How We Help: GST/HST, Deemed Trust, s.160 Assessment and T2’s

A couple of months ago, I received a call from a senior law partner at one of Toronto’s top law firms asking me if I could help out a client of theirs with a messy tax problem because their firm was just too expensive for the couple.

I was told there was a balance owing to the CRA for GST/HST, and that the firm was essentially bankrupt, they feel they don’t owe the money and the CRA was threatening to raise a Deemed Trust followed by a s.160 assessment.

All over $30,000 owing to the CRA.

Sounds simple enough…

Confirm the amounts, then figure out if the balance is actually owing, tie up loose ends then make arrangements between the client and the CRA to resolve both matters.

I connected with the couple, got their side of the story, then met their wonderful accountant and got her side of the story.  I took all of that information, and had a nice long chat with the Collector at the CRA.

Here is the CRA’s side;

The couple owned a business, which accumulated debt through the filing of GST/HST but never paying it.  They also failed to file T2 returns.

The company had at one point in time sought financing and ended up pledging their inventory in return.  When the business began to slow down, the lender took the assets, and sold them to pay back the money they had lent to the business.

There was a shortfall.

The CRA did not like this at all.

With money owing to the CRA, they used their Deemed Trust provision and raised a s.160 non-arms length assessment against the lender for taking the inventory and disposing of it without paying the CRA.

The CRA were just waiting for the corporations director to file for bankruptcy before they actioned the s.160 because that would survive the bankruptcy and would result in the CRA getting paid on all fronts.

But logic sold me that a business which was struggling would not have significant amounts of GST/HST owing in its final years.

Something did not seem right.

I called back the CRA Collections office who, quite frankly, was extremely unhappy about having to answer additional questions about the origin of the debts… Again.

I had asked her to go through the last 3-years worth of filed GST/HST returns and give me verbal figures for Total Sales, GST Collected, and Input Tax Credits.

She started.  The first year was fine.

The second year was fine.

The third year, she started, “Total Sales were $25,000”, “GST Collected was $1,500” and ITC’s were …

… she paused…

“No ITC’s, eh?” was my response.

“No.  No ITC’s”, she said, completely puzzled.

“So I don’t expect there to be any ITC’s on any of the returns going forward, is that accurate?” I asked.

“No ITC’s on any of the returns going forward… That’s so unusual”, was her response.

We re-filed the last 6 GST/HST returns to include the ITC’s.  They went through a desk audit quickly because of the notes indicating someone missed ITC’s, and upon posting knocked down the balance owing considerably.

The s.160 assessment was cancelled and the remaining, much smaller balance was paid in full.

I introduced them to one of the fantastic accountants in my network who quickly completed the T2’s for them.

Everyone left happy.

That’s how we help!  Knowing the ins and outs of the CRA’s collections department and even think that something might have posted incorrectly, 4-years ago.

inTAXicating by Goldhar!

 

 

inTAXicating is now a Certified Profitable Giving Specialist! What That Means For You…

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).

inTAXicating provides Canada’s only full tax solution to assist Canadians solve all of their tax problems, including ones brought on by participating in tax shelters.
Below is only a snapshot of how to view a CRA debt related to a Tax Shelter / Gifting Arrangement and some of the options to start resolving the issue(s).
In order to reach a solution for Canadian Taxpayers the following things must be considered;
  1. Ability to Pay according to you and,
  2. Ability to Pay according to the CRA.

From there, you have only a few options;

  1. Do nothing
  2. Resolve the balance outstanding
  3. Fight the CRA

Should you choose to resolve the balance outstanding, you again have only a few options;

  1. Pay the balance in full
  2. Ask the CRA for a payment arrangement, and prove you need one
  3. Wait for the CRA to take it from you.
  4. File a Consumer Proposal
  5. 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 info@intaxicating.ca

 

Insolvent or in Tax Trouble? Don’t Let the CRA Decide.

Insolvent or Tax Troubles?  Don’t Let the CRA Decide!

In my experiences which includes almost 11-years working in the Canada Revenue Agency (CRA), you should never allow the CRA to decide whether you can fix your tax problems or whether you should go bankrupt.

From the stand-point of a CRA Collections officer, going bankrupt is great because it removes the account from their inventory of accounts to collect / resolve.

Your file disappears from their inventory and re-appears in the CRA’s Insolvency Unit inventory.

From the perspective of the Collections Department, it’s case closed!

 

There are 3 ways a CRA Collections Office resolves one of their accounts;

1) Collect it / fix the compliance issue(s)

2) Write it off because they cannot collect it

3) Move the account to the Insolvency unit

 

Go Bankrupt!

The CRA’s Collections Officers are not allowed to tell you to go bankrupt. In fact, they are taught in their training that they are not allowed to do that, and that sentiment is reinforced at all future training they attend.  As someone who trained CRA Collections staff for 5-years, I can confirm this fact.

Collections staff are not allowed to even suggest that you go bankrupt.  They might confirm it, but that’s all they can do.

What CRA Collections can do, however, when they feel you are insolvent, is to force you into bankruptcy via their collection actions, which include but are not limited to;

  1. Bank garnishment
  2. Wage garnishment
  3. Lien on a property
  4. Enhanced garnishment to accounts receivables (in the case of a business)

All the while, why applying these garnishments, the CRA refuses to release the hold on the accounts.

They freeze every source of income that you might have and you are faced with the decision to come up with the funds to pay them, or file for a proposal or an assignment in bankruptcy.

In some cases, a bankruptcy is unavoidable and the right solution, but not in every case, which is why I strongly recommend speaking to someone who is looking after your interests first and foremost.

There are tax-related companies who are fronts for insolvency firms, so they might appear  to want to help you, but they want you to file for bankruptcy, and there are other tax-service firms which gather your information and they unable or unwilling to help you, pass you along to a trustee.

You don’t want or need either of those.

You need a tax firm which has the experience in CRA’s collections, and who have the relationships with not only Insolvency firms, but mortgage brokers, reputable accountants and investment professionals so that you’re options are laid out for you to decide the best option.

Not the CRA.

In order to resolve your tax issues you need to disclose the details so your options can be determined, and you need your tax help to do the same.

Ask your tax-help the following questions;

  1. Are you committed to finding me a tax-solution first.
  2. If that solution is not going to be accepted by the CRA, what other options do you feel would work.

Don’t be weary if a firm wants to charge you a small fee to diagnose and plan out your solution.

You should be weary if they want to charge you a significant amount of money to diagnose it  and not give you a plan.  If they want to keep the plan a secret, and not educate you along the way, it’s because there is no plan.

Likely their solution it to drag you along the process knowing that the CRA will come along and lower the boom and then suggest to you that your only option is to conveniently have them file bankruptcy for you.

Don’t ask the CRA if you should go bankrupt.  You might not like the answer.

If you owe money to the CRA and you’re not sure if the debt is a tax matter which can be resolved, or if bankruptcy or a proposal are better options, just ask!  Send an email to info@intaxicating.ca and let’s talk!  We’re here for you.

Tips To Keep the CRA Collections Group Happy!

The following are tips to keep the CRA’s collections department happy.

This list in not fully inclusive of everything that you can do because you cannot send them gifts, they have to reject or toss them, and if you do their work for them – they might like that for a bit – until there are no more accounts, and then they will have no more work to do, and then no job.

 

So here are a few tips to keep CRA happy…

  1. Communicate, communicate, communicate.  If they have to contact you, they’re already angry.
  2. Don’t be a jerk on the phone to them.  Everything you say goes into a permanent diary and that diary is summarized semi-annually.  You don’t want anyone who accesses your account to think you’re a jerk
  3. Don’t accuse them of being out to get you…  They likely have 400-500 accounts and their goal is to collect some, write some off and let the others pay or go bankrupt.  Just show them some progress on any of those fronts and you’ll be in much better standing.
  4. Ask for the best and lowest settlement offer.  The CRA does NOT do that unless it is through insolvency or a formal proposal in bankruptcy.  The IRS settles debts, but this is not the IRS… The CRA is WAY better!
  5. If you enter into a payment arrangement, ensure there are sufficient funds in the account to pay the cheques. If a cheque is returned NSF (not sufficient funds), then the CRA collections officer will take immediate collection actions and getting those Requirements to Pay removed can be next to impossible.
  6. Keep current!!!  Whether during the period of a payment arrangement, or just through discussions with the CRA make sure you are up-to-date on all filings and payments (including GST/HST, income tax, payroll taxes, etc).   If you fail to remain current, the CRA can – and likely will – end the payment arrangement and pressure you for more.
  7. Understand that the CRA is not your bank, and treat them that way.  At a bank, you are earning credit, but at the CRA, in collections, you are paying 10% interest compounding daily… It’s not in your best interest to take your time re-paying them.
  8. If you have nothing to hide (and even if you do have something to hide), be honest with the CRA collections officer. Things you say may cause the CRA collections officer to become concerned.
  9. Provide the information that is requested by the CRA collections officer. If the CRA collections officer trusts you, he/she will be more likely to exercise discretion before pressing confirm on that Requirement To Pay.

Are There Really “Red Flags” At the Canada Revenue Agency (CRA)?

Are there “Red Flags” at the Canada Revenue Agency (CRA)?

How not to get noticed for the wrong things, this Tax Season.

One of the most commonly asked questions of me is about being “flagged” by the Canada Revenue Agency (CRA) and how to avoid getting flagged, or, what gets your flagged.

I hate to break everyone’s bubble, however, there are no red flags!

For the majority of Canadians who file their taxes year-in, year-out, and who make remittances, make their payments, open businesses, close businesses, make money, lose money, and everything in between, your tax account is just a record of transactions, conversations and payments received and made.  Even for those Canadians who should be doing the above and don’t or who fall behind and catch-up on one mass filing, their accounts have a bit more information due to CRA research, however, No flags.

For those engaged in criminal behaviour, however, there are no “flags”, because you are being investigated criminally and whether you know it or not, the CRA knows you and is watching your activities and comparing that to what you file.  Your tax account is known because it is being actively worked by someone.  There are words or phrases placed in your permanent diary which tell anyone who reviews your account what you are up to, but it certainly doesn’t mean you’ve been red flagged.

So why do people talk about flags?

They’re actually talking about stuations like some described below which catch the attention of the screeners on a case-by-case basis, and could result in them being audited outside of their normal audit review period.

1) When you get your tax returns completed and filed for the year, and there are issues, possibly mistakes, which the CRA catches and in anticipation of getting the solution, have a hard time getting a hold of you.

2) You are suddenly self-employed and you are not sure what to claim, or how much you are entitled to, or you claim things or amounts different from your industry standard.   The CRA compiles industry profiles which they use to assign you a “SIC Code” and they compare your returns with the Industry Standard to ensure you fall in line.

3) The dreaded “Net Worth Assessment”.  If you appear to the CRA to be unable to afford the lifestyle that you are currently living in, then the CRA can, and will, issue a Net Worth Assessment and force you to prove that you are not hiding income.  Yes, this can be a challenge, especially in light of the assessments being done from tax centres outside of the Greater Toronto Area who cannot fathom a million dollar house and a $75,000 income.  They don’t take too kindly to the concept of being being helped by family or personal wealth.  Just be warned that a tax return showing $1.00 of income for the year and an address in a wealthy neighbourhood is cause for further questioning.

4) Big changes from year-to-year.  If there are major changes in your income or expenses whether personal or business-related, are going to draw the attention of the CRA.  The CRA wants to make sure that you have not made a mistake, or worse, that you have bought into a tax scheme.  Expect questions, so get proof ready!

There are some tax situations that are just automatically looked at closer – each the year the CRA with the help of the Department of Finance choose a sector of industry to look at in closer depth usually because something has been detected in previous years or because there is a lot of cash floating around these business, such as construction, or dentists, doctors, IT consultants…

Home office deductions for example are frequently looked into as this is often a common problem for taxpayers claiming the home office in order to use deductions without actually utilizing their home as their office.

Even if you honestly never ever use your company vehicle for personal use, it will take some hard doing to prove to the CRA that this is true. Just driving back and forth to work in the business vehicle is classed as personal use. Your best protection here is to keep very detailed records concerning the business vehicles.

6) Renting for income:  Do not assume that rental losses are going to be accepted at face value by the CRA.  While the CRA will give you some grace time to start generating a profit from your rental business, it will still be watched with a close eye based on your industry, location and address(es).

7) Who prepares your return matters!

The CRA is starting to follow the IRS and taking a long hard look at tax accountants and tax preparers to see if there is a pattern among certain firms / indivuduals who either claim deductions they are not allowed to claim on your behalf, or who are missing certain expenses or deductions.  The CRA’s hope here is to weed out the bad apples, and educate the current crop to ensure they take advantage of the deductions and tax credits available to each client.

Should be a valuable change to the Canadian tax filing scheme.

But at the end of the day, doing it right, and on time, is the best way to stay out of the CRA’s bad books.

If, however, you have any questions, concerns or comments, please feel free to reach out to me at any time, at worlans@intaxicating.ca.

 

Money Mentors’ Advice for 2014 Taxes

I came across this article relating to Canadian Tax Filing for 2014, and thought it was worth a share.  The article can be read via the link below.

Money Mentors’ Advice for 2014 Taxes.

This article outlines how the Canada Revenue Agency (CRA) website, http://www.cra.gc.ca, can be used to keep up to date on any changes for 2014, and for 2015, which could help Canadians save money.

Money Mentors list themselves as being “the only Alberta-based, not-for-profit credit counselling agency.”   What I like about this article is that this firm also believes that credit counselling, money coaching, retirement planning, tax saving and community financial literacy are essential to contributing to a healthier financial future for all Canadians.  

Read the article, but as an outline, the topics covered include;

1) RRSP’s and TFSA’s

2) Charitable Donations

3) Medical Expenses 

4) Public Transit

5) Child’s Art/Fitness Amount

6) Childcare Expenses

7) Job-Hunting Expenses

8) First Homes

9) Students 

Enjoy, and please do not forget to get your Canadian Tax Return filed and paid – if at all possible – by April 30th!

If you have any tax-related questions, specifically relating to collection matters with the Canada Revenue Agency (CRA), you can reach out for a free consult with us via email at intaxicatingtaxservices@gmail.com, or to me, Warren Orlans, at worlans@intaxicating.ca.  We can also be reached on the phone or by text at 416.833.1581.

Please be patient as we are swamped and it may take some time for you to get a response.  Feel free to follow up and bug us in the same manner as the CRA bugs you.  We’re okay with that.

Also feel free to get more information about us at http://www.intaxicating.ca.

Not All Tax Information Found on the Internet is true! Are you shocked?!?

Did you know that not all the tax information and suggestions you find on the Internet are true?

Of course you knew that!

I’ve joked with everyone from my children, to family, friends, employers, employees and even director’s and CEO’s of huge organizations that tax information “must be true!  It’s on the Internet”, no matter how absurd it might appear to be.

We all know, or should know to take everything we read with a grain of salt… and that fact-checking is critical when trying to decide if information is legitimate, completely made up, or aimed to scare you.

Sources

As we scroll through pages and pages of information, reading about situations and stories about how the Canada Revenue Agency (CRA) administers tax law here in Canada it is easy to lose sight of goal, which is to get a better understanding of what is acceptable and what is not regarding so many aspects of taxation.  The best indicator of how close to the truth an article is can be determined by the sources cited in that piece.

An article about the CRA with a link to the CRA website (which backs up the facts) is the best indicator that the author knows their stuff.

If, however, you come across an article which has no references, no supporting links to the originating source, or links from a website titled something like “I_want_to_stop_the_CRA.org” then you can be assured the information is not going to be accurate, it is not going to help you, and more likely it was written to scare you, or present a horror story to get you to contact them to help you.

Don’t waste your time on those… Ever!

When a prominent tax lawyer wanted everyone to stop looking for solutions on the Internet it was presented that the CRA could find out you have a tax problem by sneaking into your house, taking your computer, breaking in to it, and seeing that you have been looking for tax help online.

GASP.

Well, guess what?

If the CRA has to come and seize your computer, they already know you have a tax problem!  They cannot seize your computer unless it’s part of a criminal investigation.

The true intention of these ads is not to warn you about a new power that the CRA has secretly acquired, but rather this firm doesn’t want you seeing that there are options available for you online to fix the problem yourself.  So they scare you away from the Internet so you won’t find helpful tips and solutions at firms like this one, inTAXicating.

Better to hire them then get advice from a real former CRA Collection employee to help get you back on track.

In a capitalistic marketplace I don’t blame them, but I am concerned.  Tax is confusing, especially when a tax problem suddenly arises and the CRA is pressuring you to fix it quickly in one of their 3 ways:

1) Pay it

2) File up-to-date and watch the balance go away, or,

3) Go bankrupt.

How can you be expected to make that sudden choice which has significant short and long-term implications on you, your business, your family and your life, without having the facts, all the facts, and not just the facts the CRA wants you to have, or that you believe they are telling you.

That’s where I come in, specifically, this blog, this business and this business model.

I want you to know the truth.

I want you to be able to make an informed decision whether that decision is made via information found on this blog, or on my website, or through an email to me.  I want you to be able to understand the CRA and their collection, enforcement, audit, filing process and administrative process as well as I do.

I want you to understand the corporate culture there and that very infrequently is there an agent on the other side of the phone with your picture on a dart board in their cubicle.

I want you to know your options, your best next steps and that your long-term plan of action will not only help you resolve your tax situation but also keep you and the CRA happy.

I want you to know that in situations where I feel that you cannot do this alone, that I can help you, and will help you, make matters right, and I want you to know that a tax problem does not occur overnight and resolving them can take a long-time.

I have the knowledge and understanding that no-one else can claim to possess about the CRA collections policies and process and I don’t say that to boast, but rather to inform.  I don’t profess to have an “army” of “real” CRA staff with me, nor do I pretend that background is in any area other than where it shows on my web-site, blog, and on my LinkedIn profile.  Collections, collection, collections.

I’m also not going top pretend that a background in Appeals or Audit is going to help you better than a back ground in Collections.  To each their own.

I write my blog posts myself and where possible I cite everything I can to the CRA website so that you can be comfortable knowing that information you read on my social media platforms are sourced from the people who want you to pay your taxes and question your deductions and filing deadlines.

I don’t write my posts in order to scare anyone or to force them to use my services, because quite frankly, I want everyone to be able to navigate the Canadian tax system without ever having problems and running afoul of the CRA and in a perfect world, one day I’ll be able to provide a users guide to the CRA to allow people to file, re-file and pay without incurring penalties and / or interest and where the CRA understands why people can’t, won’t or are unable to do so and then have the CRA deal with them in an understanding manner.

But for now, we have to take it one day at a time, and one situation at a time.

The best day to start fixing tax problems is today.  There are always solutions and there are always options.  In deciding what you want to do, you need to make sure you are getting the right information and from the right sources.  Be wary of what you read on the Internet because it can make you want to close your blinds, change you name and hide from the CRA when all they want you to do is to close an account or file a nil return.

Get the facts!

inTAXicating Tax Services offers a free 15-minute consultation to determine how to best proceed with a tax situation.

From there if’s decided that a written plan of action is needed, I can produce one for you.

If from that, a decision is made to engage inTAXicating to represent you in your dealings with the CRA, then we determine if the hourly or fixed plan works best for you.

You don’t have to worry about opening those brown envelopes.  Help is here!

http://www.intaxicating.ca

http://www.intaxicating.wordpress.com

info@intaxicating.ca

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