If you hiring friends or family to assist with your business, it’s doesn’t pay to be too casual about it
Here are the answers to the most frequently asked CRA Tax collections questions from the past weekend:
- Can you bribe a CRA officer in Canada?
First off, bribing a CRA officer is a criminal offense and you could quickly wind up with the RCMP at your door, or under investigation, but more realistically, the staff at the CRA tend to be lifelong civil servants and one of the great benefits of working in the civil service is the great pension. Few civil servants are willing to even entertain the thought of giving up their pensions, let alone going to jail for someone when they have hundreds of other people to collect from.
2. Is there GST/HST on a lien?
Answer: Let’s presume that the question is asking if there is additional GST / HST on a lien, and the lien has been registered by the Canada Revenue Agency (CRA). In that scenario, the answer is no.
The CRA would register a lien for unpaid or unfiled (and assessed) GST / HST, and the amount used for the lien is the amount owing on the day it has been registered in Federal Court. This fact is important because from that day forth, interest continues to accrue and accumulate on the tax account with the CRA, but the lien only reflects the amount owing at a point in time.
Often, a lien will get paid out and then the CRA’s computer system kicks out an update Notice of Assessment with an additional balance owing and taxpayers are puzzled having just paid off a lien.
They did pay the lien.
Now they pay the rest of the balance owing.
3. Where can I get the truth about Voluntary Disclosure?
Answer: From the CRA website, of course. The link to the VDP section of their site is here; http://www.cra-arc.gc.ca/voluntarydisclosures/
4. Can I claim mileage drive to and from work at the CRA?
Answer: I hope you enjoy your career at the CRA and are not an auditor, because you should know this answer! You cannot claim mileage driving to and from work.
“If you use a motor vehicle for both employment and personal use, you can deduct only the percentage of expenses related to earning income. To support the amount you can deduct, keep a record of both the total kilometres you drove and the kilometres you drove to earn employment income. We consider driving back and forth between home and work as personal use.”
Since today is Thursday, I thought a Thursday Thirteen themed post might be a good change of pace!
Here are 13 things that should NEVER be said to someone with a tax problem, from someone who claims to want to help (or just your money).
Each quote below was an actual quote uttered by a tax solution representative or accountant to a prospective client in my presence.
Sit tight, and get ready to shake your head in disbelief…
13. “GST, HST, PST… They’re all the same.”
12. “CRA Collectors don’t care about you. They treat their clients like a ‘whack-a-mole’ game. You pop your head up and they smack you on the head with a hammer. We provide you with a helmet or advise you to stay underground until the game is over.”
11. “You’re an alcoholic? GREAT! Substance abuse qualifies for relief!!”
10. “I can tell you for a fact that the Auditor General requires the CRA to close files, NOT collect money. The benchmark is 7-years. We can close your file in 7-years!”
9. “You’re just a little guy! Nobody cares about you.”
8. “If you tell the CRA anything you are shooting yourself in the feet. That’s dumb and it hurts.”
7. “I know the CRA have won in Tax Court, but they are wrong, and this time we have everything we need to prove them wrong!”
6. “Just ignore them and it will all go away.”
5. “You don’t need to speak to a Tax lawyer, or an accountant. They’re useless. You should never talk to the tax preparer. Just pay us $5,000 and we can make it all go away.”
4. “The Taxman…”
3. “I don’t care what the CRA wants, and how soon they want it. They’re getting what I want to give them, when I’m ready to give it to them, AND they’re going to see that I’m right and they are wrong.”
2. “We need to reduce the amount that you owe, so I’m going to create a T2200 for you, and claim a lot of expenses that your employer has not deducted like mileage, phone, and parking. They’ll never know its not true and on the off-chance that they ask, I have hundreds of parking receipts in my car I can give them. It’s perfectly fine…”
- “Don’t even bother opening that envelope… Just throw it out.”
Just missing this list, but barely, is the commonly uttered line; “Quick, transfer the house out of your name before the CRA registers a lien against it!”
Bob Hamilton, the Commissioner and Nancy Chabwan, the Deputy Commissioner of the Canada Revenue Agency (CRA) Celebrates 100 Years of Taxes with #Canada150
2017 marks not only Canada’s 150th Birthday, but also the 100th Anniversary of the Income Tax Act (ITA).
To mark this anniversary, the CRA has put together a video that highlights the history of income Taxes in Canada and the role they play in building the country and lifestyle of Canadians – as well as how the CRA has evolved to meet the needs of Canadians over the years.
The 150th birthday of Canada is July 1st.
The 100th anniversary of the ITA is September 20th
Watch the video, and share with a de-taxer near you.
The Taxpayers’ Ombudsperson, Sherra Profit has announced that the Office of the Taxpayers’ Ombudsperson (OTO) will be undertaking an examination into the systemic issue of the Canada Revenue Agency’s (CRA’s) practices regarding providing legal warnings to taxpayers when collecting unpaid taxes.
Obviously, the OTO have received many complaints alleging that staff at the CRA have been taking legal actions – freezing and seizing funds from bank accounts, garnishing wages, taking refunds – without notifying taxpayers first, or without working to make a payment arrangement first.
Apparently, the purpose of this exercise is to allow for the Ombudsperson to identify the current process the CRA uses in order to take legal actions, specifically to see if the notice being given is “sufficient”.
Additionally, there will also be a review of whether the CRA clearly identifies their entire collection process on their website.
Is it clear enough for the average Taxpayer to understand not to carry a balance with the CRA?
After the examination, the Taxpayers’ Ombudsperson will make her findings public in a report.
For those of you not familiar with the Office of the Taxpayers’ Ombudsperson (OTO), they “work to enhance the Canada Revenue Agency’s (CRA) accountability in its service to, and treatment of, taxpayers through independent and impartial reviews of service-related complaints and systemic issues”.
The website can be found here; https://www.canada.ca/en/taxpayers-ombudsman.html
The OTO wants to initiate systemic examinations when complaints or questions are raised about a service issue that may impact a large number of taxpayers or a segment of the population, in order to keep on top of the pulse of Taxation and the CRA here in Canada.
Recommendations arising from these examinations are aimed at improving the service provided to taxpayers by the CRA.
“While the CRA’s collections practices and collections officers’ behaviours are some of the most common complaints received in my office, we have received more specific complaints about the legal warnings aspect. CRA collections officers generally try to work out an acceptable payment arrangement that will allow taxpayers to avoid undue financial hardship. Taxpayers who contacted my office indicated they were taken by surprise, and said they have faced financial hardship and stress because of the lack of notice prior to CRA taking legal action.”
Let me tell you, Office of the Ombudsperson, that there are 3 important pieces to the puzzle that you do not know about or have overlooked;
- The issuance of the Notice of Assessment (NOA) comes with legal warning built right into the notice. As the CRA’s collectors will tell you over and over again, the CRA is not a bank and thus, by issuing the NOA the CRA is demanding payment in full. If, for whatever reason, a taxpayer cannot make payment in full, they are expected to contact the CRA and let them know.
- Recent attempts by the CRA to lower their workloads resulted in the creation of New Intake inventories where by the collectors were advised and trained to take immediate legal action against a taxpayer once the 90 days grace period granted upon the issuing of a Notice of Assessment has passed. Day 91 = legal action.
- Trust accounts, situations where trust funds are due to the CRA as due right away and no collection restriction applies, ie/ jeopardy.
The answer here might include spelling out information on the CRA website a touch more clearly, and it should include having it in a few more places, maybe flashing and more noticeable because to educate and inform each and every Canadian Taxpayer all the time so everyone knows, just is not feasible.
Personal experience working at the CRA has afforded me a much different view of the CRA’s legal warning procedures and when I compare how I handled files to how others did, I get it… There are issues.
I cannot tell you the number of times I gave verbal legal warning, followed that up with written legal warning, then followed that up with another call and then upon freezing a bank account, got that call of surprise and shock.
However, I do know of a few others who froze bank accounts and instead of sending the legal document to freeze the account to the bank and the Taxpayer on the same day, held on to the Taxpayer’s copy for an extra day or 2 in order to prevent the Taxpayer from getting the notice first and emptying his / her bank account.
It’s not as clear as one might want it to be…
OTO… You’re going to be so disappointed with what you find, but you need to understand before you try to make the CRA A kindler and gentler place that everything is already in place, policy and procedurally, to do just that.
It could just be that people who are not informed do not feel they have a person or place to ask questions without fear of reprisal!
Warren Orlans, the Director of inTAXicating Tax Services has completed his Profitable Giving Specialist accreditation which certifies that he is able to demonstrate understanding and proficiency in each of the following 4 areas;
- The Tax Shelter Industry in Canada
- The Regulations: Promoter Liability and Penalties, Third Party, and Civil Liability
- Registered Profitable Gifting Arrangements and the Law
- The Role of the Canada Revenue Agency in Regulating RPGAs
In addition to assisting Canadian Taxpayers who have fallen victim to Tax Shelter scams like the Global Learning and Gifting Initiative (GLGI), the Canadian Organization for International Philanthropy (COIP), the Relief Lending Group (RLG), Mission Life Financial Inc (MLF), Pharma Gifts International (PGI) and Integrated Receivables Management Inc / Integrated RM Inc (IRM).
- Ability to Pay according to you and,
- Ability to Pay according to the CRA.
From there, you have only a few options;
- Do nothing
- Resolve the balance outstanding
- Fight the CRA
Should you choose to resolve the balance outstanding, you again have only a few options;
- Pay the balance in full
- Ask the CRA for a payment arrangement, and prove you need one
- Wait for the CRA to take it from you.
- File a Consumer Proposal
- File for Bankruptcy.
Keep in mind that the CRA does not “settle” debts like the IRS does. The only way to “settle” or pay less than the full amount of tax, penalties and interest, is through bankruptcy or a proposal.
While all of the Collections matters are in process, you are entitled to file for Taxpayer Relief and ask the CRA to return some or all of the penalties and / or interest which it has charged you. This application should be devoted time and effort to complete. It should never be a cookie-cutter application written by someone else because the CRA sees those and mass-denies them. Anyone trying to sell you a cookie-cutter application knows this and is “helping” you for the money and not because it’s the right thing to do.
Taxpayer Relief does not hold back Collections for doing what Collections does – trying to collect a balance owing – nor do CRA Collections care that a Taxpayer Relief application has been submitted.
A CRA review of a Taxpayer Relief Application can take upwards of a year. Be prepared for that delay and the interest that accumulates on your tax account should you wait to pay it later.
Having a trained set of eyes look over and edit a Taxpayer Relief application is a great idea because if you’re taking the time to submit an application, you want to make sure that you are putting your best work forward.
But ultimately, when looking at your options… All of your options, you want to make sure that your interests are being looked after first. You need an expert in CRA Collections, in Tax Shelters, and who can assist you with accounting, refinancing, insolvency and proposals and who can give you the best advice, the most cost effective advice and the advice that they would take if they were in your shoes.
inTAXicating Tax Services is that organization and we’re here to help you with all of that, and so much more. We associate ourselves with like-minded professionals who also understand that you are the client and that you need assistance and service.
If you have any questions about any tax shelter that you may have been involved in, and you need to know your specific options, contact us at firstname.lastname@example.org
No, the CRA does not send tax refunds through Interac