Interview with David Babalucco Senior Tax Manager at Rolf Benson Tax Firm Part 2

Today we publish part two of our interview with David Babalucco, a senior tax advisor at the firm Rolf Benson. David is a busy guy this week – wait, this quarter – but he was nice enough to offer us some insight into the life of a tax manager and some of the tips we can use throughout the year to stay organized.

Here’s part two:

Kelvin: Do you have a particular type of client you’re focused on? What are some of the common aspects of your more successful clients?

David: I do, the bulk of my clientele are owners and managers of businesses which are usually incorporated. With that usually comes personal, corporate and estate planning, so while I’m working with companies, there’s still personal distinctions. The more successful clients are motivated and creative. Some are stronger on one side while some are stronger on the other. They may be motivated but lack creativity.

On the motivation side we can definitely help, because we’re providing a service that involves skills they may not have picked up in the past. You can teach those things. The creativity is normally a skill you either have or you don’t, I believe it’s internal. Although if you lack creativity, hopefully you’re motivated and you can hire someone to be creative for you (laughs). Whether you’re creative or motivated, my clients are happy to leave the issues with taxes and accounting with me. I tell them to concentrate on making the money and finding success, I’ll just keep that success organized.

Do you deal with large tax bills or people in tax arrears? How do you help your clients overcome significant financial hurdles?

We do, nine times out of ten it’s a difficult process to get through. Generally we’re in this spot because they lack some organizational skills or less of a handle on the responsibility associated with tax planning. Early on in the lifespan of their business, a lot of them might be procrastinators and they put things aside and it snowballs for years until the CRA picks it up, then it becomes a huge issue and you want to avoid that. Generally the clients expect to have issues to work through, but they’re never happy about it, naturally. At that point it’s up to me to help them work through it.

A lot of One Stop customers are subcontractors who really value the advantages of working for themselves. Do you work with people who put their money in TFSA’s?

Not that much actually, but I can say that this is an area where knowledge is important. You want to get it right so you’re taking complete advantage of the system that’s been set up for you. It comes down to whether or not people should be putting money into their accounts at all, how much they’re allowed to contribute, that type of scenario. It’s usually fact-based and depends on the criteria. Sometimes people over contribute and the CRA needs clarification, so then we can step in and fix that.

What are the primary benefits of a TFSA for subcontractors?

The primary benefit with the TFSA is that the income earned on the investment is not taxable. The second is that it’s not taxable when it’s withdrawn, and the contribution room is replenished, so it can be paid back into the TFSA in the following year, so you do get it back.

Do you have any tips for contractors when it comes to investing or saving their money?

Organization is the key, and once you’re organized, you need to stay on top of it. Diligence. It sounds like a chore, but once you’re in the swing of things it becomes a lot easier. Get organized and set up separate accounts. Whether it’s savings, credit accounts, a subcontractor needs separate accounts, and then they need to have the diligence to put aside a portion of their income into those accounts. It’s a lot easier to pay the bill at the end of the year when you’ve got the income set aside. When you set it aside each month, you never actually collect that income because it’s spoken for. Then when the CRA tax bill arrives it’s not such a big deal to pay it off.

David, thanks so much for your time, we really appreciate the insight. I promise we’ll encourage our clients to call you earlier than April 30th. Cool?

(Laughs) You bet Kelvin, thanks for talking with me today.

Alright, back to work!

You bet!