Ready for tax planning automation?

By Simon Doyle | April 25, 2017 | Last updated on September 15, 2023
3 min read

A report last year by the Brookfield Institute, at Ryerson University, claimed 98% odds that the jobs of accountants and bookkeepers would be automated. An online tool by the BBC similarly says the probability for certified accountants is 95% within 20 years.

That would make the next two decades, or less, a period of upheaval for the tax planning business, as online platforms and mobile apps offer sophisticated tax preparation backed by artificial intelligence.

Will financial advisors increasingly refer clients to robo-accounting platforms as opposed to accountants? Gennaro De Luca, founder of online program Taxplan Canada, hopes so.

“In today’s environment, where fees have become front and centre in terms of client awareness, you want to make sure you’re adding value to the relationship,” says De Luca, a CFP. “With the client’s authorization, we share information with the advisor, and of course, the tax returns are a wealth of information with regards to planning.”

Read: Personal tax season — Are you ready?

Do it yourself

Competing traditional tax software like Turbotax are do-it-yourself platforms, De Luca says, whereas Taxplan offers more of a hybrid model with professional tax planners.

The Woodbridge, Ont.-based company’s tax planners work remotely, saving Taxplan overhead costs, he says, and allowing it to offer pricing of $150 to $230 per year for a small business owner with investments and rental income.

The service doesn’t yet do corporate returns, but De Luca is planning to offer that as it evolves. Next year, he plans to add on-the-go mobile expense tracking, where clients can upload pictures of receipts using their mobile devices. Clients add all information as they receive it, and the tax professional takes over at tax time.

Read: Essential tax numbers for 2017

Mobile tax planning

But digital competitors are also ramping up. Last year, five to six million Turbotax customers did some portion of their taxes using their mobile device, Brad Smith, the chief executive officer of California-based Intuit, which owns the digital tax platform, told Bloomberg News this month.

Smith said artificial intelligence and machine learning have already reduced, by 40%, the amount of time it takes to file a tax return. Using its tax return data, Intuit is expanding algorithms that can auto-populate deductions by profession, such as for a schoolteacher or an Uber driver, he said.

“I want taxes to be, basically, effortless,” he told Bloomberg. “We would like to get to the point where you can get a tax return done without answering a single question.”

In Canada, Turbotax offers a T2 corporate tax return service for $230. Its website says clients can get help along the way from its experts or through its online community.

U.S. expansion

Taxplan Canada is ahead of its digital competitors in Canada, De Luca says, because it offers the same service as a professional accountant, for less. The company is eyeing expansion into the U.S., where the landscape is growing more crowded with digital tax services on offer from H&R Block, Credit Karma and TaxAct.

“Right now, we’re still improving on the technology,” De Luca says. “We want to make sure that we’ve got the process right.”

Read: Artificial intelligence, overseen by humans, key to new robo

He says he’d like to be seen as a disruptor to the traditional, walk-in tax preparation office, but doesn’t “want to eliminate the personal element.” While he thinks most people want personal help with their taxes, he can’t say “with absolute certainty” whether robo-accounting will eliminate the human element. “I hope we don’t get to [that] point.”

Simon Doyle