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.
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.
The link to the original article is here;
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.
I came across this article from the Montreal Gazette;
I strongly recommend that you take the time to read it. It is brief, but very informative as it tells the story that I have been trying to tell for the past 20-plus years! There is that there is a significant percentage of, not just Quebecers, but Canadians who leaving money on the table because they don’t understand the tax system, according to a report released by the C.D. Howe Institute last week.
The report — which bases many of its conclusions on a survey of 1,000 Quebecers — suggests that lack of knowledge is one of the reasons many people don’t take advantage of credits and savings vehicles, like RRSPs, which could reduce their tax burden.
“People might be missing out on benefits that they’re entitled to,” said Antoine Genest-Grégoire, a tax policy researcher at the Université de Sherbrooke and one of the authors of the report.
“It can take various forms, people can simply not know about the existence of the credit … sometimes, they know it exists but they don’t know how to use it or they find it too complicated.”
Survey participants were asked a series of questions about how the tax system works and the average score was just 55%.
It wasn’t just tax credits that left participants stumped. Respondents scored poorly on questions about progressivity — the idea that people with higher incomes pay a higher tax rate, a core principle of the Canadian income tax system.
While almost 90% of respondents knew that income tax rates differ based on how much people make, many struggled with the concept of bracketing — when different segments of an individual’s income are taxed at different rates.
“We hear a lot of people thinking that once you reach the top income brackets, you essentially pay close to 50% of your income in taxes,” Genest-Grégoire says, when in reality, it’s only the income above the cut-off for the highest tax bracket that’s taxed at the highest tax rate.
Only 26% of survey respondents were able to answer a question about that correctly.
While survey respondents generally had a good sense of whether they pay sales tax on everyday purchases, like groceries, prepared food and clothing, there were some exceptions.
For example, Quebec provincial sales tax doesn’t apply to books, a decision made to encourage literacy and support book publishers in the province. Only 21% of survey respondents knew that.
The result, Genest-Grégoire said, is that the public policy objectives of the tax exemption are unlikely to be realized.
The lack of tax literacy doesn’t just affect individuals pocketbooks, Genest-Grégoire said.
“People who don’t understand taxes tend to have lower trust in the tax system. The Canadian tax system, even though you’re obligated by law to produce a tax return, works on trust. The government doesn’t audit everyone,” he said. This lack of trust “makes tax avoidance, tax evasion more probable.”
Genest-Grégoire said the provincial and federal revenue agencies have taken steps to put more information online, but the system itself remains complex. One solution would be to make benefits that are currently provided through the tax system more accessible and for government to automatically enrol people, as is already the case with many benefits for children.
Warren Orlans, a former CRA Collections Employee turned Taxpayer Advocate has been saying for over a decade that the CRA needs to continue putting out information on the Internet, however it needs to be available in many different formats in order to be most effectively accessed by Canadians everywhere. “Not everyone learns the same way, so having a concept explained in text, showing steps, and possibly with an example and even with little videos would expose the greatest number of Canadians to the message at once.”
“Every day, I deal with Canadian taxpayers and corporations of all sizes as they try to understand and interpret the CRA. My 11-year’s experience at the CRA and 10-years outside the CRA have afforded me the ability to diagnose and resolve even the most complex of tax matters”, Orlans said.
If you need help understanding the CRA, or interpreting their letters or actions, contact the best, at inTAXicating. Email: info@inTAXicating.ca. Or call us at 416.833.1581.
Toronto-based, Coast-to-coast tax liability expertise.
The Canada Revenue Agency has announced to tax preparers and representatives that if they wish to have online access to a business client’s tax information after May 15, 2017 they will have to complete the authorization request in the Represent a Client section on the CRA web site.
In order to do this, tax representatives have to log into Represent a Client and select “Review and update” from the Welcome page. They then select “Authorization request” at the bottom of the “Manage clients” tab and follow the instructions.
Once the request is complete, tax representatives will need to print the signature page for their client to sign. Once it is signed, a scanned copy of the document may be sent to the CRA using its submit documents feature.
Using this method will allow tax professionals to gain access to their business clients’ information in five days or less instead of the 15 days it currently takes with form RC59.
If, however, you still prefer your current process, you can still use form RC59 to request access to your business clients’ information by telephone or mail.
And if you need to have authorization in less that 5 days, you should reach out to us here at inTAXicating, because with almost 11-years’ experience working in the CRA’s Collections department, we know how to get that authorization in the hands of someone in minutes!
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Happy Canada Day, Canada. You don’t look a day over 150-years-old!
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.
Or email us: firstname.lastname@example.org
What are you waiting for?
The changes proposed by the Canada Revenue Agency (CRA) to the Voluntary Disclosures Program (VDP) have been described as an improvement, but no where close to what is needed to reduce tax evasion, according to The National Union of Public and General Employees (NUPGE) – one of Canada’s largest labour organizations.
VDP, as we all know, gives Canadian taxpayers who made mistakes or hid income on their taxes the opportunity to voluntarily come forward to the CRA and declare or correct the mistakes without fear of prosecution, and gross negligence penalties.
Some, however, feel the VDP has been overly generous in cases such as the deal offered to clients of the KPMG Isle of Man tax scheme. The same people also believe that the CRA’s VDP has failed to differentiate between those who simply made errors in their tax return and “wealthy individuals” who wilfully evaded taxes using offshore tax havens.
While it can be very difficult to distinguish between someone who willfully evades taxes from someone who tried to but got caught, it is quite clear regarding the use of tax havens because either you report your offshore income (legal) or you don’t (illegal).
The union strongly believes that those caught “using a tax haven should be treated more severely than innocent mistakes.”
The Minister suggested that releasing the names of the participants and their advisors should be required although the CRA has always kept track of both scenarios once the disclosure has been approved. Where a taxpayer received assistance from an advisor in respect of a VDP application, the name of that advisor should generally be included in the application.
The union expressed concern that the proposed changes fail to restrict access to voluntary disclosure in cases where leaks about tax havens are likely to provide the government with lists of Canadian account holders. They feel that at that point, “it should be too late for wealthy individuals to take advantage of the VDP if they are already likely to be exposed.”
While I do agree the government should look at how they treat those who have not filed differently than those who store money offshore in hopes of evading the paying of taxes, I do not agree that in each and every case it is the “rich” or “wealthy” who are doing it.
In fact, I have encountered many Canadians of all races, religions and levels of income who have stuffed away money overseas and they range from being super-wealthy, to single parents on OAS or pension income who can barely make their rent. It’s not just a “wealthy” issue.
Sure, it doesn’t read as well if its not an attack on the “rich” and yes, there are some who have complained that nowadays it is the unionized worker who is the “rich” in Canada, which is why I prefer to not paint everyone with the same brush, and group by filers and non-filers.
Under the program, any use of a tax haven scheme should mean less relief than for other forms of non-compliance, which makes a lot of sense.
For the union, they believe that; “the majority of Canadians feel that there are two tax systems, one for the rich and one for the rest of us. It is very important for the government to get this right.”
NUPGE: Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good.
Link to original article:
Recent radio advertising and newspaper or online articles would have you believe that the CRA has been ramping up staff in order to break down your door in the middle of the night and arrest you for tax fraud.
Deep down inside you knew that you should have opened a BN number and GST/HST account for your child\s lemonade stand because even though they were significantly under the $30,000 sales threshold, if registered, you could have claimed the Input Tax Credits – but you didn’t and the CRA wants their money!
You also know that if you had a question, the CRA call centre were going to mislead you, or lie to you so that you would be forced to pay even more money.
You also know that you might need help for a tax accountant, tax lawyer, tax broker, tax solutions firm, or tax audit specialist… but you cannot choose because the different names must mean they do different things and you don’t know which category you fall into, and … the CRA are so coming to get you… now!
(Is that rustling in the bushes in front of my house?)
Well all of these new powers and the threats that they are going to break-down your door and arrest you on the spot are not really true.
You only have to fear the CRA breaking down your door (really the RCMP, but I’m sure the CRA would be there somewhere along the way) if you have done something wrong. Very wrong. Criminally wrong.
You should be concerned if the CRA knows you’ve done something criminally wrong, or have been involved in terrorist financing or activity because they’ll pass that along to the police.
The Canada Revenue Agency gained the little-noticed new authority, which does not require a judicial warrant, through an amendment tucked into the government’s most recent budget bill.
Previously, confidentiality provisions in the law prevented the CRA from handing information about suspected wrongdoing, on its own initiative, to law enforcement.
The exception was information that pointed to tax-related crimes.
The new provisions apply to offences including breaking and entering, vehicle theft, arson, corruption and kidnapping and in return, the CRA can now receive information from local authorities about any offence with a minimum prison term, or one with a maximum sentence of 14 years.
The list of offences is broad and is a significant shift in confidentiality policy allowing the CRA to pass along information to law authorities without a court-ordered warrant, even when the alleged crime(s) have nothing to do with taxes.
Interim procedures for administering the new powers were issued to all CRA employees in June 2016 not too long after the legislation received royal assent.
The intended use of this new tool, is that an exchange should occur when an employee gathers information in the course of their regular duties.
This information exchange was intended to be one-way and would be closely controlled through a set of strict criteria.
As an aside, it would have been nice to know who might be carrying on criminal activity, when I was working at the CRA and went to visit a business to determine why they stopped filing GST returns, only to learn that they were conducting illegal activities and was physically threatened before getting the heck out of there.
The following day the RCMP showed up, cleaned out the place and arrested the operators.
I never did get my outstanding GST returns, however, which could have been prosecuted as a criminal offense (but was not).
All potential referrals to police will be vetted by the agency’s criminal investigations personnel and must be approved by the assistant commissioner of the department’s compliance programs branch, CRA has reported.
The key points to remember are this;
- If you happen to have partaken in a criminal activity, you might not want to disclose that to the CRA collector.
- Make sure to stay compliant! File up to date and don’t give the CRA reasons for looking for stuff.
- Take all of the tax-related advertising with a grain of salt. Their intention is to scare you and force you to drop a ton of cash at their business. Instead, I recommend you do your research, ask questions and get the solution that fits your tax problem.
- If you’re not sure… Ask. Then use your judgement.