When I saw this headline in Money Sense.ca I immediately felt upset that this article was going to be a bunch of made-up, fear-mongering, scare tactics along the lines of something that would come from an advertising campaign from a certain tax law / brokerage firm.
They popularized the calling of the CRA the “tax man” and since we all know the CRA hates that, its worth noting that it a confrontational relationship with the CRA is what they are all about.
Some people need that.
Then, upon reading the list, I noticed that each and every one of the 7 items has a quote from… Dioguardi, and once the shock and surprise wore off, I shook my head and wanted to set the record straight, as far as I see it.
The link to the original article is here;
So let’s look at these items in a bit more depth;
1. Social media. Sure. If you make it public, and you have a unique name, the CRA can see what you’re posting. It doesn’t mean that if you have $40K in reported income and buy a $100K boat that they are going to assess you. If you are in collections and the CRA’s collections officers are trying to get you to pay, and all of a sudden a boat shows up on their radar, they will do their research and determine who owns it, how it was purchased and if it belongs to someone who owes the CRA taxes, then you have better have a good explanation as to why you didn’t disclose it.
2. Kijiji, eBay, etc. Yes, if you are selling items online as a way to earn an income it is income that you should declare and pay taxes on. The CRA have in the past requested and received information from eBay related to their top sellers. If, however, you are doing this as a business, it would have made sense to have engaged an accountant or tax professional to ensure that you are not only reporting correctly, but that you are claiming all eligible deductions and expenses – like a home office – to offset the income earned. A business is a business.
3. Credit card slips – yes, however only if it’s through an audit and the auditor has requested it directly from you. I suppose if you were under criminal investigation, or were in collections for a long time, the advanced collection techniques might include requesting this information, but the collections staff are not able to do anything with it. Auditors can assess with it. Collections cannot. Very misleading point here!
4. Bank accounts and investments – All financial institutions are required to provide year-end tax slips to taxpayers indicating their position during the year and in each and every case, a copy is sent to the CRA. They already have this information. They’re not watching anyone. The slips the bank sends is matched to the slips the taxpayer files. No slip, then the CRA asks for it (maybe you lost or forgot it) and then if it’s not accounted for, the CRA will raise an assessment.
If a taxpayer is in collections and the CRA wanted to know information about a bank or investment they have the ability to use a Request for Information, to ask for information and a Requirement for Information to ensure they get the information. Both processes are complicated and the CRA must prove that they were denied the information or that they need it urgently in order to raise an assessment.
5. This section is a bit vague and underwhelming. First, the CRA checks the sales records much faster than they did years ago – but they take that information then send out a questionnaire to the taxpayer to complete which is the supporting document they use to assess. They see you sold, but you let them know if there is cause for digging deeper.
On the rent side,, what catches the most number of people is when a renter pays rent in cash and the landlord and the landlord does not provide receipts and neither reports in… until there is an issue, and the renter declares rent paid. The CRA checks the landlord to see if they declared the rental income and when they have not… Assessment. The CRA is, again, not watching people in this case. They come across these assessments because of breakdowns in rental agreements.
6. Income and pensions. This list should have stopped at 5. This is not a case where CRA watches anyone. It’s about reporting and discrepancies.
7. Mystery diners – I’m not even going to comment on this than to say that it’s so over the top it’s unbelievable.
I will add, that while working at the CRA, I did attend restaurants as a representative of the Crown, however I disclosed my reason for being there and it was only in situations where restaurant owners had payroll debts over $300,000, and suddenly reduced their payroll from 15 full-time employees to 2 full-time employees. I just needed to check and see if they really did cut staff, or if they just started paying the other 13 cash under the table, to avoid having to deduct and remit the CPP, EI and tax. In each and every case, upon entering the restaurant, I would count the number of employees – when I saw more than 10, I would take the owner aside, explain this was not legal, then request a payroll audit and be done, until the audit assessment came into collections.
So to conclude, the most accurate part of this article is, “always give full and complete disclosure”.
The “tax man” is not watching you, unless you are in collections, under investigation, or trying to “game” the system.
If you have questions, concerns or comments, and want the truth about your situation, send us an email to info@intaxicating.,ca and we can have that discussion.
If you live in Southern Ontario, you are in the middle of a heat wave. Summer came back bigger, badder, stronger than it had all summer, and with humidex readings in the low 40’s, all the talk is about cooling off and extending the cottage season.
And there is nothing wrong with it.
But as the calendar creeps towards October, we enter the last quarter of the year and this is traditionally the best time of year to finally seek resolution on that nagging Canada Revenue Agency (CRA) tax problem.
The tax problem that causes you so much stress that you cannot open the brown envelopes from the CRA.
The tax problem which resulted in the CRA freezing your bank account or garnishing your wages.
That nagging tax issue which prompted the CRA to register a lien against your property.
The one that prevents you from having a full night’s sleep.
Yes, that one.
Well worry no more because help is here.
No matter how big, or small, complex or simple, we have seen them all, and resolved them all. At the very least, after a meeting with us, you will understand the truth behind your tax problem – whether you have a chance of having it overturned or whether you actually are on the hook for the balance.
After a meeting with us, you can finally start on the pathway to resolving your tax troubles and no longer worry that when you try to use your debit card it might not work because the CRA froze your bank account and withdrew all of the funds.
Toronto-based. Canada-wide Tax Liability Specialists.
The Canada Revenue Agency (CRA) announced that James Harvey Cameron, a former resident of Calgary, has been sentenced to 11 years in jail and fined $550,892 after defrauding investors of over $2.5 million through a deceptive investment scheme. The judge also ordered Cameron, 66, to pay restitution of $1,831,700 to his victims.
If Mr. Cameron fails to pay his fine in six months he will have to serve an additional four years in jail for default.
From 2002-2006, Cameron operated a fraudulent RRSP scheme which promised a 2% monthly return to individual investors. The scheme raised just under $8 million, but only paid out a total of $882,000 to investors. Cameron misappropriated the funds to support his luxurious lifestyle, including buying property, cars, a horse, and a $75,000 cruise in the Bahamas. He also transferred funds offshore to Barbados.
A Canada Revenue Agency (CRA) investigation proved that Cameron diverted $3.9 million of the investors’ funds for his own use and failed to report this as income on his tax returns, evading $1,132,882 in taxes.
“I have no doubt whatsoever that [Cameron] executed a deceptive investment scheme with subjective knowledge of the prohibited act and consequences,” said presiding judge, Justice P.R. Jeffrey, in his written reasons for convicting Cameron. “The CRA acted towards him with considerable patience, forbearance and fairness. He was given ample opportunity to provide to CRA any plausible alternate explanation for what occurred, yet did not.”
Justice Jeffrey commented in his sentencing report: “The $1,831,700 I have ordered payable in restitution should be subtracted from his [Cameron] total taxable income… therefore I find his taxable income to have been $2,118,817.”
Cameron was convicted of tax evasion under the Income Tax Act and fraud under the Criminal Code.
Sentencing took place today at the Court of Queen’s Bench in Calgary.
You can report suspected tax evasion to the CRA by visiting https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/informant-leads-program.html or by calling the National Leads Centre at 1-866-809-6841.
All case-specific information in this news release was obtained from the court records.
Did you know that between April 1, 2012, and March 31, 2017, total domestic and offshore related criminal investigations have resulted in 408 convictions involving $122 million in federal tax evaded and court sentences totaling approximately $44 million in court fines and 3,103 months in jail?
Looking for information related to the Canada Revenue Agency (CRA) Taxpayer Relief Program?
Here is the information that matters! Link is at the bottom.
Important note: A request for relief from penalty and / or interest amounts does not stop or suspend collection activity on an account or the accrual of interest.
Information you must include with your request
It is important that you provide the Canada Revenue Agency (CRA) with a complete and accurate description of the circumstances to explain why your situation merits relief.
In order to support a request, you should provide all relevant information including the following, where applicable:
• your name, address, and telephone number;
• your social insurance number (SIN), account number, partnership number, trust account number, business number (BN), or any other identification number assigned to you by the CRA;
• the tax year(s) or fiscal period(s) involved;
• the facts and reasons supporting that the interest or penalty were either mainly caused by factors beyond your control, or were the result of actions by the CRA;
• an explanation of how the circumstances affected your ability to meet your tax obligations;
• the facts and reasons supporting your inability to pay the penalties or interest assessed or charged, or to be assessed or charged;
• any relevant supporting documentation such as death certificates, doctor’s statements, or insurance statements;
• in cases involving an inability to pay or financial hardship, full financial disclosure including a statement of income, expenses, assets, and liabilities (to help individuals provide full financial disclosure);
• supporting details of incorrect information given by the CRA in the form of written answers, published information, other evidence; or when the incorrect information given by the CRA is of a verbal nature, you should give all possible details such as date, time, name of CRA official spoken to, and details of the conversation; or
• a complete history of events including any measures that have been taken, e.g., payments and payment arrangements, and when they were taken to resolve the non-compliance.
Note: You may submit photocopies of supporting documents. During the course of our review, the CRA may contact you if they need additional information or documentation, however that is not common.
• Indicate with your request if this is the first or second review request. A second review request is when you ask the CRA to reconsider its original decision.
You must include Form RC4288, Request for Taxpayer Relief – Cancel or Waive Penalties or Interest to make a request to cancel penalties or interest.
You can also write a letter marked “Taxpayer Relief”.
Submitting the Application
You can submit your request to cancel penalties and / or interest and all supporting documents:
• online at My Account, My Business Account, or Represent a Client, by selecting the “Submit documents” service; or
• by mail at one of the designated offices below.
For more information on the Submit Documents online service, go to Submit documents online.
• British Columbia and Yukon
Vancouver Tax Services Office
9755 King George Boulevard
Surrey BC V3T 5E1
• Alberta, Saskatchewan, Manitoba, Northwest Territories, and Nunavut
Winnipeg Tax Centre
66 Stapon Road
Winnipeg MB R3C 3M2
• Ontario, New Brunswick, Nova Scotia, PEI, Newfoundland and Labrador
Prince Edward Island Tax Centre
275 Pope Road
Summerside PE C1N 6A2
Shawinigan-Sud Tax Centre
4695 Shawinigan-Sud Boulevard
Shawinigan QC G9P 5H9
• Non-resident or international taxpayers (individual, corporation, trust, and part XIII and non-resident withholding accounts)
International and Ottawa Tax Services Office
P.O. Box 9769, Station T
Ottawa ON K1G 3Y4
inTAXicating – Your Canadian Taxpayer Relief experts! Don’t believe us? Contact us and find out why! info@inTAXicating.ca
What Do Lionel Messi, Cristiano Ronaldo and Floyd Mayweather have in common aside from being top atheletes in their respective sports, and extreme wealth?
Ronaldo and Messi with the Spanish Tax Authroity, and Mayweather with the IRS, which just goes to show you that no matter how much money you have, or don’t have, you still have to report income, file on time and pay your taxes!
In Ronaldo’s case, the Spanish Hacienda tax authority believes Ronaldo failed to pay €14.7 million in taxes pertaining to income earned on his “image rights” between 2011 and 2014. The belief is that he used (and still uses) a shell company in the British Virgin Islands and Ireland, to hide at least €78m in image rights.
Ronaldo’s camp claim that he has fulfilled all his tax obligations, maintaining that the majority of his image-rights income is earned abroad and therefore not liable for Spanish tax.
How does Ronaldo’s situation differ from Lionel Messi’s tax case?
Barcelona star Lionel Messi and his father Jorge were found guilty of tax fraud in July 2016 after it was found they had hidden image-rights income from the Spanish authorities. Messi was fined €3.6m and sentenced to 21 months in prison (which was suspended) for defrauding €4.1m between 2007-09.
The Messi family had previously paid over at least €10m in back taxes and charges, long before their case made it to court.
In Messi’s case, the court determined there was a total failure to fill his tax obligations on image rights income.
A huge concern stemming from the The Supreme Court’s judgement in the Messi surrounded the role that Messi’s tax and financial advisors played and how both parties were not indicted as part of the prosecution since they there was evidence that they advised the player on how to evade taxes.
In Spain, a guilty verdict for an aggravated tax crime means a mandatory jail time of two to six years, while conviction of the lesser offence brings a suspended sentence. If Ronaldo admits to the details in front of the judge within two months after being accused, and pays over the amounts allegedly defrauded, his punishment could be reduced.
Messi’s 21-month prison sentence for tax fraud was reduced to a €252,000 fine, while his father’s 15-month prison sentence was reduced to a €180,000 fine.
These fines are in addition to the re-payment of the taxes originally owing plus any penalties and interest accrued to the balance.
Floyd Mayweather, and his estimated net worth of $340 million is in trouble with the IRS and has apparently filed a petition asking for a temporary reprieve from unpaid taxes from 2015 until after his fight with Conor McGregor in August.
Apparently, while he has substantial assets, those assets are restricted and primarily illiquid. The upcoming fight against McGregor, however, would provide Mayweather with enough liquid cash to pay the IRS debt from 2015 in full.
Mayweather, made $220 million alone from his 2015 fight against Manny Pacquiao. It is unclear how much he owes the IRS in taxes. Given a 15-month lapse since the 2015 tax due date, Mayweather would owe 7.5% in penalties plus accruing interest on top of what he was already scheduled to pay.
Forbes estimated Mayweather’s net worth at $340 million in January.
So the moral of the story is this;
Not everyone wants to pay their taxes, and some will go to great lengths to reduce or avoid paying taxes. If that is something that you feel you must do, you have to be prepared for the consequences of your actions when and if the government comes back to you.
File on time.
Pay on time.
Don’t pay the government more than you should.
If you need help because you’re carrying a balance with the CRA and you want to discuss options, contact us today!
I came across this article from the Montreal Gazette;
I strongly recommend that you take the time to read it. It is brief, but very informative as it tells the story that I have been trying to tell for the past 20-plus years! There is that there is a significant percentage of, not just Quebecers, but Canadians who leaving money on the table because they don’t understand the tax system, according to a report released by the C.D. Howe Institute last week.
The report — which bases many of its conclusions on a survey of 1,000 Quebecers — suggests that lack of knowledge is one of the reasons many people don’t take advantage of credits and savings vehicles, like RRSPs, which could reduce their tax burden.
“People might be missing out on benefits that they’re entitled to,” said Antoine Genest-Grégoire, a tax policy researcher at the Université de Sherbrooke and one of the authors of the report.
“It can take various forms, people can simply not know about the existence of the credit … sometimes, they know it exists but they don’t know how to use it or they find it too complicated.”
Survey participants were asked a series of questions about how the tax system works and the average score was just 55%.
It wasn’t just tax credits that left participants stumped. Respondents scored poorly on questions about progressivity — the idea that people with higher incomes pay a higher tax rate, a core principle of the Canadian income tax system.
While almost 90% of respondents knew that income tax rates differ based on how much people make, many struggled with the concept of bracketing — when different segments of an individual’s income are taxed at different rates.
“We hear a lot of people thinking that once you reach the top income brackets, you essentially pay close to 50% of your income in taxes,” Genest-Grégoire says, when in reality, it’s only the income above the cut-off for the highest tax bracket that’s taxed at the highest tax rate.
Only 26% of survey respondents were able to answer a question about that correctly.
While survey respondents generally had a good sense of whether they pay sales tax on everyday purchases, like groceries, prepared food and clothing, there were some exceptions.
For example, Quebec provincial sales tax doesn’t apply to books, a decision made to encourage literacy and support book publishers in the province. Only 21% of survey respondents knew that.
The result, Genest-Grégoire said, is that the public policy objectives of the tax exemption are unlikely to be realized.
The lack of tax literacy doesn’t just affect individuals pocketbooks, Genest-Grégoire said.
“People who don’t understand taxes tend to have lower trust in the tax system. The Canadian tax system, even though you’re obligated by law to produce a tax return, works on trust. The government doesn’t audit everyone,” he said. This lack of trust “makes tax avoidance, tax evasion more probable.”
Genest-Grégoire said the provincial and federal revenue agencies have taken steps to put more information online, but the system itself remains complex. One solution would be to make benefits that are currently provided through the tax system more accessible and for government to automatically enrol people, as is already the case with many benefits for children.
Warren Orlans, a former CRA Collections Employee turned Taxpayer Advocate has been saying for over a decade that the CRA needs to continue putting out information on the Internet, however it needs to be available in many different formats in order to be most effectively accessed by Canadians everywhere. “Not everyone learns the same way, so having a concept explained in text, showing steps, and possibly with an example and even with little videos would expose the greatest number of Canadians to the message at once.”
“Every day, I deal with Canadian taxpayers and corporations of all sizes as they try to understand and interpret the CRA. My 11-year’s experience at the CRA and 10-years outside the CRA have afforded me the ability to diagnose and resolve even the most complex of tax matters”, Orlans said.
If you need help understanding the CRA, or interpreting their letters or actions, contact the best, at inTAXicating. Email: info@inTAXicating.ca. Or call us at 416.833.1581.
Toronto-based, Coast-to-coast tax liability expertise.