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
I came across a headline from CBC.ca which screamed “Revenue Canada forbids Unitarians from working for justice – Tax auditors continue Harper-launched probe of religious charity under new Liberal government” and I could not hesitate to stop and see what this was all about.
The link to the original article is here, and comments are already closed for this topic, a day after it hit the public broadcaster’s website with a whopping 732 comments.
To summarize the article for those who do not want to follow the link, the CRA (not Revenue Canada) advised the Canadian Unitarian Council that it’s council bylaws are too vague. They did not “forbid” them for doing anything but being compliant with Canadian Charity regulations.
The CRA wrote, “Vague purposes are ambiguous and can be interpreted in many different ways,” in a compliance letter, which includes other demands more than a year after the political activity audit of this charity was launched.
The Canadian Unitarian Council bylaws were accepted by Industry Canada when the Toronto-based charity submitted them for approval (applied for charitable status) in 2013, however the Canada Revenue Agency (CRA) found the wording to be contradictory to the Charitable definition set out in the Income Tax Act, and have asked the charity to remove any reference to “justice” or “social justice.”
Where I find this post to be completely irresponsible is where the author begins to compare audits of charities to being a witch hunt which started under Stephen Harper’s Conservative government and is continuing under Justin Trudeau’s Liberal government.
“Many charities targeted by CRA’s political activity audit program, begun in 2012 under the Stephen Harper government, had expected relief from the Liberals, who campaigned on a promise to set charities “free from political harassment.”
It is the responsibility of the Minister of National Revenue through the Canada Revenue Agency to ensure that each and every charity is registered correctly and that they are following guidelines set out in the Income Tax Act and that those rules, regulations and by-laws which were submitted by the charity is being followed.
While it might be a huge pain in the ass for established charities, the CRA audit process provides an opportunity for charities to ensure they are compliant with rules and regulations and are eligible to issue donation receipts.
With all the chaos the CRA has had to deal with regarding the GLGI charity scam and other ineligible donation programs, it is VERY important for each and every taxpayer that the CRA does their due diligence and confirms the charity is following the letter of the law because if they are not, the problems fall to the people who donate!
Wisely, the Minister of National Revenue said the 24 political activity audits underway would continue without interference from the Liberal government and the Notice of Revocation of Charitable Status issued to 5 other charities would not be rescinded by her government.
The Liberals did, however, cancel political activity audits on 6 other charities.
The fact that the Canadian Unitarian Council was a vocal critic of the Harper government is meaningless, as is the fact that many of the 60 charities audited in the $13.4-million political activities audit program were too.
The only thing that matters here is that Taxpayers like you and I will be able to donate to a charity, receive a donation receipt and be sure that the donation receipt is valid and will be accepted by the CRA. Even if that means that charities which were started with all the best intentions in the world have to work a little bit harder to ensure they are fully compliant with the CRA’s Charities requirements, which can be found right here.
Personally, I’m happy to hear that of 38 completed audits so far, only one found no problems, six have been given notice the agency intends to revoke their charitable status, of which 5 will be appealing.
Considering the amount of discussion and opportunity to meet the CRA’s requirements during the audit process, it is likely that these charities which are appealing either do not meet the CRA’s charity requirements at all, or are refusing to change their bylaws and thus will have their status revoke for good.
At the end of the day, it’s not a war against charities, but it’s the CRA performing due diligence to ensure the taxpayer’s donated money is heading for a cause and not to pad the pockets of the charities Board of Directors.
The Canada Revenue Agency (CRA) has put together a list of some things to avoid this tax-filing season. Follow these 5 tips and they will save you time, stress and money!
- File your tax returns! On time.
Many people are of the belief that they do not need to file a tax return (personal tax – T1 – GST/HST, Corporate Tax – T2 – or payroll taxes) because either they do not have any income to report or because they had no activities in that period / year.
Failing to file a tax return is a criminal offense, whereas filing a return but owing a balance is not. Additionally, once a due date for a return has passed the CRA automatically charges a Late filing Penalty (LFP) once it has been filed. It’s money you do not need to be paying.
Additionally, even if you have no income to report, you still have to file a return because you might be eligible for a refund, for Input Tax Credits (ITC’s) and for child tax benefits.
Even if you don’t have all your slips / information, file because you can always amend the returns after – but don’t forget information on purpose because the CRA is all too wise for that trick and they will still assess LFP’s.
2. Gather as much information as possible (all year).
If you have not received, have lost, or misplaced any slips for the taxation year you are filing for, try to get it. If it’s a T4 slip, as your employer / HR department. If it’s an investment slip, as your investment dealer, or log onto your investment dealer’s website and print off a copy.
If you have already registered to the CRA’s My Account you have access to electronic copies of your slips. Your employer / investment dealer must provide you a copy and a copy to the CRA of each slip.
If you are missing information, use any documents you have and enter estimated amounts.
New for 2016 is the CRA’s Auto-fill service which allows taxpayers who file their returns online to automatically fill in certain parts of their income tax and benefit return. In order to use the service, you must be fully registered for My Account. For more information, go to www.cra.gc.ca/auto-fill.
If you were quick to file your personal tax return and then a new or amended tax slip arrives, My Account has a “Change My Return” feature which is very helpful, or you can go old-school and complete Form T1-ADJ, T1 Adjustment Request, and send the completed for to your local tax centre.
3. Know your credits!
Don’t rely on your accountant or tax preparation firm to know what you are eligible for, especially if you only see them during tax time when they are already busy.
Without the benefit of a relationship with your tax professionals, they are just filing the return for you based on the information you give then, and would never know what credits you are eligible for or what slips are missing, unless you tell them.
The CRA posts information about new tax credits, benefits, and deductions on their website, some of which may apply to your tax situation, so before filing your return or before signing it confirming that it is accurate, go to www.cra.gc.ca/getready to learn about the new and existing tax measures.
Remember, once you sign your tax return, the CRA believes that you have gone through the return and agree with all the information on that return. If something is denied by the CRA, you cannot blame your accountant / tax preparer.
4. Use someone you trust!
A common excuse given to the CRA when tax credits and deductions are denied is that your accountant or tax preparer did it and said it was okay. This may work to convince the CRA that you are not knowingly trying to commit fraud, but any infraction is noted in your permanent tax file and going forward may result in the CRA not giving you the benefit of the doubt where there are disputes.
If you’re concerned that you are paying too much tax, or paying to much to your accountant, or that your tax professional is recommending convoluted tax schemes involving holding companies, incorporation and other complicated processes, it could be to pad their bottom line, or because they have no idea what they’re doing.
It’s okay to ask.
If you don’t like the answer, ask again, or ask someone else.
The last thing you need is to find out that a complicated structure set up to help you pay less taxes, costs you a lot of money each year and then will be denied by the CRA – costing you penalties and interest – not the mastermind behind the scheme.
5. Donate wisely!
With all the tax shelter scams and schemes floating around, be very careful when donating.
Make sure the charity issuing the tax receipt is registered with the CRA. That is the first step, but there is an additional step which must be adhered to, and that is the common sense rule. If you donate $100, and are provided a tax receipt for $1000, you likely need to run and not include that slip, or include it for the amount you donated.
The CRA has been under a lot of criticism lately for their treatment of Canadian taxpayers who had donated to tax schemes like GLGI, but the issue here likely will be solved in court. The participants have argued that the CRA provided GLGI with their charitable status, thus endorsing the scheme, while the CRA has responded with the fact that they have warned Canadians for a long time about donation schemes and that they provide the registered charity number to charities which comply with the CRA’s requirements and the CRA was not aware of the full extent of the scam until they investigated.
It’s a hot button issue which can be avoided by not trying to reduce taxes by fudging donation receipts.
If, at any time, you owe a balance to the CRA, make sure to keep in touch with the collector, respond to all notices and change your address with them if you have moved.
I also disagree with the CRA’s Direct Deposit initiative because it provides your main bank account to the CRA so that their collectors can take legal actions right away if you do not pay your balance.