7 Ways the Tax Man is Watching You: MoneySense.ca

When I saw this headline in Money Sense.ca I immediately felt upset that this article was going to be a bunch of made-up, fear-mongering, scare tactics along the lines of something that would come from an advertising campaign from a certain tax law / brokerage firm.

They popularized the calling of the CRA the “tax man” and since we all know the CRA hates that, its worth noting that it a confrontational relationship with the CRA is what they are all about.

Some people need that.

Most don’t.

Then, upon reading the list, I noticed that each and every one of the 7 items has a quote from… Dioguardi, and once the shock and surprise wore off, I shook my head and wanted to set the record straight, as far as I see it.

Not really...
The CRA is watching you!

The link to the original article is here;
http://www.moneysense.ca/save/taxes/cra-watching/

So let’s look at these items in a bit more depth;

1. Social media. Sure. If you make it public, and you have a unique name, the CRA can see what you’re posting. It doesn’t mean that if you have $40K in reported income and buy a $100K boat that they are going to assess you. If you are in collections and the CRA’s collections officers are trying to get you to pay, and all of a sudden a boat shows up on their radar, they will do their research and determine who owns it, how it was purchased and if it belongs to someone who owes the CRA taxes, then you have better have a good explanation as to why you didn’t disclose it.

2. Kijiji, eBay, etc. Yes, if you are selling items online as a way to earn an income it is income that you should declare and pay taxes on. The CRA have in the past requested and received information from eBay related to their top sellers. If, however, you are doing this as a business, it would have made sense to have engaged an accountant or tax professional to ensure that you are not only reporting correctly, but that you are claiming all eligible deductions and expenses – like a home office – to offset the income earned. A business is a business.

3. Credit card slips – yes, however only if it’s through an audit and the auditor has requested it directly from you. I suppose if you were under criminal investigation, or were in collections for a long time, the advanced collection techniques might include requesting this information, but the collections staff are not able to do anything with it. Auditors can assess with it. Collections cannot. Very misleading point here!

4. Bank accounts and investments – All financial institutions are required to provide year-end tax slips to taxpayers indicating their position during the year and in each and every case, a copy is sent to the CRA. They already have this information. They’re not watching anyone. The slips the bank sends is matched to the slips the taxpayer files. No slip, then the CRA asks for it (maybe you lost or forgot it) and then if it’s not accounted for, the CRA will raise an assessment.

If a taxpayer is in collections and the CRA wanted to know information about a bank or investment they have the ability to use a Request for Information, to ask for information and a Requirement for Information to ensure they get the information. Both processes are complicated and the CRA must prove that they were denied the information or that they need it urgently in order to raise an assessment.

5. This section is a bit vague and underwhelming. First, the CRA checks the sales records much faster than they did years ago – but they take that information then send out a questionnaire to the taxpayer to complete which is the supporting document they use to assess. They see you sold, but you let them know if there is cause for digging deeper.

On the rent side,, what catches the most number of people is when a renter pays rent in cash and the landlord and the landlord does not provide receipts and neither reports in… until there is an issue, and the renter declares rent paid. The CRA checks the landlord to see if they declared the rental income and when they have not… Assessment. The CRA is, again, not watching people in this case. They come across these assessments because of breakdowns in rental agreements.

6. Income and pensions. This list should have stopped at 5. This is not a case where CRA watches anyone. It’s about reporting and discrepancies.

7. Mystery diners – I’m not even going to comment on this than to say that it’s so over the top it’s unbelievable.

I will add, that while working at the CRA, I did attend restaurants as a representative of the Crown, however I disclosed my reason for being there and it was only in situations where restaurant owners had payroll debts over $300,000, and suddenly reduced their payroll from 15 full-time employees to 2 full-time employees. I just needed to check and see if they really did cut staff, or if they just started paying the other 13 cash under the table, to avoid having to deduct and remit the CPP, EI and tax. In each and every case, upon entering the restaurant, I would count the number of employees – when I saw more than 10, I would take the owner aside, explain this was not legal, then request a payroll audit and be done, until the audit assessment came into collections.

So to conclude, the most accurate part of this article is, “always give full and complete disclosure”.

The “tax man” is not watching you, unless you are in collections, under investigation, or trying to “game” the system.

If you have questions, concerns or comments, and want the truth about your situation, send us an email to info@intaxicating.,ca and we can have that discussion.

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CRA News Release: Reminder – Registered Charities Prohibited From Devoting ANY Resources to Partisan Political Activities

The Canada Revenue Agency (CRA) has issued a Press Release on their website; http://www.cra-arc.gc.ca/chrts-gvng/chrts/cmmnctn/pltcl-ctvts/dvsry-eng.html, reminding registered charities that they are prohibited from devoting any of their resources to partisan political activities.

The CRA has determined that a “partisan political activity is one that involves the direct or indirect support of, or opposition to, any political party at any time, whether during an election period or not, or a candidate for public office.”

For those of you quick to conclude that this is a recent change – made by the Conservative Party of Canada to protect themselves from negative press, the prohibition on partisan political activity is a long-standing requirement under the Income Tax Act (ITA).

Charities are responsible for their resources, and must devote these resources to exclusively charitable purposes.

Charities that devote any resources to partisan political activities may no longer be eligible for registration. A charity’s resources include funds, property, and personnel (volunteers, employees, and directors).

Partisan political activity may include, but is not limited to:

  • providing financial or material contributions to a political party or candidate
  • making public statements (oral or written) that endorse or denounce a candidate or political party
  • criticizing or praising the performance of a candidate or political party
  • organizing an all-candidates meeting or public forum in a way that could be seen to favour a political party or candidate
  • inviting candidates to speak at different dates or different events in a way that favours a candidate or political party
  • posting signs in support of, or opposition to, a candidate or political party
  • distributing literature or voter guides that promote or oppose a candidate or political party explicitly or by implication
  • explicitly connecting its views on an issue to any political party or candidate

These restrictions on partisan political activities do not prevent volunteers, employees, or directors of charities from:

  • helping in a political campaign, as long as they do this in their personal capacity and do not suggest they represent a charity
  • making partisan political comments in public (including on social media), as long as they make it clear they are speaking in their personal capacity and not as a representative of a charity

Charities that use the Internet or social media to post information should ensure the information does not contain partisan political statements. Also, the information should not link to statements made by a third party that support or oppose a candidate or political party.

An important note surrounds the responsibility charities have to ensure their social media also complies with these rules, and as such, when a charity invites comments on its website, blogs, or on social media, it should monitor them for partisan political statements and remove, edit, or moderate such statements within a reasonable time.

For more information on political activities, you can refer to the CRA’s website, specifically their section on Resources for charities about political activities, including Policy Statement CPS-022, Political Activities, and Partisan political activities, or call the CRA’s Client Service Section at 1-800-267-2384.

The Rickey Henderson Effect: The Value of a Wink.

The Rickey Henderson Effect: The Value of a Wink.

I hope you are able to, and take the time to, read this post on the importance of acknowledging others – in business and in life.

In this specific article linked above, the author describes how as a young child, Rickey Henderson – then an outfielder with the New York Yankees – winked at him as he was leaving the baseball field in between innings.  That wink alone led the author to become a huge fan of Henderson’s and the author detailed how his mother purchased Henderson products and how he influenced his friends to purchase products and the net effect of that wink was money in Henderson’s pocket (he receives a share of items purchased in his name or his likeness).

Fast forward to 2014, and the author comments on the importance of a wink, or 😉 in social media and how it can also have the same impact on people.

I completely agree.

The most effective way to interact with people is to, well, interact with people.  Saying hello, nodding, winking, waving, or in today’s cyber-society with a wink, or a smiley face or even by personalizing emails through the adding of terms like; “Hope you are well”, “Warm Regards” or “All the best”.  These little additions tell the person on the other side that they are being acknowledged and by taking the time to do that you have an ally.

To that point, a personal story.

I had been working at the Toronto North Tax Office of the Canada Revenue Agency for 2 1/2 years and had become accustomed to putting my head down as I walked through the building as others do.  I have always been great with faces but terrible at remembering names, and it was easier to pretend there was no one there or that I was distracted so I didn’t have to say hello or remember a name.

Then one morning as I left the subway and walked towards the office, someone walked by me and said, “Good morning Warren!”,

Much to my surprise – and I am nowhere near shy or introverted – I looked up, did not recognize the face, but said hello back and then out of my mouth came this; “I’m sorry.  Normally I am great with faces but I cannot remember where I know you from.”

He responded; “I’m Mark.  You trained us last week on Director’s Liability.  Great class.  I learned a lot.”

It was that moment when I decided that I needed to acknowledge people too.  Stop walking with my head down.  Stop looking busy.  I needed to learn people’s names and a fact or two about them to show them I care and help bring the office closer.

From that morning on, I saw and addressed each and every person I came across by their name (or what I suspected was their name).  If I called them by the wrong name, they would just correct me, right.  🙂

For the next 9 years, I became that guy at the CRA.  The guy who knew “everyone”.  The guy people came to with questions, and for advice.  The guy who liked the people he worked with because he took the time to get to know them and as I moved into leadership roles, I was best able to get the most out of all my staff because I knew their strengths and weaknesses, likes and dislikes.  I wanted what was best for the CRA, but also best for the employees and if there was a dispute, there was that trust that I was not going to steer them wrong and it would benefit them in the end.

I took the time to wink.  Just like Rickey Henderson did, and it paid off exponentially.

Today, take the time to say hello to people you would not normally talk to.  Not too long, but just enough to let them know you care.  Or send an email that is a little less impersonal and a little more warm.

You will feel great and so will they!

😉

The Importance of a Social Media Policy and Compliance to that Policy

English: Data from April 2011 Editor Survey th...
April 2011 Editor Survey that lists Social Media activities (Photo credit: Wikipedia)

As a user of the Internet, for work or for play, it is extremely important to know and understand what the consequences can be when you use social media.  

Many do not.

I am constantly amazed that people get caught doing, saying or showing things online which they later regret and the consequences of their actions can be very severe.  It certainly changes the way people see them, and can change the way people treat them, with bullying, job loss, or lack of promotion some of the worse case scenarios.

I learned this the hard way.  In the almost nine years since I started blogging I did so with the mistaken assumption that no one read my it and that the 5-10 hits a day were complete strangers who arrived there by error.  Not having any comments, and being able to see the search engine terms used to get there it was easy for me to write whatever I wanted in complete anonymity.  My blog was my forum to bitch, moan and complain about whatever I felt like, whenever I felt like it.  Getting it all off my chest made me feel great.

Then it all came crashing down.  I can recall this as if it were yesterday, when I hit send on one particular post from 2005 in which I complained about my employer and also lambasted some colleagues for their lack of work ethic.  I never thought for a moment that there was a remote possibility that anyone from my company was reading my blog and that the information I wrote in that post, or in any of my previous posts were going to be spread around the office and used against me, like they were.  

My hits over the next couple days went from 5-10 to 150 on that post and I started to receive anonymous ominous comments on that post.  Stuff started to disappear from my desk, and I would get hang-ups in the middle of the night.  Then some of my colleagues would start random conversations with me and include information from my blog that they would not have known if they did not read it there, like “how was the movie you saw Saturday with your wife at Yorkdale.”  I was perplexed. 

It was soon thereafter when I realized that I had made a really stupid mistake and if I wanted to continue to work there without having my stuff disappear, I would need to go into damage control and implement my own social media policy.

Some of the key points are below;

1) No mention of work. Ever.  I’m a blogger building my brand first and foremost.
2) No mention of names of my family or friends unless they give me permission.
3) No posting of pictures on any form of social media except for family pictures on Facebook that I would be comfortable sharing with the world or a future employer.  
4) I would never say anything online that I do not believe in or would not say face-to-face to someone.
5) If I am going to be critical of something or someone it had to be fact based and that required sources and a ton of research.  No gossip or hearsay.
6) I am my own brand. I want my brand to be respected and taken seriously so I will have to treat others that way – good and bad.

The next thing I had to do was take a step back and see how this new social media policy worked for.  I moved my blog from Blogger to WordPress and kept it hidden until I was sure that I could play by these rules.  Once I came out from hiding, I not only started to play fairly, but I started to informally educate others about the consequences of using social media for I realized that whatever you post that can be traced back to you, or your brand, can and will be used against you at some point in your life.

I have seen people tagged in photos where they are with friends and drinking, and the picture is most unflattering – maybe they are winking but look drunk – or the comments to a photo are unflattering or rude, or a photo taken in an inappropriate position – like on the toilet, and even an innocent comment like “I’m bored” which shows up next to a mention about your place of employment.  All these examples can have long-lasting consequences far from the original intent.  Ignoring them is not an option and just removing them usually does not suffice either.  Not being in that situation is the best choice a person can make, and letting others know if equally as important.

I’m being tough on myself, but it’s nothing compared to the tolerance that certain industries have for themselves and when tracking their massive employee base. 

Financial services, for example, can be especially tough due to the high regulation and as an employer they must ensure that their employees are clear about the organizations expectations and the social media policy.

I, for example, when hiring for my tax units always spends a few minutes to check out the candidates Facebook page, LinkedIn profile and then I Googled them to see if there are any warning flags.  To not do so, would be not be responsible on my behalf.  If they post anything and their profiles are not neat and tidy it means either they are going to be social media nightmares for the company or I am going to have to do a lot of coaching and mentoring them to ensure they don’t get caught online harming the company’s image of their own brand.

One of the first discussions I would have with staff is to caution them about what they say when using certain social media outlets, like LinkedIn.  If they are choosing to comment on posts and join discussions they have to remember that they are not just individuals commenting there but they are also employees so they have to be cautious to keep their comments on topic and away from anything which could get them fired or the company sued.

I treat all my online activities, whether blogged, tweeted, liked or commented on, which relate to any external business as being monitored and recorded by someone if the company is not doing it themselves.  I expect the same from my staff, my colleagues and my peers.  I know when I talk to staff who are not practicing safe, social media that it is just a matter of time before it catches up to them.

Implementing an effective social media compliance process isn’t rocket science especially when the company has a clear social media policy and everyone abides by it and that policy has to be more than reactionary and punitive.  Effective companies outline how they interact with the world via social media and how they expect their employees to do so as well.  Leading organizations empower employees to build the corporate brand but it is certainly a team effort every step of the way.

Almost every other department has a key role in shaping the message.  Marketing defines the scope of the message, the IT group outlines which social technologies will be used and provides the devices to be used while the legal and social media compliance groups are critical to ensure that the messages meet the necessary regulatory criteria.  Once all that is in order it is absolutely critical for the training and learning group to be engaged so that the organization be trained to understand the pros and cons of using the various forms of social media, the most common being Facebook, LinkedIn and Twitter. 

What most employees in large organizations do not know unless they are trained is that any output on a social media platform goes through a series of serious checks and balances before someone hits send.  Static content, for example – such as Facebook and LinkedIn profiles – require documented pre-approval before being posted online, while interactive content such as updates to Twitter, LinkedIn, and other networks do not need to be vetted, however, regularly monitoring the content is extremely critical to ensure that there are no compliance violations or negative comments. 

What most employees fail to understand is that these tight rules not only apply to business-related items posted by the organization but also if it comes from the employees personal social media accounts.  It pays to think twice before speaking about your organization, their practices, clients or earnings.

Organizations keeping a close eye on their social media content in order to control the public message and ensure it is compliant with the organization’s policies and procedures.  It also allows organizations to control their message and that makes sense from a brand perspective as quick accurate responses to comments shows a proactive organization while quick responses to, or removal of, derogatory or inappropriate messages displays a proactive social media policy.  Keeping negative comments unanswered in a thread is a message to the general public that it is okay to pile on with more negative comments and spam the site.  If these comments are removed and/or responded to quickly than others will think twice before hitting send. 

Even prior to the monitoring the output, employees usually are not aware that many organizations prefer to control the message by utilizing tools to prevent rogue posts from ever hitting the web.  Organizations assign limited permissions to certain employees and once that employee is finished creating a tweet, comment or update it is them moved into a queue to be edited or for managerial review before it moves to the compliance group, then on to marketing before it is approved and posted.

The best of these systems even come with their own archiving tools already built-in as financial services are heavily regulated and keeping all outgoing messages for a certain period of time, are a requirement of regulators.

Banning social communications altogether and hoping for the best, is no longer a viable alternative.  Restricting communication, access to information and people networking is a practice which many organizations have been moving away from since smartphones have become commonplace on the hips of many employees.   There is also the opinion that if organizations continue to resist, that their competitors and customers are moving ahead and talking about them to their current customers and to their potential customers. 

To further that point, many organizations who are already heavy in social media are forging ahead with new social media positions, such as the social media compliance officer who among other things, lines up tweets for management’s approval and works closely with legal, marketing and training to ensure the right message is getting out and that all staff have been trained in a meaningful manner on the risk of non-compliance to these policies both for their personal brand and for their company.

Banks in particular, are moving forward quickly in all areas of social media, and with great reason.  These customers tend to be more affluent and faster adopters of new, expense-cutting technology such as online and mobile banking, which makes them particularly valuable at a time when revenues are low and expense cutting makes the most sense.  Getting them on the bank’s side also helps on the public relations front as these tech savvy folks are just as likely to comment online about good experiences, as they are to complain about bad ones.

So next time you fire up the computer, smartphone or tablet, make sure that before you press send that you are doing so responsibly.  You don’t want to ruin your brand in a manner of seconds (or a few words) considering how long it took you to build it up. 

Managing – Internal communication. Keeping staff engaged.

What forms of communication work best with your staff and within your organization?  Besides the usual suspects, being email, phone and video conferencing, what do you use to keep dialogues open and retain information for ease of use or for succession planning?

Here are some of my thoughts and suggestions;

How to use these tools to improve internal communication with and among employees.

I have noticed in my 15 years in industry that many companies are reluctant to adopt social media tools internally and externally for fear of losing control of their message and to protect their brand.  Those who have made the leap are learning that online tools and technologies make it easier to engage employees in more meaningful dialogue.  The result, I find, is improved efficiency, increased collaboration and greater employee engagement as they are creating an environment where employees feel their voices will be heard.  Engaged employees feel valued, and valued employees tend to have more motivation and are happier.

One of the most common ways to engage employees is by keep an up-to-date internal home page for the business or for the business unit.  My tax unit, for example has a neat, organized internal site that we use to store information and anyone in the unit can recommend changes and most can make the changes.  It’s a team page, through and through.  It also serves as the unit’s evolving knowledge base since it is edited and updated collaboratively by the unit   It also houses the latest applicable company announcements, HR information relating to tax, marketing documents, company policies and how-to information.  We recently made part of it public so we could share that information with the rest of the business.

This site works for us because it’s a great archiving tool for tax information.  We try to keep links and documents up to date and the problem of multiple versions of information living all over the place is eliminated.  We are sharing our tax knowledge and spreading the word in real-time.  I have always felt that people who share ideas and their thought process learn and understand faster.  No better form of training exists.

A slightly more advanced tool I like to use is the office messenger service, which only works internally.  It not only allows me to see when someone is at their desk, but when they are in a meeting or busy and do not wish to be disturbed.  Staff use the application to challenge each other, think communally and can have answers within seconds which allows them to continue working through issues and not have to drop it and get back to it at a point in the future (if at all). 

It’s also used for personal discussion, which I’m okay with since it is better than having to get up and walk over and disturb one person or possibly more than that.   I have always felt this tool increases collaboration and allows the staff to learn from each other and it gives them an outlet to ask a question privately which thy may have been too shy or nervous to ask out loud.  With the screen sharing capabilities, staff no longer have to struggle with explaining things, they can share their screen and others can see, learn and help.

My latest pet project is the internal tax blog.  In my opinion, the blog is much like the main page on a sharepoint / Intranet site where news about the company and staff are posted.  It can be used to explain a new tax treaty change or to congratulate a colleague on the birth of their child, with pictures.  Most of the blogs are written by senior management, but other staff do post occasionally, and aren’t shy about chiming in with their opinions.  Case in point, this blog, which is now 3 years old and still a work in progress.  It’s intent was to be the repository for tax changes, tax research and my management style.  Needless to say, it’s not there yet.

I also want this blog, and the internal one to be collaborative too, and provide an outlet for the staff to comment and receive feedback or questions to answer from either the team or the rest of the business.  It’s a great forum for a shy employee who knows a lot to be heard and recognized for their knowledge.

A blog is a also a smart tool to keep employees aware of what’s happening in the company, without overflowing their inboxes.   Everyone should be encouraged to participate because if it is just one or 2 people then it runs the risk of being their opinions and not the facts.

From the IABC Research Foundation’s 2009 survey, some numbers on usage of tools by employers to engage employees.  I’ll bet the numbers have grown considerably in the past 3 years with twitter coming into the mainstream and many corporate missteps through social media. 

Tools used by organizations to communicate with employees:

Blogs: 47%

Discussion boards: 32%

Podcasts: 29%

Videocasts: 28%

Social networks: 27%

Wikis: 26%

 

What tools have you found work for your organization and which will you stay away from?  any stories to share?

Social Media Code of Conduct

Please read this post;

http://rinkcomms.wordpress.com/2010/02/16/adopt-a-social-media-code-of-conduct/

I totally agree that there is nothing better for brand recognition and respect than having a presence on the web. I also agree that with that presence comes a huge responsibility to keep the brand in the most positive light.

In one of my earlier stops in my taxation career I came across some Twitter comments from a young lady who had started working in one of our US locations and in her tweets she was trashing the company and doing this while sitting at her desk.

I notified IT and she was removed from the company for conduct detrimental to the company.

Bottom line… Don’t be stupid. If you are supposed to be working from home or out of the office don’t update your facebook status. If you want to use your facebook account to post pictures of you getting drunk of half-naked, make sure it’s viewable only by your friends because you don’t want your potential employer at a law firm, CA office, etc. seeing you like that and letting it cloud their judgement of you.

Be smart.