BC Tracking Condo Purchasers

Effective September 18th, 2018, the Ministry of Finance in the province of British Columbia (Canada) has introduced a new version of their property transfer tax return which asks for additional information which could be used by the Ministry of Finance, or the Canada Revenue Agency (CRA) to track condo flippers, or those individuals or businesses who purchase condos and rent them out.

The property tax transfer (PTT) return requires that individuals with a “significant interest” in a corporation or trust that acquires property must be identified, with some exceptions.

If, the purchase is made through a corporation or trust, this new legislation will require property developers to collect a database of pre-sale buyers and remit that list to the BC Government.

The change in the regulations have been implemented to reduce the opportunity for tax evasion and / or money laundering, which are believed to have contributed to the skyrocketing house prices in the province.

The New PTT Return will likely require information on all beneficiaries of certain trusts and corporate interest holders including their name, contact information, tax identifiers (SIN, ITN, BN), and citizenship.

The draft legislation titled the Land Owner Transparency Act is still in the consulting stage and the BC government has stated that the results of the consultations do not affect the new PTT return which came into effect September 17, 2018.

These changes pose real threats to the highly speculative pre-sale condo market in BC, and if successful, will likely be implemented in other large urban centres, such as Toronto, Montreal and then across the country.

In recent years, pre-sale buyers have made out like bandits, securing pre-sale contracts with no proof of funds, without having financing in place, or the ability to secure financing and in many cases these buyers have absolutely no intention of closing upon completion of the condo, instead, flipping the contract to other buyers at a profit, without paying the tax on the gain.

The CRA frowns on buyers who flip condo contracts once a profit has been realized and have cracked down on this process, albeit, not enough, and not just on those who have been taking part.  The CRA has also assessed buyers who have legitimately sold their units and who have met all of the requirements for ownership, however it’s much easier for the CRA to determine everyone is guilty than to have to pull the legitimate from the pile of illegitimate.

These contract flippers have been successful because there is no title registration through BC land titles which means the best that the CRA can do is take the developer to court in order to obtain the list of pre-sale buyers who have flipped their contract, or go to court and seek information through a Requirement for Information, but the CRA must have evidence to support their claim that buyers have flipped condo contracts without declaring the capital gain.

All in all, this is just another area where the CRA is tightening up regulations thanks to the BC Ministry of Finance, and we will soon see this process come to an end.  In the meantime, there will be a whole bunch of taxpayers who will be assessed by the CRA, and there will be a 50% Gross Negligence penalty attached to that assessment.

Taxpayers who have been assessed by the CRA and who have done nothing wrong, should contact inTAXicating Tax Services at info@intaxicating.ca, and discuss our strategy for assisting taxpayers.

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The Canada Revenue Agency (CRA) Knows Who Cheats on their Taxes!

Are you on the Canada Revenue Agencies radar?  How about on the CRA’s Audit Radar?  Have you been “flagged”?

Have you ever wondered how the Canada Revenue Agency (CRA) decides who to audit?  Are there red flags?  Or does the CRA know how you operate your business which makes you more or less likely to be audited?

Here is the answer that you might be looking for;

The CRA knows who Cheats on their Taxes!

Do you fit their profile?

Are you at risk?

First, some background.

While I was still working at the Canada Revenue Agency (CRA), we released the results of a study that was put together to profile what kind of person poses the most risk for the CRA’s collections and audit groups.

The CRA spent a lot of time going through the main accounts; personal tax, payroll, GST/HST, and Corporate Tax, and we looked at who filed on time, who filed late (and how late they filed), and who was regularly compliant, and who needed a follow up verification audit, and what the result of those audits were.

This study focused on Tax Compliance, specifically;

  • Percentage of Taxpayers who accurately reported income and expenses (95%)
  • Percentage of Taxpayers who file on time (93%)
  • Percentage of Taxpayers who made payments on time with their filing (91%).

When it comes to reporting compliance or honestly reporting all your income and/or expenses, this study found that males are more likely to underreport their tax owing than females.

The study also found that underreporting is highest among taxpayers aged 35 to 54 and lowest among taxpayers under 35.

Underreporting of tax was also lowest for taxpayers who are married and highest for those who are separated, with single taxpayers somewhere in between.

Not surprisingly, underreporting of tax is higher among taxpayers whose main source of income is either capital gains or self-employment income versus taxpayers whose main source of income is wages, where most of the tax is withheld at source by the employer.

So who is on the CRA’s radar?

The prime candidates for the CRA to audit, or perform a desk review of expenses, are the separated or divorced males between the ages of 35-54 years old.

Do you fall into that category?

If so, know that the CRA is keeping one eye on you and the other on what you report and when it is reported.

Contact us at inTAXicating, and let us help you ensure that you remain compliant, and ensure that you have the knowledge necessary to organize your records so that you can quickly and easily get through a CRA audit.

EXAMPLE:

Here is an example of a case where the CRA used the criteria identified earlier to quickly descend on a taxpayer who fell behind in his filing and remitting duties.

Case: Tax Cheat?  Or Disorganized Business Owner?

I was approached by a business owner who ran very loosely with his books and records.  He kept a box of receipts and while most of the business receipts made the box, many got lost along the way.  Additionally, this business owner charged business expenses on his personal credit card, and personal expenses on his business card.  He travelled quite a lot for work, and he posted a lot of content on social media, but he failed to keep a thorough and accurate log documenting his personal versus business travel.

Additionally, because he was always on the go, had no time to review the details of the tax side of his business.  He had money in his business bank account, then he knew he was earning money.  At year-end, he would bring his half-completed records and his shoebox to his accountant for the preparation of his returns.

In June he would receive a refund.

A series of events, however, changed his life forever.

  1. His accountant began to get busy
  2. As a result, he was late getting payroll figures, and was late making the payroll remittance
  3. Then the GST/HST numbers were delayed, so that filing was late
  4. His personal tax filings were delayed
  5. His business tax filing was delayed.
  6. His business made money.
  7. While all of this was going on – he continued to send his info to the CA, and pay the CA’s invoices.  He would get the odd notice from the CRA and send it to his accountant to “take care of”.

This is very typical and a common occurence.

What he didn’t know was that everything was not okay.

One day a CRA field officer showed up to discuss his non-compliance and to arrange a payroll audit because the company was 6-months behind on remittances.  There was also a balance owing to the CRA of over $35,000.

Shocked, he contacted his CA who said that she would look into it, that it was going to take some time and she felt the CRA was completely wrong.

Convinced that the accountant was right, the business owner went back to work, and the accountant was going to find the error and fix the problem.

Only problem that he didn’t know was that there was no “error”.  The balance owing to the CRA was legitimate.  By filing late over that 6-month period, the accountant had amassed a significant balance due to late filing penalties and the balance was jumping by leaps and bounds as a result of the 10% interest the CRA charges on outstanding balances (compounding daily).

Then one day he received a call from one of his main suppliers who was concenred because not only did he cheque bounce, but there was a CRA officer there earlier in the day asking questions.

He contacted his accountant.

She appeared stunned and said that she would call the CRA and fix it.

She was just buying time.

A week later, the garnishment was still on the account, interest was accruing, and the accountant was telling stories of the CRA being unfair, and mean, and not listening or returning calls.

Frustrated and panicked that he might have to close his business without a bank account, he contacted his CA and asked for his books and records.

She refused.  Realizing that this was the end of the relationship with her client, she told him that she had done a lot of work with the CRA and she demanded payment before she would give up his information.

He refused to pay – how could he?  He had no access to his bank account and the CRA had taken all of his funds.

In fact, it took him 8-months and a small claims court date for this process to resolve itself.  She took him to court for unpaid work, and thankfully, the judge was wise to this CA and her practices and awarded the client his books and records in return for payment of the work actually completed, not the entire invoice.

The damage was done.  The business was also close to being done.

The CRA doesn’t care about the reasons why someone becomes non-compliant – they look at the business, the owner, and then set their course to fix it.

The fact that this business owner fit the category did not help him at all, as the CRA quickly and aggressively went after every asset that he had, raised assessments for the missing payroll and GST/HST figures, and sent Requirements to Pay to his business bank account, contacted his receivables (clients) and quickly moved to raise director’s liability so they could go after his personal assets.

Conclusion

Running a business is difficult.

Running a business without a business bank account is also difficult.

Running a business without a bank account, after the CRA notified your clients that you owe considerable amounts of tax money is next to impossible.

What killed this business was a combination of bad accounting, bad advice, lies, deception and some really bad luck.

The reality is that many, many businesses and individuals have this experience on a daily basis.  It is next to impossible for the CRA to determine if the information being told to them is legitimate or a made up story – but when the owner of the business is a perfect fit for commiting tax fraud – the CRA takes notice.

Could this have been fixed?  Of course.

If you owe money to the CRA, or if you have fallen behind on compliance, or if you suspect that your tax advisor is giving you bad advice, contact us now.  At inTAXicating, we’ll look at the facts, and help you run your business while we work on solving the problem.

Visit our website @ www.intaxicating.ca.

Send us an email to: Info@intaxicating.ca

 

 

Former Canada Revenue Agency (CRA) Auditor Not Guilty of Fraud

A former Canada Revenue Agency (CRA) auditor and his wife were found not guilty of fraud when a judge rules that the CRA failed to prove that the fraud was intentional.

This is significant, folks!

The original article can be found here;

https://www.surreynowleader.com/news/former-canada-revenue-agency-auditing-employee-and-wife-found-not-guilty-of-tax-evasion/

What I truly hope is that this ruling provides the CRA with a much clearer understanding that there are actually some Taxpayers and businesses (and even former employees) who might not fully understand the CRA’s rules and regulations and their application, and that there exists a chance that people make mistakes.

I’m not saying in this case that there was a mistake – and I don;t believe that the judge was saying that either, but what was very clear from this ruling is that the for the CRA to win a case they need proof and facts.

The CRA obviously will be appealing this decision.

My experience in the CRA has afforded me this insight which I happily pass along to each of you who read this…  It’s okay to make mistakes.  We all do.  The CRA does not expect each and every Canadian Taxpayer to be tax experts, but where the CRA has zero tolerance is where Taxpayers try to circumvent the rules and do so knowingly.  At that point, you can’t claim you didn’t know the rules.  You’ll be no mercy from the Crown at that point in time.

As well, there are many, many, many opportunities to resolve the tax issues before having to bear the expenses of going to tax court!  This ruling was the first of it’s kind, and considering how many people want to sue the CRA or take the CRA to court, it makes you wonder who is advising them, and who is paying their bills!

To understand where you stand and what your options are, you can start by contacting inTAXicating Tax Services, at http://www.intaxicating.ca, and start dealing with you tax issues with the facts.

info@intaxicating.ca

Tax Debt, Tax Arrears, Taxes Owing to the Canada Revenue Agency (CRA). Call it what you want, but it is ruining your life!

Do you have tax debt to the Canada Revenue Agency (CRA)?  Tax arrears causes stress each and every day on you, your business and your family? Even if you are in an arrangement with the CRA, they can change their mind on a moments notice and want more.  Knowing that the CRA can take all your money, or close your business at any time for your Tax Debt cannot help you sleep at night…

Everybody has answers for you which best suits themselves or their business.

We have a solution that best suits you and your business.

It’s called the Debt Diagnosis, and it’s a service we provide that no other tax solution / tax resolution / tax negotiator can provide.

Our Debt Diagnosis Program looks at the specifics of your CRA debt, your other debts, your current compliance situation, your assets, liabilities, ability to pay, and a whole bunch of other factors and we provide you with your options, suggestions and recommendations regarding how to proceed with your CRA debt(s).

We’ll advise you about options – options you know about already, like the CRA’s Taxpayer Relief Program, and the CRA’s Voluntary Disclosures Program – and we will tell you about options you don’t know about, and you won’t find in writing, because the CRA doesn’t want you to know about them.

As a former CRA Collections Senior Officer – who spent almost 11-years collecting primarily business taxes – GST/HST, Payroll, Corporate Tax, and Personal tax – and managing CRA Collections staff – I understand Director’s Liability, Non-Arms Length Assessments, Write-Off’s, Payment Arrangements, Taxpayer Relief, and everything else to do with collections better than anyone!

I created the Write-Off checklist that many CRA office’s use to write off their accounts.

I have resolved files that the CRA never thought they would collect on, while I was working at the CRA, and working outside the CRA.

Knowing the ins and outs of the CRA’s Collections division helps you!

Remember this: Getting in to Tax Debt takes time. Getting out of Tax Debt also takes time!

If someone is offering you a quick solution, then they are trying to get you into Bankruptcy, or filing a Consumer Proposal.  Insolvency firms are creating “tax” centres to “help” you with your tax debts.  They offer prompt resolution of CRA Collection actions, such as; Requirements to Pay and Wage Garnishments because if you go bankrupt the CRA cannot collect their debts… Most of the time.

Learn what options you have, which are specific to your Tax Debt / Tax Compliance matters.

The CRA has options available for Taxpayers who cannot pay their debts.

Use those, instead of trading Tax Debt for Credit Problems.

Talk to us at inTAXicating!

Find us @ http://www.inTAXicating.ca

Email us at info@intaxicating.ca

Learn the plan to take control of your Tax Debt, and all your other tax-related / debt-related issues and get moving in the right direction today.

There is no need to run to a trustee.

Or spend thousands and thousands of dollars to a firm who is going to promise solutions – tell you the CRA won’t budge on their position – and then tell you that the best option is to go bankrupt.

Get started on resolving your tax debt(s) today.  The CRA still works in the summer!

http://www.inTAXicating.ca

 

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

CRA Problems? Here is what you need to do!

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Do you have problems with the Canada Revenue Agency (CRA)?

Do you owe the CRA money?

Are you behind on your personal (T1) tax filings?

Are you a business owner and you have fallen behind on payroll, GST/HST or Corporate Tax (T2) returns?

Has the CRA registered a lien against a property you own?

Have you transferred and asset and the CRA is assessing a 3rd party for your debts?

Are there garnishments on you bank account or against your wages?

Do you own a business and the CRA is contemplating Director’s liability?

Is the CRA taking you to court, and you just don’t understand if you have a case or not?

Does any of this make sense to you?

It’s complicated, it’s time sensitive and it’s extremely frustrating that the CRA would rather force you, or your business into bankruptcy that work with you, isn’t it?

Here is what you need to know before you can do anything to solve these problems:

  1. If you search online using any keywords related to CRA, tax, debt, or urgency, you might wind up here (you can thank me later), or you might wind up at a trustee.  Bankruptcy firms have covered the internet with keywords aimed to make you think that the best and only option for you, is bankruptcy or a consumer proposal.  While it might be, there are SO many other options!!!  You don’t need a trustee to put you in bankruptcy in order to remove a RTP, when asking the CRA to remove it might be the way to go.
  2. Just like the phone scams claiming to be from the CRA, or wanting to clear your ducts, there are many “Tax Solutions” firms out there disguised as your ideal solution, when they want your money, your trust and then you accept their advice that bankruptcy is the best option for you.  You can identify these firms this way:
    1. They buy followers on Facebook, Twitter and other social media accounts they operate.
    2. They write blog posts not intended to help you, but to scare you.
    3. They refer to the CRA as being bad, evil, and as the “Tax Man.”  That approach is proven to never work.  Even if you detest the CRA, telling them that won’t help your case.
    4. They hide their true intentions; either that they are part of a Trustee in Bankruptcy or by calling themselves fun names, to distract you from who they are and who the owners are.
  3. You need to know what the CRA wants from you, and how to go about fixing it.  If you don’t know how the debt came about or what the CRA can, will, or have done to you already, then you cannot fix it, or have someone fix it for you, and,
  4. You need to know what will happen to you / your company / your family, in the instance where you decide to; do nothing, pay the balance, file the returns, fully comply with the CRA or choose bankruptcy / consumer proposal.

Without knowing answers to the above 4 questions, you cannot properly fix your tax problems once and for all.

If the “solution” to your 5, 10, 15 or 20-year tax problem can be fixed in one meeting and for a fee, what exactly are you getting?

Tax problems that take years to establish, sometime take years to resolve.  Considering some of the alternatives, it’s worth it to know that your CRA problems have been resolved and you are not exchanging a CRA tax problem for a bankruptcy / consumer proposal problem.

Ask, before you begin.

info@intaxicating.ca

Tell us about your tax problems, and let us tell you what the best option for YOU is.  If the solution can be achieved through a simple action which you can do, then you get moving on it.

If it requires some expertise or assistance, then leave that up to us.

Former CRA Collections expertise to help you when you need it the most!

 

 

Belgian Tax Authorities Going After Crypto-Currency Investors

It is no surprise, that the Tax authorities in Belgium, the Special Tax Inspectorate (STI) have begun to monitor investments involving Crypto-Currencies.

The STI have started investigating cases where citizens of Belgium have traded in digital currencies on foreign exchanges, and similar to many other countries around the world, the Belgium tax authorities are checking to see if these investors have been claiming their dealings and paying the 33% Capital Gains tax.

This gain would be reported in the “other income” section on a Belgian tax return.

Belgian tax authorities have found the taxation of Crypto-Currency challenging as every other county has, because the management of these assets takes place on foreign trading platforms and there is no jurisdiction around virtual space… Yet.

Likely, the Belgian tax authorities will follow suit of other countries and tax the gains as a commodity based on the location and / or residence of the trader.

The incentive to report will come in the way of significant penalties and interest when the STI finds the taxpayer before the taxpayer reports.

STI opened the investigations after receiving information from a foreign tax authority about the Crypto-Currency dealings of several Belgian citizens.

Information sharing among all tax authorities increased effective January 1, 2018 with the signing of The Multilateral Competent Authority Agreement (MCAA).

The MCAA is a multilateral framework agreement which provides a standardised and efficient mechanism to facilitate the automatic exchange of information in accordance with the Standard for Automatic Exchange of Financial Information in Tax Matters (Standard).

This new framework avoids the need for several bilateral agreements to be concluded, which means each participating country has ultimate control over exactly which exchange relationships it enters into and that each countries’ standards on confidentiality and data protection always apply.

In case you are ready to deem this framework illegal, the legal basis for MCAA rests in Article 6 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (Convention) which provides for the automatic exchange of information between Parties to the Convention, where two Parties subsequently agree to do so.

So as it becomes easier to get information on local citizens from international tax regimes, you can expect government tax authorities, like the STI to continue to approach trading platforms, and other governments  directly to obtain more data about Belgian citizens and their transactions related to digital currencies.

In December 2017, the Belgian tax agency, STI, agreed that a 33% withholding amount would be applied to profits and incomes from Belgian citizens who were involved in speculative trading of Bitcoin and other Crypto-Currency.

The tax is imposed on private individuals who trade in digital currencies with the intention of earning profits from the price fluctuations.

When the crypto trading is conducted by a business, or by an individual as a business, the tax rate might be as high as 50%.

Governments believe that Crypto-Currency companies should be obliged to cooperate with tax authorities, or as in the case of the US, where the IRS sent legal requirements to a firm, who were then required to do so by law.

In Belgium, Crypto-Currency are neither legal, nor illegal, however, the government have not announced a comprehensive policy yet, and like other EU Countries, appear to be waiting for a common European policy.

If you have been dabbling in Crypro-Currency, and not reported it on your Canadian Tax return, you should reach out to us at inTAXicating Tax Services, and we can help you amend your return, report the gaims, claim the losses and get filed before the CRA finds you!

info@intaxicating.ca