2022 Tax Season Report: Canadian Accounting Industry Challenges

Almost half of firms are more enthusiastic about cloud-based technology than in the past, and other key insights from this year's Tax Season Challenges Report.

As always, there were challenges that Canadian accounting professionals - in firms of all sizes - needed to face during the 2021 personal tax season. How effectively were they able to meet them?

This year, Wolters Kluwer’s annual study was expanded to explore new challenges faced by accounting professionals as the industry continues to evolve.

The survey was administered to industry professionals across Canada, in English and French - with 15% of respondents coming from medium-large firms of 6 plus full time employees and the remaining 85% from those working in small organizations (1-5 full time employees).

Here is a summary of the key findings with more available in our full report.

Working from home was easier than ever

it should come as no surprise that a substantial number (88%) of accounting professional found it easier to adapt to working from home than the previous year.

Similarly, a larger number of people (+6%) found it easier to collaborate more effectively while working away from the office. Most likely, this is due to the incorporation of helpful tools such as cloud-based compliance applications and practice management software.

There's an opportunity to improve staff management

Managing staff continues to be quite challenging for most firms.

For the fourth consecutive, 31% of survey respondents indicated that employees were performing unnecessary manual data entry. Once again, this identifies the need for firms to embrace innovations such as CRA Auto-Fill-My-Return as well as integrated software that shares one central client database, so that information needs to be updated only once. The deployment of tools of this nature would not only help reduce errors, it would also free up time for staff to do work that is more interesting and considered more valuable.

Just over 40% of all respondents stated that they found it difficult to retain staff. The figure was highest for those from medium-large firms who stated that they faced this issue close to 50% of the time. Innovations such as cloud-based software offer employees more flexibility - including the ability to work anytime and anywhere - something that today's candidates are looking for.

In 41% of all cases, firms needed to hire temporary staff or outsource return preparation. However, many (75%) found it difficult to do so. When firms use temporary workers, there is a need to provide them with access to company information and expert points of view. This necessitates the need to have a centralized document system on hand, so that part-timers do not have to rely on full time staff to provide them with the knowledge they need.

Client service challenges continue

It's so important to have client information on hand to prepare returns. Yet, many firms surveyed (78%) needed to remind their clients that they require it, a 15% rise from the previous year. This is an issue that needs to be addressed through the implementation of tools such as digital signature technology and portals.

Additionally, 30% of respondents stated that they were unable to accommodate client requests for advisory services during tax season.

Firms should beef up their tax knowledge

Clients rely on firms for tax advice. So, it is advantageous when tax expertise is easy for them to access.

Unfortunately, close to 1/3 of the firms surveyed are outsourcing complex tax questions to a tax specialist, a significant expense for those without in-house tax expertise. This is consistent with the finding that approximately 30% of all respondents believed their team was up to speed on all tax issues and updates. Related to this, 40% or respondents said that they spent a lot of time answering tax questions from their staff.

Of course, spending inordinate amounts of time answering tax questions can reduce your productivity. Implementing easy-to-use tax research tools can help, by providing quick answers to tax questions for both you and your staff.

There's room for improvement when it comes to workflow and technology

Technology has had a tremendous impact on the accounting industry, streamlining workflow and making firms work more efficiently during tax season.

Almost 3/4 of all respondents were satisfied with the tracking of their jobs and billing. There is still an opportunity to increase the satisfaction level in this area for many firms by incorporating practice management solutions.

Over 60% of all respondents stated that they are not currently using automatic payment technology, an innovation whose time has come. It not only speeds up when you get paid, it offers clients an easy way to take care of their bills.

And there are other ways that technology could improve the ways firms operate moving forward. Half of those surveyed believe that a more integrated automated system would improve their efficiency. Plus, there is an opportunity to improve document retrieval through the implementation of a document management system, something that would prove to be advantageous for the 22% of respondents that stated they did not find it easy to locate and retrieve documents when they needed them.

Finally, half of those surveyed said they were more enthusiastic about cloud-based technology than there were in previous tax seasons. It is anticipated that this number will rise, as more people become accustomed to these innovations, increasing their proficiency.

You can learn more in the 2022 Tax Season Challenges Report.