Member of Nova Scotia First Nation charged with evading $2.2 million in taxes

The Canada Revenue Agency have announced that they have charged a member of Nova Scotia’s Millbrook First Nation with evading $2.2 million in GST/HST.

The CRA charged Lisa L. Marshall who was the operator of the Traditional Trading Post, a convenience store, located on the Cole Harbour reserve of the Millbrook First Nation using the Excise Tax Act with wilfully evading or attempting to evade compliance with that Act.

The CRA alleges that between July 1, 2010, and June 30, 2015, the store failed to collect or remit $2,284,144.72 in Goods and Services Tax (GST) and Harmonized Sales Tax (HST) related to the sale of tobacco products to non-Aboriginals.

The agency says people who fail to remit tax owing are liable not only for the full amount, but also to penalties and interest, and if convicted, the court can levy a fine of up to 200% of the tax evaded and also impose a prison term of up to 5 years.

The moral of the story here, is that if you are required to charge, collect and remit GST or HST, you should.  The CRA treats Trust Funds – money taken by registrants and held in trust until they are remitted to the Crown – very seriously, and those who misuse Trust Funds are dealt with swiftly and to the full extent of the law allowed to be used by the CRA.

 

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How to Make a Payment to the Canada Revenue Agency (CRA)

Do you owe money to the CRA?  Are you in Collections?  Do you have CRA debt?  Are you looking to make an installment payment, or a payroll remittance?  How about a GST/HST payment or remittance?

If any of these apply to you, then you need to know how to make a payment to the to the Canada Revenue Agency (CRA).

If you have to make a payment to the Canada Revenue Agency (CRA) for either tax arrears or with a filed return, or as a remittance / installment, you have no excuses!  You can use any of the following options:

  • Your financial institution’s telephone or online banking service
  • The CRA’s pre-authorized debit service offered through My Account, which lets you:
    • set up a payment from your bank account to the CRA on a pre-set date
    • pay an overdue amount or make instalment payments
  • The CRA’s My Payment service, which lets you make payments online. You can use this service if you have Visa®Debit, Debit MasterCard® or Interac®
  • Online at a participating financial institution
  • Through a third-party service provider which offers payment by credit card or PayPal.
  • In person at any Canada Post outlet using cash or debit card.

 

What if you cannot pay in full, or if the CRA is all over you and you want to make a payment but don’t want them immediately sending a Requirement to Pay to your bank account and freezing it? 

 

If you owe money to the CRA but are unable to pay the full amount now, or if you need the CRA to work with you and set up a payment arrangement – to make smaller payments over time until you have paid your full debt (including penalties and interest), you should contact inTAXicating Tax Services through our website www.intaxicating.ca to schedule a meeting.

Aside from helping you make that payment, and avoid the garnishment, we can also assist with a wide variety of tax matters.

We can also assist with the potential cancelling, waiving or reducing the amount of penalties and / or interest you owe through the CRA’s Taxpayer Relief Program.  Results are never guaranteed, however, you stand a 0% chance of having the penalties and / or interest reduced or waived entirely if you do not apply.

Email: info@intaxicating.ca

Statute of Limitations for Tax Debt: Canada

Statute of Limitations for CRA Debts – Truth vs Myth

There is a common belief that there is a statute of limitations on tax debts and that taxpayers can ride out these periods and ultimately pay no taxes.  Google it, and you will see all kinds of information out there, but it’s the Canada Revenue Agencies information which matters the most.

A Collections Limitation Period (CLP) is the time in which the Canada Revenue Agency (CRA) can begin actions to collect a tax debt.

Myth: After the CRA issues a notice of assessment, it has either 6 years or 10 years to collect the debt. If you don’t pay what you owe within that time, the CRA can no longer collect the debt.

Fact: Each tax debt has a 6 or 10 year collections limitation period (depending on the tax) and the limitation period can be restarted or extended by the CRA when certain events occur.  At that point, the total amount of time that the CRA has to collect the debt will be longer than 6 or 10 years.

Even after the collections limitation period ends, you can still have a tax debt and interest will continue to accrue until the tax debt is paid in full.

 

Start of the collections limitation period

The limitation period starts on the date that a notice of assessment or reassessment is sent, or 90 days after that date, depending on the type of tax debt.

 

Types of tax debt

The collections limitation period start date and duration will be different depending on the type of tax debt. Some tax debts are subject to collections restrictions, while others are not.

The following are some of the most common types of tax debt:

 

Individual (T1)

The Collections Limitation Period (CLP) starts on the 91st day after the CRA issues the notice of assessment – unless there is an objection filed.  There is a 10-year CLP on T1 debts which can be re-started and extended by the CRA.

 

Corporate (T2)

The CLP starts on the 91st day after a notice of assessment or reassessment is sent unless a NOA or appeal has been filed.  The 10-year CLP applies, however the CLP can be restarted and extended.

 

Large Corporations (as defined by the Income Tax Act)

The CLP starts on the 91st day after a NOA or reassessment is sent.   The 10-year CLP applies, however, the CLP can be restarted and extended.

This type of tax debt is subject to a 90-day collection restriction for the period after a notice of assessment or reassessment is sent, however, the CRA can act to collect 50% of the amount owing by a large corporation as soon as a notice of assessment or reassessment is sent.  The CRA can start collection action on the 91st day for the remaining 50% of the amounts owed by a large corporation, unless a notice of objection or appeal is filed.

 

Payroll (T4) Deductions

The CLP starts the day after the Notice of Assessment is sent.  There is a 6-year collections limitation period, however this CLP can be restarted and extended at any time.

NOTE: There is no collections restriction on Trust funds, so the CRA can begin collections actions the day after a Notice of Assessment has been sent.

NOTE: If a Notice of Objection or an appeal has been filed, the CRA can continue to collect the debt(s)

 

GST/HST

The Collections Limitation Period starts the day after the Notice of Assessment is sent and while the 10-year CLP applies, it can be re-started and extended at any time.

NOTE: Additionally, since GST/HST are also Trust Funds (funds held in trust for the Crown), there is no collection restriction once the Notice of Assessment has been sent.

NOTE: If a Notice of Objection or appeal is filed, the CRA can continue to collect the debt(s).

 

Collection Restriction Period

For tax debts subject to collection restrictions, the CRA cannot start collection action:

  • during the 90 days after a notice of assessment or reassessment is sent
  • during the time that you dispute your debt by filing a notice of objection or appeal

However, if the CRA determines that it might not be able to collect a tax debt because of collection restrictions, it can apply to the Federal Court (Canada) for a jeopardy order.  If granted, this order will let the CRA take collection action immediately.

 

Restart of the collections limitation period

The limitation period is restarted when either you or the CRA takes certain actions. Tax debts subject to the 6-year limitation period are restarted for another 6 years and tax debts subject to the 10-year limitation are restarted for another 10 years.

The following are examples of actions that will restart the collections limitation period. This is not a complete list.

 

Actions you initiate

The collections limitation period will restart when you:

  • Make a voluntary payment
  • Write a letter to the CRA proposing a payment arrangement
  • Offer to provide security instead of paying the amount owed
  • Make a written request for a reassessment of an amount assessed
  • File a notice of objection with the CRA
  • File an appeal with the Tax Court of Canada
  • Ask the CRA if you can make pre-authorized debt payments

 

Actions the CRA initiates

The CRA takes various actions to collect tax debts when taxpayers don’t make voluntary payments.

The collections limitation period will restart when the CRA:

  • Issues a garnishment or statutory set-off to collect an outstanding tax debt when you don’t make voluntary payments
  • Applies a refundable credit to your tax debt and notifies you by sending a letter or Statement Of Account
  • Issues a NOA or reassessment against a third party for amounts you owe
  • Certifies your tax debt in the Federal Court of Canada
  • Initiates seizure and sale action to collect your outstanding tax debt

 

Extension of the collections limitation period

The events listed below can extend the collections limitation period. When this happens, the clock stops running on the date that an event begins and it will not run during the event.

This has the effect of stalling the collections limitation period.

When the event is completed, the collections limitation period resumes where it left off.

Other events can then restart the limitation period.  It will end when the 6‑year or 10-year limit has been reached, even if it took more years than that to reach that limit if you include the stalled time.

The following events can extend the collections limitation period:

  • You file an assignment (bankruptcy or proposal) under the BIA, CCAA or FDMA.
  • The CRA accepts security instead of payment of a tax debt.
  • You become a non-resident of Canada after the CRA issues a NOA or reassessment.
  • The CRA postpones collection action without accepting security for an objected or appealed GST/HST debt. This applies only to GST/HST tax debts assessed under the Excise Tax Act.
  • You file a Notice of Objection with the CRA. This will extend the limitation period only for tax debts subject to collection restrictions.
  • You file an appeal with the Tax Court of Canada. This will extend the limitation period only for tax debts subject to collection restrictions.

 

NOTE: Filing a Notice of Objection with the CRA or an appeal with the Tax Court of Canada will restart the collections limitation period for all types of tax debts because both of these actions are considered acknowledgments of debt.

Similarly, if your tax debt is subject to collection restrictions, filing an objection or appeal will extend the collections limitation period.

 

End of the collections limitation period

Once the period ends, the CRA cannot take any further action to collect the debt, however, the tax debt still exists and you can make voluntary payments.  Voluntary payments you make after the limitation period ends will not restart it.

Happy Canada Day! Don’t Forget About Taxation!

Happy Canada Day, Canada.  You don’t look a day over 150-years-old!

Happy 150th Birthday Canada!

There are so many things to be thankful of this Canada Day, beginning with Tim Horton’s and hockey and ending with socialized medicine and peace.  But in between there is a whole lot of taxation.  Taxes you pay which go to build new arenas, which pay for medicine, which support the troops who keep us safe, and fund programs which integrates youth of all backgrounds, races, religions and income levels together in order to keep violence as low as possible.

These are the taxes we cannot avoid paying – unless we stop spending – and they are the consumption taxes (GST/HST), gas tax, liquor tax, and many more, and there are taxes on wealth, like personal income tax, as well as Corporate taxes.  There are also payroll taxes and any other fee, levy or revenue tool (all taxes but given a different name).

For the most part, these taxes are unavoidable, and as Canadians we pay them knowing that money goes back into the economy and helps people.

What I do not understand, however, is why people pay more taxes than they are required to pay, or can afford to pay, and these taxes are viewed by people in the Canada Revenue Agency (CRA) as a “stupid” or “lazy” tax and what they are referring to are penalties and interest.

It is my belief that no one should pay any penalties or interest.  Ever.  Why give the CRA more money than they are seeking through the Income Tax Act or the Excise Tax Act.

If you work with an accountant or tax preparer, there should be no reason for late filings or late remittances, or for missing out on key deductions because that representative should know you, and the industry you work in, and be able to keep you current and free of penalties and interest.

But there are many legitimate reasons why people file late, and incur penalties and watch interest accrue on their tax accounts, and these people are then hammered by the CRA and need help, which is why I created inTAXicating.  My goal here is to help you get out of the troubles that you have gotten into and by help, I mean rehabilitate you and get you current on your filings, help you reduce your balance owing, apply for taxpayer relief (fairness) if it applies to you, and get you on a remitting and reporting schedule which ensures you are never late again.

Too many firms out there have watered down the “Tax Solution” process to the point where you pay them a ton of money, they “fix” your issue and then another one pops up, all because they are experts in taking money and not experts in resolving CRA debt issues.

The best part about working with inTAXicating is having the expertise where you need it.  If your problem is with collections or enforcement then you need the person who worked in that area, and trained and managed the collectors and who can tell you the CRA’s next move before they can.

Being audited?  Recently assessed?  Don’t understand a letter?  Balance looks too high?

There is no tax situation too scary, or too difficult to figure out.  Business taxes, personal taxes, GST/HST, payroll, T2’s, provincial, federal, liens, RTP’s, appeals, VDP… We’ve seen it all, handled it all, and have been successful with it all.

Just because it’s July 1st and summertime doesn’t mean the CRA stops working too.  In fact, it’s the opposite.  With more time on their hands, the CRA’s collections staff have the time to thoroughly research tax files which have balances on them to see what they can do to ge the account paid in full.

My experience working in the CRA for almost 11-years, tells me that the majority of in depth investigations occurs during the summer months.

Make summertime the best time to resolve that nagging tax problem.

If you have a tax problem, we have a tax solution.

You can also find us on twitter @inTAXicating or on Facebook @inTAXicating

Or email us: info@intaxicating.ca

 

What are you waiting for?

Common GST / HST Questions asked this past week

Below are some common GST/HST questions ask by readers of this blog through either email, Facebook comments, Tweets, or search queries.  I wanted to share the question, and provide the answer to save readers some time.

Q: Can you charge HST without an HST number?

A: No.

Q: Collecting GST when not registered?

A: Don’t.

Q: When do I have to start charging GST?

A: When you register or when you earn more than $30.000.00, or $2500 in HST.

Q: Do I have to charge HST under $30 000?

A: Yes, if you’re registered.

Q: Can you charge HST without a HST number?

A: No.

Q: What is the GST $30000 threshold?

A: It is the threshold that the Canada Revenue Agency (CRA) states determines when you must register for the GST/HST.  Under $30,000 in taxable sales, registration for GST/HST is voluntary.  Once you hit $30,001, then it is required.

Q: Do I charge HST if I make less than 30000?

A: Earn, not make, and you don’t have to, but I strongly recommend it.

Q: What are the CRA invoice requirements?

Better worded as what are the invoice requirements if I am registered for the GST / HST?

A: To have your GST / HST number clearly displayed on the bottom of your invoices so people who pay you GST / HST know you are actually registered.

Q: How does GST or HST work?

A: Basically, if you sell or provide goods and services in Canada, you must charge customers the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST) unless your business qualifies as an exception.

If your Canadian business fits one of the exceptions, it won’t have to charge, collect and remit GST/HST.
The two possible exceptions are:
1. You sell or provide a good or service that the CRA has classified at being “zero-rated” or “exempt”
2. You are a small supplier

Zero-rated goods and services, such as exports, medical devices or basic groceries, are charged 0% HST. Exempt goods and services, such as golf or music lessons, child care, etc., are exempted from GST/HST, so they are not subjected to the tax.

A small supplier is one who has total taxable revenues before expenses from all your businesses of less than $30,000 or less in the last four consecutive calendar quarters and in any single calendar quarter.

Q: Any industries or professions have to apply for GST / HST right away?

A: Yes. Taxi and limousine operators and non-resident performers have to charge GST/HST even if they are small suppliers.

Q: Do I want to register for GST / HST even though I’m considered a small supplier?

A: Yes

Q: How do I register for GST/HST?
CRA makes registration easy for Canadian’s. You can register by phone (call the Canada Revenue Agency at 1-800-959-5525), online, by mail or even in person at a tax office.
(Note that if your business is in Quebec, you need to contact Revenu Quebec instead at 1-800-567-4692 as they deal with GST/HST in that province.)

If your small business starts out as a small supplier and you make more than the small supplier limit ($30,000) you’ll want to register for GST/HST right away; in the eyes of the Canada Revenue Agency, you are now a GST registrant and you:
1) have to collect GST/HST on the supply that made your revenue go over $30,000;

2) have to register within 29 days of the day that you made the supply that made your revenue go over $30,000.

What causes problems for small businesses is they don’t realize they’ve gone over the limit until some time later when they’re doing the books and then discover they didn’t charge the GST/HST when they should have.  Small suppliers must watch their revenue carefully.

Q: What is a BN?

A: When you register, your business will be assigned a business number (BN); this is the number that you and the CRA will use to identify your business. (You’ll be using it on all your invoices, in your accounting system, and in all your tax-related correspondence with the CRA.)

Q: Do I need to charge the GST/HST?

(Answers the question whether or not you need to charge GST/HST on your sales of goods or services.)

A: Sales of zero-rated or exempt goods and the small supplier exception are discussed later.

Q: Shipping Out of Province: Should You Charge GST/HST?

A: Yes.  Depends on the province you are shipping to.  They pay the applicable rate in their province.

Q: What’s the difference between zero-rated and exempt goods and services?

A: These are two special classes of goods and services that the customer does not pay GST/HST on but in the case of zero-rated goods you, the provider of goods or services, can still claim input tax credits.

Hope this helps!

If anyone has any questions, concerns or comments about the GST/HST and need additional assistance, please contact us at info@intaxicating.ca

 

 

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

How inTAXicating solved a complex CRA tax issue relating to GST/HST, Deemed Trust, s.160/325 Assessments, CRA Collections where the incorporated director was advised to go bankrupt.

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 Canada Revenue Agency (CRA) tax problem because their firm was just too expensive for the couple.

Upon accepting the offer, I was told there was a balance owing to the CRA for GST/HST, and that the firm was essentially bankrupt, with no ability to pay.  The business directors felt that they did not owe the CRA anything, and because they were essentially insolvent, they had stalled and delayed the CRA As much as they could.

Until the CRA advised them that they were going to proceed with the raising of a S.160, Non-Arms Length Deemed Trust assessment for a payroll debt and a S.325 Non-Arms Length Deemed Trust assessment for GST/HST.

This, however, was a huge problem because when raising a s.160/325 assessment, the CRA essentially takes the debt that the corporation has not paid, and transfers it to another corporations or person who benefitted through dealings with that corporations to the detriment of the CRA.

That 3rd party eventually turned out to be family…

It was all over $45,000 owing to the CRA.

While a solution sounds simple enough – confirm the balances owing to the CRA, then confirm the legitimacy of those debts, tie up some loose ends on the compliance side, and then make arrangements between the client and the CRA to resolve both matters.

One huge issue is that the client spoke to the CRA and the collector knows that the s.160/325 is a problem (but the collector doesn’t know why).  In the collector’s eyes, she has the upper hand because the assessment touches a nerve with the client, but on the other hand, without knowing the nature of these concerns, the CRA are taught to think the worst, and thus are more eager to raise the assessment because they suspect the client is hiding something.

So I connected with the couple, got their side of the story, then met their 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 because they didn’t get paid.

With money owing to the CRA, the collector was prepared to use their Deemed Trust provision and raised a s.160/325 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.160/325 because that would survive the bankruptcy and would result in the CRA getting paid on all fronts.

Having worked in the CRA’s collections department for almost 11-years, logic told me that a business which was legitimately struggling would not have significant amounts of GST/HST owing in its final years.  They would not have had the financial resources to buy inventory to sell if the business was failing, rather, they would be selling off their inventory at a deep discount to recover the maximum amount possible.

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.  The CRA quickly arranged for a desk audit of the refunds, and the client quickly provided the supporting documentation to support the majority of the ITC’s, and within 2-weeks, the audit was done, the returns accepted and sent for posting.

Upon posting, the revised returns knocked down the balance owing considerably.  All of it.  The payroll debt too.

As a result, the CRA cancelled the s.160/325 assessments turned their attention to the T2’s which we had completed and filed in the interim.  The credit from the GST/HST is sitting on the CRA’s systems waiting for the T2’s to post in full.

That’s how inTAXicating Tax Services helps!

Knowing the ins and outs of the CRA’s collections department is a skill which very few possess.  Thinking to ask the CRA for information related to the GST/HST filings and to ask the CRA to amend them even though they fell beyond the 4-year limitation period for allowing Input Tax Credits (ITC’s) is a request that many accountants will not make.

Our prior CRA collections experience allows us to stand out.  inTAXicating Tax Services.  Contact us at info@intaxicating.ca

 

 

Your Canada Revenue Agency (CRA) Tax Collections Questions Answered

Here are the answers to the most frequently asked CRA Tax collections questions from the past weekend:IMG_7817

  1. Can you bribe a CRA officer in Canada?

Answer: NO.

First off, bribing a CRA officer is a criminal offense and you could quickly wind up with the RCMP at your door, or under investigation, but more realistically, the staff at the CRA tend to be lifelong civil servants and one of the great benefits of working in the civil service is the great pension.  Few civil servants are willing to even entertain the thought of giving up their pensions, let alone going to jail for someone when they have hundreds of other people to collect from.

2.   Is there GST/HST on a lien?

Answer: Let’s presume that the question is asking if there is additional GST / HST on a lien, and the lien has been registered by the Canada Revenue Agency (CRA).  In that scenario, the answer is no.

The CRA would register a lien for unpaid or unfiled (and assessed) GST / HST, and the amount used for the lien is the amount owing on the day it has been registered in Federal Court.  This fact is important because from that day forth, interest continues to accrue and accumulate on the tax account with the CRA, but the lien only reflects the amount owing at a point in time.

Often, a lien will get paid out and then the CRA’s computer system kicks out an update Notice of Assessment with an additional balance owing  and taxpayers are puzzled having just paid off a lien.

They did pay the lien.

Now they pay the rest of the balance owing.

3.   Where can I get the truth about Voluntary Disclosure?

Answer: From the CRA website, of course.  The link to the VDP section of their site is here;  http://www.cra-arc.gc.ca/voluntarydisclosures/

4.   Can I claim mileage drive to and from work at the CRA?

Answer: I hope you enjoy your career at the CRA and are not an auditor, because you should know this answer!  You cannot claim mileage driving to and from work.

From the CRA website; http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/229/slry/mtrvhcl-eng.html

“If you use a motor vehicle for both employment and personal use, you can deduct only the percentage of expenses related to earning income. To support the amount you can deduct, keep a record of both the total kilometres you drove and the kilometres you drove to earn employment income. We consider driving back and forth between home and work as personal use.”