7 Ways the Tax Man is Watching You: MoneySense.ca

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.

Most don’t.

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.

Not really...
The CRA is watching you!

The link to the original article is here;
http://www.moneysense.ca/save/taxes/cra-watching/

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.

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Canada Turns 150, the Income Tax Act turns 100

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.

How To Prevent Being Scammed By A Fake-CRA Call…

The best way to avoid being scammed by a fake CRA caller.

Hang up.

If they start raising their voice, threatening you, or tell you that you are going to be arrested, or that the government is going to seize your house, or car, and especially if they tell you that they are going to take away your children.

Just hang up.

If you receive an email from a scammer but it looks legitimate, check the return email address. Government email addresses end with “.gc.ca”, oh, and if claims to be from the Canada Revenue Agency (CRA), you should be aware that the CRA employees are they’re not supposed to and not allowed to email outside the office.

If you’re not sure, don’t buy into the threats, and certainly do not give them any information at all.

Hang up.

Canada Revenue Agency (CRA) Auditor Convicted of Corruption

CRA LogoI came across a news article this morning that a Canada Revenue Agency (CRA) auditor from Montreal was convicted on Friday June 12th on charges of corruption for attempting to extort $90,000 from a restaurant owner in lieu of a $600,000 audit assessment.

Upon seeing the article, I went to see if I knew any of the people involved, which I did not, and it brought back my memory of the only time I was offered a bribe while working at the CRA, which I obviously declined.

I was the Resource and Complex Case Officer in a Collections unit here in Toronto and one of my accounts involved a gentleman who had a habit of opening and closing companies over a 27-year period.

He would never file, the auditors would assess his balance, he would bankrupt the company and the next day he would open a new one. He even used the same bank, but would open and close accounts over-and-over again.

It was quite funny given that he denied everything, even his $1 / year income but with a $5-million dollar house all paid off, it took me one phone call to put everything together.

He was a nice guy… Honestly. His house was built by him and his kids, on land his father bought 45-years ago, and the assessments the CRA were charging him with – prompting him to bankrupt the companies – was not even related to the business he was in.

He didn’t know why they were assessing him. He was afraid the CRA was going to put him in jail.

The CRA thought he was a criminal and kept on top of him.

One giant misunderstanding, which was quickly resolved after I taught him how to file HST returns.

But when I first met him and presented him with a list of companies that he had opened and closed year-after-year, he said this to me;

“I’m connected to the mob.”

I said to him, “Okay. That’s not my business. What is my business is finding out why you keep doing this and what the CRA can do to help you.”

He said, “If you can make this balance go away, I’ll give you Toronto Maple Leaf tickets.”

After I stopped laughing, I said to him, “Are you kidding me? I’m a huge hockey fan, and I love the Leafs, but if I were to even consider a bribe that would result in me losing my job, going to jail, and not being able to see my children, it would have to be for a hell of a lot more than Leafs tickets, and to be honest, if you have THAT much cash, you’re better off paying your debts and never falling behind on filing or paying again.”

He replied; “I was just kidding.”

I said, “Of course you were.”

I mentioned it to my Manager who, after reviewing the file, suggested I run this by the Special Investigations unit. I spoke to SI and they knew of this gentleman and that he has been suggesting his ties over the years in hopes of having the CRA back off, and only when I explained the reasoning behind the debt did the SI manager mention that he was told this many years ago but didn’t believe it to be true.

I wonder what happened to that guy…

I hope he stayed compliant!

Back to this case.

This case relates to an auditor named Francesco Fazio who, in 2005, was auditing a restaurant named “La Belle Place.” and after completing the audit, told owner Stamatis Argiroudis that he would owe $600,000 in taxes based on Fazio’s estimate of unreported revenue, according to a Montreal Gazette report.

According to testimony from the trial, Fazio told the owner that a more favourable estimate could be made for $90,000.

The owner refused to pay the money and probably words were spoken and the file was transferred to another CRA auditor. The auditor said the owner mentioned connections to organized crime, however the judge presiding over the case did not believe this to be true and ruled against the auditor.

In this day and again of recording devices in our phones and the CRA snitch line, it’s important to be careful what you say, and to whom you say it. Same goes for using social media. Be careful what you say about people and businesses when it’s not true.

I hope the CRA conducts an investigation into all the companies that this audit has audited to see if there is a recurring pattern or if this was a once-off situation.

CRA Reminder! This Monday, June 15th 2015, is the Deadline for Self-Employed Individuals to File their 2014 Income Tax and Benefit Return!

inTAXicating and The Canada Revenue Agency (CRA) would like to remind those taxpayers who are self-employed individuals (and their spouses or common-law partners) that the 2015 personal tax (T1) tax filing deadline is midnight on Monday, June 15, 2015.

If you had an outstanding balance for 2014, it would have had to be paid to the CRA on or before May 5th 2015, which is different from the normal April 30th deadline as a result of that extension granted by the CRA this year.

If you miss the deadline, you might be liable for a late-filing penalty (cumulative if you have been filing late in multiple consecutive years), and / or a late-filing penalty on amounts owing which applies to returns received after the June 15, 2015 deadline.

The CRA suggests you file electronically, using NETFILE , which allows you to file your individual income tax and benefit return over the Internet quickly and easily.  For a list of software and web service options, including those that are free for everyone, go to http://www.netfile.gc.ca/software.

If you have a balance owing, you can make your payment using your financial institution’s telephone or Internet banking service. For more information about online payments, go to http://www.cra.gc.ca/payments or contact your financial institution, or search through the blog posts at inTAXicating.wordpress.com for a post on how to make payments to the CRA.

You can also pay using the pre-authorized debit online service offered through the CRA’s “My Account” feature. The pre-authorized debit allows you to:

  • Set up a payment to be made from your bank account to the CRA on a pre-set date
  • pay an overdue amount
  • make instalment payment

You can also make your payment using the CRA’s “My Payment” service. My Payment lets you make one or more payments in one simple online transaction.  You can use this service if you have access to online banking at a participating financial institution.

You can also sign up for direct deposit to receive your refund in your account at your Canadian financial institution-no more waiting for a cheque to arrive in the mail, however as I have mentioned in many previous posts, signing up for this service provides the CRA with your banking information which is the first place they will try to seize if you ever have a balance owing to them.

Save time – go online!

The CRA’s online services make it faster and easier to handle your business’s tax matters. You, your employee, or your representative can file, pay, and access detailed information about your tax accounts-all online, all at your fingertips. To learn more about the CRA’s electronic services for businesses, go to http://www.cra.gc.ca/businessonline.

If you have questions or concerns regarding your taxes or a letter / notice you have received from the CRA, drop us an email at info@intaxicating.ca or intaxicatingtaxservices@gmail.com.  Take advantage of our free consultation.

Thursday Thirteen Tax Tips: 13 Important Considerations Before Hiring Tax Representation

Trying to decide if it is time to hire a tax representative is a difficult decision and if made incorrectly, can cost hundreds if not thousands of dollars plus add significant amounts of stress and reputational damage to you and / or your business.

With so many people and organizations on the Internet promising to do so much for you, how do you know who to trust and more importantly, how can you tell if the specific tax matter you have is something they have experience (and success) handling?

Well, I’m going to give you some tips, so feel free to share them, about how I would go about finding a tax expert for my situation and what important questions you need answered before you hand over your hard-earned money, Social Insurance Number (SIN) and / or Business Number (BN).

The first thing that you must be comfortable doing is asking questions and if you do not understand the answer or if it seems like the response you get is part of a sales pitch, then think twice and get another quote.  It’s okay.  Anyone offering these services will either expect that you have spoken to more than one person, or will be confident that their expertise is what you need and know that you will come back.

Do they offer a free consultation?  It’s helpful if you do not know exactly how much trouble you are in, if at all, and having a few minutes to ask will put your mind at ease and help build a relationship for the future if it’s necessary.

During a 15-minute free consultation I usually do not know how many other tax representatives they have spoken to, if any.  As a result, I have to be clear, honest and set the price based on the amount of work involved, only.  It works for me, and it works for my clients.

keep-calm-youre-hired

Once I begin working with clients I get to hear what others promised, or wanted to charge, and often times I am surprised both by the recommended course of actions and the price quoted / charged.I thought it might be a good idea to expand on this topic and provide the 13 IMPORTANT considerations to look for before hiring tax representation:

13) Knowledge – Does this person or organization have significant knowledge in the area you need?

12) Experience – Knowledge is great to help you understand more, however, is their knowledge based on books they studied in school, or was it gained through hands-on experience?  If you are lucky, you can get both.

11) Fit – Can you work with them? Are they able to explain in a manner that you actually understand what happened, and what the next steps are.

10) Advertising – Odds are good that if they are spending a lot of money on advertising, they are going to have to charge you more in order to re-coup the costs.  A lot of advertising doesn’t necessarily mean they are the best, it just means they value advertising, or need clients..

9)  Social Media Presence – Taking into consideration that people do NOT advertise they have a tax problem online, it can be difficult to see if your prospective tax representation is worth your hard-earned dollars.  A good way to check up on a prospective hire is to have a look at their followers and who they follow.  It may seem great that a firm will have 5000 followers, however, followers can be bought, so a Canadian firm with 3000 followers from, say, Turkey might be a tip-off that something is not right.  Also look at their posts and comments via mainstream media.  Are they commenting on articles to educate or does everything they publish and promote look like it has been written by a marketing firm aimed at trying to get you to hire them.

8) Flexibility – Are they flexible in their pricing, or are they so set in their fees that they will not, or can not, recommend someone else or reduce their fees to assist.

7) Promises – Do they promise to save you money through reviews of your tax filings or do they take the easy way out and recommend bankruptcy, or a proposal?

6) Fear Mongers – If you notice that the tone of everything coming from a prospective firm / representative seems like they are trying to scare you, they are, and that’s a good sign to proceed with caution.  If they tell stories of the CRA hiding in your bushes, reading your emails or coming to arrest you, you should think twice.

5) What is their catch? – You know what you need, but what do they want, or what do they want from you?  There might be additional things relating to your tax issues that you did not know about and would benefit you, but if it’s not necessary and they won’t back away from it – like a financial analysis – then be concerned that they just want to put you though a cookie-cutter program instead of working towards solving your problem(s).

4) Do they play nice with others? – Blog posts aside, are they active in community networking groups (like on Linked In) and are they contributing to the discussions or do they have their own agenda and are just posting articles aimed at the wrong crowd – ie/ pitching their services to individuals in a group full of tax lawyers.

3) Sticks and Stones – How do they  refer to the Canada Revenue Agency?  Do they call the CRA the “Taxman”?  Do they have other negative nicknames?  I can tell you with the experience that 10-plus years of working for the CRA has afforded me that the CRA HATES that and do you really want your representation to start your negotiations off on the wrong foot?

2) Which Way is Up – Does their projected course of action come with terms, such as; “I think, this will work” or “I can try this…” or does the word “maybe” come up a lot?  The good part of that language is that it is a sign that they want to try a course of action and they expect the outcome to be positive or they have no clue what to do and after they run you through their cookie-cutter service, they hope you will be in a better situation.

1) You are Smarter – If you finish your conversation and get the feeling that once all is said and done you will be in a much better place both mentally and financially and you are armed with enough information and understanding of what got you there in the first place and that you can and are able to identify and address all future issues, then you might just be in the right place!

Good luck!

 

Warren

Congratulations to inTAXicating for finishing 2nd in the 2013 Canadian Blog Awards!

I recently received word that this blog, inTAXicating, finished 2nd in the Legal / Professional category of the Canadian Blog Awards.2013 Canadian Blog Awards

The Canadian Blog Awards is an annual event on the Canadian Blogosphere in which Canadian Bloggers and Blog Readers vote to decide which blog is the best – either overall or within a category.

This year (2013), the Canadian Blog Awards are being operated by Jonathan Kleiman, a Toronto Small Claims Court Lawyer and Toronto Business Lawyer.

The first Canadian Blog Awards were held in 2004, by Robert McClelland of MyBlahg.  He hosted the awards for 2005 and 2006 before handing them over to a coalition of bloggers and business owners keen on recognizing Canadian blogging talent.

Aside from being thrilled at the nomination, I am excited and content with the 2nd place finish because it means that not only is there plenty of room for improvement, but that people understand that in order to help themselves save taxes, or fix tax troubles, they need to read online to see what the experts are recommending.

With the CRA moving more and more online in everything they do, it only makes sense that you, the taxpayer, keeps up to speed as well, or at the very least, read and learn from people who were on the inside… For a long time… And who grew up in that space, trained the staff in that space and led staff in that space.

Thank you for voting for this blog and for dropping by for tips, suggestions and recommendations on how to best handle your tax questions or tax problems.

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Make sure to visit http://www.intaxicating.ca but what you really want to do, is contact us at info@intaxicating.ca or by phone at 416.833.1581 to have your questions answered or to have your tax problems solved.

#x-taxer