Fired CRA Employee Denied Access to Tax Records… Duh!

A Superior Court judge has dismissed the application of a former Canada Revenue Agency (CRA) employee requesting the CRA produce various third-party records for use in his defence.

Christopher Casola of Sudbury faces charges including breach of trust by accessing taxpayer information other than for the public good, fraudulently accessing a CRA computer, as well as two counts that allege that the breach of trust and unauthorized use of a computer were done for the benefit of The Bacchus Motorcycle Club, and he faces eight counts involving several weapons offences, including possession of an SKS assault rifle, alleged to have occurred in 2016.

The CRA will fire, and prosecute those who access information which they are not entitled to, and because the CRA’s computer system tracks all accesses (including date, time, and how long they were there) it can be a very easy case to make.

Oddly, in his defense, the accused requested access to various CRA records, including the mainframe computer that contains the records of all individuals who have filed a tax return; the CRA Matching Action Review System (MARS) database accessible on servers between March 26, 2014, and Jan. 7, 2015; a data dump of the entire Notepad option in the MARS database; as well as what is referred to as the “entire CRA workload audit trail” in connection with the review of the accused’s work that was undertaken by the CRA after security concerns became known.

In a decision delivered July 11, Justice Dan Cornell wrote that the applicant had stated the records were necessary to duplicate the CRA’s internal review, which allegedly indicated Casola, a former assessment processing clerk in the electronic processing and records division at the Sudbury Tax Centre, had accessed the files of several individuals with alleged connections to another motorcycle club, thereby contravening the agency’s code of ethics and conduct.

Justice Cornell accepted the Crown’s argument, however, that the applicant did not articulate why they required entries for dates other that those when the alleged unauthorized access occurred.

“Despite being asked on more than one occasion to provide a reason for the requests that have been made, the only answer that was given is that the accused ‘wants to recreate the CRA process to double check the results to see if the results are accurate’,” the justice wrote. “This is not sufficient to establish that the information that is being sought is likely relevant to an issue that may arise at trial.

“The applicant did not provide an expert report, or for that matter, outline any possible concerns about the accuracy of the information that was provided or to raise questions about the process that was followed by the CRA during the review of the CRA records. In the end, all that was put forward in support of the request for the production of third party records were vague assertions that there was a problem with the results of the searches that had been undertaken.”

Those “vague assertions” amount to nothing more than “sheer speculation,” Cornell wrote, and “fall far short of satisfying the onus that lies upon the applicant to establish that such third party records should be produced in order to permit the accused to make full answer and defence.”

“In view of the fact that I have determined that the information sought is not likely relevant to an issue at trial or the competence of a witness to testify, I need not attempt to balance competing privacy interests of those who would be affected by disclosure against the accused’s right to be able to make full answer and defence.”

The accused could have requested a trail of his accesses through the Access to Information program available to all CRA employees and every Canadian Citizen.

 

If you would like, you can read the full decision, here; www.canlii.ca/t/hszmv.

 

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July 9, 2016: The Canada Revenue Agency Revokes the Registration of the ACTLAP Children’s Foundation (A.C.F.)

The Canada Revenue Agency (CRA) has posted on their website that they will revoke the registration of ACTLAP Children’s Foundation (A.C.F.), a charity based in North York, Ontario, effective July 9, 2016. The notice of revocation has been published in the Canada Gazette.

On May 3, 2016 the CRA issued a notice of intention to revoke the registration of the ACTLAP Children’s Foundation (A.C.F.) as a charity, in accordance with subsection 168(1) of the Income Tax Act (The Act). The letter stated, in part, that:
“The audit by the Canada Revenue Agency (CRA) has revealed that the Organization operated primarily for the non-charitable purpose of furthering a tax shelter donation arrangement, the Pharma Gifts International Inc. program. The Organization agreed to accept alleged gifts of property from participants and to act as a receipting agent for this donation arrangement. For the period of June 16, 2012 to June 15, 2014, the Organization improperly issued receipts totalling over $64 million for purported donations of cash and pharmaceuticals, which were not legitimate gifts. Of the $1,724,814 in cash contributions it received, the Organization paid $1,289,385 to the promoters of the tax shelter. Of the $62,315,818 million [sic] worth of tax receipts issued for the gifts of pharmaceuticals, the CRA determined that the Organization significantly over-reported the value of the alleged property, resulting in grossly inflated tax receipts to participants.

The audit has shown that the Organization has failed to comply with several requirements set out in the Act. In particular, the Organization issued donation receipts for transactions that did not qualify as gifts, issued receipts otherwise than in accordance with the Act and its Regulations, did not devote all its resources to charitable activities and failed to maintain proper books and records. For all of these reasons, and for each reason alone, it is the position of the CRA that the Organization no longer meets the requirements necessary for charitable registration and should be revoked in the manner described in subsection 168(1) of the Act.”

Registered charities perform valuable work in our communities, and Canadians support this work in many ways. The CRA regulates these organizations through the Act and is committed to ensuring that they operate in compliance with the law. When a registered charity is found not to comply with its legal obligations, the CRA may revoke its registration under the Act.

Registered charities receive generous tax incentives under the Act including the ability to issue official donation receipts. To maintain this privilege, charities must continue to meet all the requirements of the Act.

The CRA is committed to preserving the integrity of Canada’s tax system.

The CRA audits every gifting tax shelter that offers official donation receipts in excess of the value of any property donated.

The CRA has also repeatedly warned Canadians of the consequences of participating in abusive tax shelters that it holds to be non-compliant with the Act.

There is a substantial amount of information on the CRA’s website and the CRA has published information, including warnings about tax shelters and donating wisely, in a variety of newspapers, magazines and various other media sources.

For more information, go to Tax shelters and Donor Beware, a special report from the Office of the Taxpayers’ Ombudsman.
An organization that has had its registration as a charity revoked can no longer issue donation receipts for income tax purposes and is no longer a qualified donee under the Act. The organization is no longer exempt from income tax, unless it qualifies as a non-profit organization, and it may be subject to a tax equal to the full value of its remaining assets.

For more information about the registration of Canadian charities or to find out more about a registered charity, go to the CRA’s Charities and Giving webpage.

Quick Facts on charities:

• As of March 31, 2016, there were 86,191 registered charities across Canada.
• Canada’s approximately 86,000 registered charities issued receipts worth more than $15.7 billion in 2014.
• In the 2015-16 fiscal year (April 1 to March 31), the CRA’s Charities Directorate completed 726 audits of registered charities chosen using a variety of methods – including random selection, follow-up on possible non-compliance or complaints, and based on a review of annual information returns. During that same period, 20 charities had their registered status revoked by the CRA as a result of an audit.
• As of March 31st, 2015, the CRA reassessed more than 195,000 taxpayer returns, denying in excess of $6.6 billion in donation claims mostly due to tax shelter gifting arrangements.
• A copy of the Notice of Intention to Revoke and other letters relating to the grounds for revocation are available to the public on request, in the language in which they were originally written, by going to Request for registered charity information.

Related Products

Canada Revenue Charities Listings: http://www.cra-arc.gc.ca/chrts-gvng/lstngs/menu-eng.html
Charities Media Kit: http://www.cra-arc.gc.ca/chrts-gvng/md-kt/menu-eng.html

Stay connected

To receive updates when new information is added to the CRA website, you can:
• Follow the CRA on Twitter – @CanRevAgency.
• Subscribe to a CRA electronic mailing list.
• Add the CRA’s RSS feeds to your feed reader.
• You can also watch the CRA’s tax-related videos on YouTube.

In a nutshell, this charity received $1,724,814 in cash contributions.
It paid $1,289,385 of that money to the promoters of the tax shelter who were bringing in the people to donate.
This charity issued donation receipts totalling $62,315,818 million dollars.
It failed to keep adequate books and records.
It failed to devote 100% of its efforts to charitable work.

As a result, any of the taxpayers who have filed their tax returns claiming any of the donation deductions from this charity should hope that the CRA offers them a deal to accept the money donated on a dollar for dollar basis, or they should use the Voluntary Disclosure Program to amend their returns! (Just not the current year return).

Note: Please use common sense when making a donation! If you make a $100 donation and receive a donation receipt for anything more than that amount understand that the CRA will deny it… eventually.

Claiming Gas or Mileage? How to avoid having this expense denied by the Canada Revenue Agency.

Many taxpayers here in Canada are advised to “keep their receipts” when they claim mileage and / or gas on their tax returns.  The thought here is that the Canada Revenue Agency (CRA) might audit your tax return and will deny your claim if you cannot show proof, but what are you allowed to deduct?  Does it matter if you are self-employed or if you are a salaried employee?  Did you know that just keeping your receipts is not enough and there might be deductions you are entitled to that you are not claiming?

It all matters.

If you are claiming vehicle expenses and you are a salaried T4 employee working for someone else, then you need to know this;

Or, if you are self employed, you need to know this;

So if you rely on your accountant to take care of this for you, or if you wish to use the services of Intaxicating Tax Services, at the very least, you need to be aware of this important fact;

The CRA regularly rejects gas receipts from taxpayers who pay for their gas with debit cards.  Why?  Because they are not sure if you are getting cash back on the transaction – that does not show on the debit slip.

Example: I go to fill up my car 3 times a week, and each time I put in $20.00 worth of gasoline, but get cash back of $80.00 each time.  My debit slip reads $100.00, and I claim $300.00 worth of gasoline expenses for that week on my tax return when in actual fact I was only entitled to receive a deduction in the amount of $60.00.

In addition, if you are required to travel a lot for work, make sure that you have a calendar at home and at the office (on the office computers) which show the location of the meeting, the name of the organization and / or people that you are meeting, as well as the purpose of the meeting (ie/ sales, cold call, delivery).  Make sure that you track the mileage as well.  This way when the CRA questions the high claims, you can show them with 100% certainty that your travel claims are for work purposes.

It also helps to keep all the gas transactions on the same credit card for organizational purposes.

It takes a little effort and organization but it’s worth it.

Intaxicating Tax Services can be found @ http://www.intaxicating.ca and make sure to drop by our helpful blog here.