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Euroguy18

Tax Law and Math?

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Hey everyone, 

I'm curious to know how relevant math skills are for the practice of tax law (tax litigation and/or tax planning). Tax law is a field that could potentially interest me going forward, but I feel that my arts background might limit my ability to succeed in this particular area of the law. 

If one doesn't have a business or economics degree, how would this impact one's chances for succeeding in tax law courses in law school and successfully practicing tax law as a lawyer? 

Is a business/economics/accounting background a necessary condition for the practice of tax law? 

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Also curious about this. I did an arts degree as well but took some advanced mathematics and statistics courses but no accounting. Curious of what level mathematical proficiency would be required for tax law courses.

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There isn't much math involved beyond basic algebra. You're not an accountant (though they don't need much complex math either).

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As someone who specialized in accounting in university and is currently pursuing his CPA, I can attest to the fact that there isn't much math involved when it comes to tax. I don't know too much about the differences between the responsibilities of tax accountants and tax lawyers, but so far most of it is knowing your way around the Income Tax Act. All relevant math relating to tax planning at least can be done simply on calculators, and as stated above, the most advanced math related calculation I've done is basic algebra relating to returns on investments.

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8 minutes ago, PatarQ said:

As someone who specialized in accounting in university and is currently pursuing his CPA, I can attest to the fact that there isn't much math involved when it comes to tax. I don't know too much about the differences between the responsibilities of tax accountants and tax lawyers, but so far most of it is knowing your way around the Income Tax Act. All relevant math relating to tax planning at least can be done simply on calculators, and as stated above, the most advanced math related calculation I've done is basic algebra relating to returns on investments.

Thanks for this 

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Posted (edited)
15 hours ago, PatarQ said:

 I don't know too much about the differences between the responsibilities of tax accountants and tax lawyers, but so far most of it is knowing your way around the Income Tax Act.

I'm not 100% sure either and most of my day is spent on tax work. Perhaps @Mal or some of the other tax practitioners can chime in. But the basic gist of it, at least from the work I do, is that tax planning lawyers interpret the law and its applications, and accountants will crunch the numbers based on the interpretations.

For example: Setting up a pipeline transaction - lawyers will draft the documents (corporate resolutions, share purchase agreements etc), based on their interpretation of the law (section 85 rollovers, 51 exchanges, etc). The accountants will then do their number thing and submit all of the paper work for tax reporting.

EDIT: But then I've also worked on transactions where CPAs dictate the steps and what needs to be drafted and we provide some input. So things get blurry there. But I haven't really seen CPA's interpret the law.

Edited by setto

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FWIW, out of the 6 "key contacts" from Osler's tax page, only 2 have Bcoms while the other 4 have BAs. I mean, the BA could technically be math (or comp sci or even software engineering if schools are weird like McGill). But yeah. The 3 tax lawyers I know were all non-science BAs.

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You don't need a math background to do tax.

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2 hours ago, kurrika said:

You don't need a math background to do tax.

Can you chime in on a good answer for the accountant or CPA responsibilities vs those of a tax lawyer? 

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I think it depends on what you want to do in tax law. If you want to legislate policies, then no, I don't think you need to be good at math. However, if you are doing estate planning or anything related to trusts, from what tax lawyers have told me, it is better to have a business/accounting background. A CPA does similar work to a tax lawyer from what I understood based on my inquiries. Having your CPA designation will make you a much stronger tax lawyer as will experience in audit (I do not really understand why the latter is so). A CPA would do the income-tax filling whereas the lawyer would do the memos and paperwork. There is a lot of overlap though (also, I am speaking about differences at the partner-level). Tax lawyers may work at accounting firms but CPAs cannot work at a law firm. So, overall, you will be a much stronger tax lawyer if you have an accounting background but it is not a necessity to pursue tax law. It may also depend on your individual strengths and how fast you can catch onto things. 

Disclaimer: this is all based on what I was told by tax lawyers and CPA tax accountants. 

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Posted (edited)
7 hours ago, setto said:

Can you chime in on a good answer for the accountant or CPA responsibilities vs those of a tax lawyer? 

I'm not the right guy for that.  I make new tax laws rather than give advice on them out in the real world.

 

 

Edited by kurrika
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Few things in finance require the ability to do complex calculations. Most calculations are done in excel, and you just need a really solid grasp of basic mathematics. Even the CFA exams, recognised as one of the hardest exams in finance doesn’t require advanced math skills. 

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There is a difference between tax planning and tax avoidance.

Tax planning involves very basic algebra.

Tax avoidance involves advanced calculus.

 

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28 minutes ago, Rumpy said:

There is a difference between tax planning and tax avoidance.

Tax planning involves very basic algebra.

Tax avoidance involves advanced calculus.

 

Advanced calculus on the part of the accountant or the lawyer? 

What would a lawyer practicing tax avoidance for their clients do exactly? 

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You don't need any accounting or math background to practice tax law. You just need to know about tax law.

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It's pretty basic math for the most part.

Occasionally, I have found you'll run into some pretty advanced tax "minimizing" (read: avoidance) concepts. But you're not doing the math here. Your job is to understand enough of how it works to advise on/litigate the legal issues. But you'll usually have an accountant or someone do the very mathy parts of it. Your job is still first and foremost zi law.

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I tell my clients when it comes to the exact numbers, get your accountant to do it, because if you as me, I'm more expensive, and I'll probably get it wrong!

For a tax lawyer, you want to have financial literacy skills. Being able to read financial statements or a balance sheet is much more important than worrying about doing the calculations.

 

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As for what tax accountants do vs tax lawyers, the short answer is the same thing, in terms of planning, advising, etc. Accountants are always involved at the beginning, the lawyers sometimes. The main difference is that the accountants will do the number crunching and tax compliance (filing elections, returns, etc.) and the lawyers do the 'execution' (i.e. legal compliance such as resolutions, agreements, etc.)

 

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4 hours ago, Chambertin said:

As for what tax accountants do vs tax lawyers, the short answer is the same thing, in terms of planning, advising, etc. Accountants are always involved at the beginning, the lawyers sometimes. The main difference is that the accountants will do the number crunching and tax compliance (filing elections, returns, etc.) and the lawyers do the 'execution' (i.e. legal compliance such as resolutions, agreements, etc.)

 

This reminds me of a similar question I have regarding a tax avoidance/estate planning/asset protection practice. Would such a practice be confined to the major Canadian cities (I.e., Toronto, Montreal, Vancouver, Calgary)? Would other fairly large (mid tier) cities like Edmonton, Winnipeg, etc. have a decent market for such services? 

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