada Revenue Agency (CRA) or another tax authority. But there are many other situations where retaining a tax lawyer can be extremely valuable. The following are just some examples:
- Setting up an initial structure for a business, or restructuring as a business matures.
- Selling a business, or better still preparing for a future sale of a business. (See our blog on Saving Capital Gains Tax on the Sale of a Business)
- Split-up or succession of a business, or transferring shares of a company to other shareholders.
- Any transaction that has a cross-border or international aspect.
- Leaving Canada permanently, or immigrating to Canada.
- Anything that involves a US citizen. (We have published numerous blogs on such topics.)
- Death, especially where a person’s estate owns shares of a private company.
- Divorce, especially where the matrimonial property includes shares of a private company.
Our goal in any situation is to structure your affairs to pay the optimal amount of tax while minimizing the risk of a CRA audit or reassessment.
What is the difference between an accountant and a tax lawyer?
A question I am often asked is this: how do I know whether I need a tax lawyer or an accountant? What is the difference? In the area of tax planning, there is some overlap, and much depends on the expertise of the individual professional as opposed to whether the person is a lawyer or an accountant.
Indeed, many tax lawyers have an accounting background. I can offer a few guidelines, however.
Generally, a tax lawyer would not prepare tax returns and an accountant would not draft legal documents for implementing tax plans or go to court for tax disputes. But, the knowledge component regarding tax may be similar. That said, it is ideal if your accountant and tax lawyer work together on any transaction that involves a tax planning component. This would generally be any major transaction.
Invitation for Discussion:
It is worthwhile to have a discussion with a tax lawyer on any transaction or life event that may involve a significant amount of tax. By being proactive, you can enjoy the tax savings that you are entitled to. Feel free to contact any member of our Tax & Estate Planning group.
Note that the foregoing is for general discussion purposes only and should not be construed as legal advice to any one person or company. If the issues discussed herein affect you or your company, you are encouraged to seek proper legal advice.