the Wealthy Canadian

Years ago I learned a phrase that has stuck with me “you don’t even know what you don’t know.” There is so much information out there that you have an idea of things that you don’t know. For example:

• I know what income tax is and many of the rules surrounding it.
• I know that there are rules about offshore income reporting, but I know that I don’t know what those rules are.
• There must be a vast number of other rules that I am not aware exist.

People often say that “what you don’t know cannot hurt you,” well I say that what you don’t know can hurt you. It’s those things that you’ve never heard of which can really get you, or can be very powerful in helping you out once you discover them.

I’ve spoken to many people who did not realize that capital gains and dividends are preferentially taxed. They’ve been going through life under the impression that all income is equal. Those people were still buying their bonds and GICs not realizing that they were paying tax on the full amount. But what if they had known that they could buy a preferred share and get continuous and comparable income in the form of dividends? For low income earners instead of paying tax for the full amount, they might not owe any tax at all. If you look at it that way, what they didn’t know did hurt them.

This is a very scary concept for me; I like to know everything and plan for every detail.  I realize that I would never be able to keep up with all of the information out there, yet what am I missing that could have a great impact on me?  The answer for me is twofold:

1. Continuous learning and growing.  I never want to stop learning new things, my goal is to be constantly open to new ideas and information.  However, I must also admit that I cannot absorb it all.  Therefore,
2. Employ the advice and service of experts.  I don’t plan on blindly relinquishing control and signing anything, but I will allow those who know better than I to help me out.

For example I used to do my own taxes, by hand and then using software.  But I would constantly read up on the rules to understand what I was filling in.  I have since given up.  My taxes are becoming more complex and take far too much time.  I am willing to give up on doing them and allow a pro to take over.  I will still ask questions, I will  still learn what I can, but I refuse to do the groundwork any longer.

p.s., can anybody refer me to a good accountant?