While clients struggle to keep up with the ever-changing income-tax regulations, financial advisors also are under increasing pressure to keep up to date and provide guidance on these issues.

Many advisors find that their clients are largely uninformed on even the basic components of tax planning, such as the credits, benefits and deductions available to them. Part of the problem is a lack of clear information from the government on the current credits and programs and the rules and eligibility requirements pertaining to them.

That view was recently confirmed in a report from the federal Office of the Taxpayers’ Ombudsman. The report focused on the Canada child tax benefit — a tax-free monthly benefit that helps families with the costs of raising children. But the problem seems to apply to the full spectrum of personal income-tax issues.

The ombudsman’s office has received a significant number of complaints related to the CCTB. Taxpayers were having difficulty obtaining “clear, accurate and timely information” from the Canada Revenue Agency about the program’s eligibility and the documentation requirements, according to ombudsman Paul Dubé.

“Essentially, it’s a communication problem,” Dubé says. “This makes it difficult for claimants to understand what is required from them in order to receive the benefits to which they are entitled.”

The report recommends that the CRA make information — such as eligibility requirements and the documentation taxpayers need to submit in order to receive the benefit — available more prominently on the CRA website and in brochures.

The issues with the CCTB reflect the broader trend of a lack of accessible information on tax credits and benefits, according to Todd Morin, regional director with Winnipeg-based Investors Group Inc. in Ottawa. Morin finds that many of his clients are in the dark about the CCTB and other credits, as well as about the rules associated with these programs.

“Not everybody is aware of them,” Morin says. “They don’t know, necessarily, where to look for them.”

That’s why it’s important for advisors to take the time to educate their clients on the tax credits available to them.

Jonathan Ruben, certified financial planner and chartered accountant with Jonathan Ruben Professional Corp. in Toronto, has found that new clients who approach him are almost always missing out on credits or other forms of tax savings for which they qualify. “[A client] can very well be in a seemingly simple situation,” he says, “and miss out on credits that [he or she] would otherwise be entitled to.”

The evolving nature of the tax system makes it even harder for Canadians to be tax-savvy, notes Joan Yudelson, director of education with the Toronto-based Financial Planning Standards Council. With the introduction of new credits and changes to existing rules every couple of years, she says, it’s easy for your clients to lose track of which credits they’re eligible for.@page_break@For example, Yu-delson says, many families may not be aware that they are eligible for the child fitness tax credit, which was introduced in 2007.

“There are so many simple tax credits and deductions that are available to Canadians,” she says. “Tax is one of those areas in which you just need to keep up to date, because there are just so many changes.”

Many clients count on their advisors to help them keep track of these changes and developments. Morin, for example, regularly educates his clients on tax credits or deductions for which they could be eligible. He sends emails to clients to notify them when new credits are introduced or when deadlines are looming. He encourages his clients to apply for as many credits as possible.

“Even if they don’t use [the credit] because they don’t qualify,” Morin says, “at least they know I’m looking out for them and doing the best I can to make sure that they’re aware of these things.”

Ruben’s firm takes a similar approach: “We integrate the tax credits and tax deductions into virtually every meeting and every email and telephone call that we have with our clients,” Ruben says. “There’s a lot of education and a lot of explaining.”

As advisors get more involved in providing tax advice, some financial services firms are making efforts to provide their advisors with tools and resources in this area. These firms see it as an opportunity to expand their service offerings.

“It is a big opportunity to add value,” says Jack Courtney, assistant vice president of advanced financial planning with Investors Group in Winnipeg.

Investors Group has an internal team of tax and estate planning experts within its advanced financial planning department, which trains new advisors on the basics of tax planning and offers monthly teleconferences for advisors on various tax and estate topics. The team is also available throughout the year to offer support to the firm’s advisors. Its members can meet with clients directly when necessary to discuss complex tax issues.

Some advisors look beyond their firms for tax training. The CFP curriculum, for instance, covers a range of tax-planning material, from basic tax credits and deductions to more complex topics such as income-splitting strategies, estate planning and tax considerations for small-business owners.

This material is an integral part of the CFP curriculum, Yudelson says, because tax planning is such an important component of financial planning.

“There are tax implications to all financial decisions that we make,” she says. “You can’t talk about a person’s financial position or financial goals and help clients adequately unless you’re considering all of the tax implications of the decisions.” IE