Common CRA Audit Triggers

Common Audit Triggers

Audits in Canada are typically assigned randomly. There are, however, some reasons as to why some taxpayers are audited more often that others.

Here are some of the most common factors which may increase the chance of being audited by the CRA, from most common to least:

 

Screwing around with Trust Funds

Sorry to be so blunt, but there is nothing that raises the ire of the Canada Revenue Agency (CRA) more than finding out, or suspecting that you have been less than honest with Trust Funds – the money taken from employees or customers and held in trust for the CRA.

In these instances, the CRA comes to audit fast, and leave no stone unturned.

Self-employment income

The addition of self-employment income, along with or instead of T4 income is an area of significant concern for the CRA.

Earning T4 income, means is likely that the sufficient amounts of tax, CPP and EI have been withheld and remitted to the CRA on your behalf and on behalf of your employer, making it low-risk.

Self-employed individuals, on the other hand, do not, in most cases, have taxes withheld at source, making it more under the scope of the CRA.

The Industry you operate in

This is a two-fold flag because not only are some sectors audited more than others – dentists, real estate agents, restaurants, construction companies, and corner stores that take cash, for example, but the CRA also uses the industry that all businesses / taxpayers operate in, and compares the numbers reported to those of the others in your industry.

If you stand out for one reason or another, expect to be asked why, in the form of an audit.

Additionally, in around November of each year, the CRA computers match and compare many pieces of taxpayer information, looking for slips which were not declared, or for outliers.

3rd Party audits

Often times taxpayers are audited simply because a related party is being audited. Sometimes this means that family members or shareholders of a closely-held corporation are audited in the course of the audit of the corporation. Other times various corporations in a supply chain may be audited because of the audit of one of them. Sometimes contractors are audited because of a payroll audit at the corporate level.

There is nothing that can be done to minimize this risk factor. Unfortunately, the more businesses and taxpayers that a particular taxpayer is involved with, the greater likelihood of a CRA audit.

We represented a construction company which had immaculate books and records, yet were under audit by the CRA for almost a year. It made no sense, because every single item requested by the auditor matched and was reported correctly.

It finally came to light that a customer of this company from 8-years-ago had tried to commit fraud and claim a receipt for services which were never performed by this company (they had changed the date and written “CASH” across the invoice).

After proving the invoice was fraudulent, the audit suddenly ceased and the taxpayer who changed the invoice was charged with fraud.

You just never know!

Informant Leads Line Tips

The Informant Leads Line / or Tips line or Snitch line, has provided way more tax and audit leads that the CRA could have ever imagined – and still does.

In light of the fact that tips relating to offshore tax evasion may yield a reward for the informant, it may never end.

Moral of the story: taxpayers who are cheating the system should not count on staying under CRA’s radar forever. They should also be careful as to who has incriminating evidence which could be reported to the CRA.

Common leads come from; ex-spouses, former employees, and neighbours. So the next time you piss someone off, you might want to make sure they don’t reported you to the CRA.

Living Beyond your means – Net Worth Assessments

Taxpayers who live in a $4 million dollar house, and who report income of $1/year, can expect to have caught the attention of the CRA. The same goes for taxpayers who have debt to the CRA and are unable to pay, yet post publicly on their social media of their travels and lavish expenditures.

Lifestyles which appears to be incongruent with the amount of declared income can expect to be audited.

Using your Vehicle for business / Claiming vehicle expenses

Vehicle expenses are often arbitrarily determined. When preparing their tax return, often times taxpayers and their accountants pick a reasonable number for vehicle expenses based on an estimate of the percentage of the vehicle usage used for business purposes.

Few taxpayers actually keep a log of every trip, yet every one should!

Not having a log, and corresponding calendar means that few taxpayers can prove to the CRA with absolute certainty, the use of a vehicle for business purposes – thus making it easy for the CRA to deny the expenses.

Real estate transaction

Thank you Liberal government and your out of control spending.

As a result of the need for tax revenue to pay down the debt and deficit, the CRA began cracking down on real estate transactions in the past 5-years. Had the Liberals won a majority government in the 2019 Federal election, there would be capital gains taxes on the sale of principal residences. Right now, it is a requirement for Canadians to track and list on their tax returns the sale of their principal residence.

To say that the CRA pays careful attention to real estate transactions would be an understatement. The CRA frequently audits HST rebates, pre-sale condo flips, new home construction, principal residence exemptions, and many other real estate transactions.

Being involved in multiple real estate transactions sharply increases the chance of being audited.

Home office expenses

The CRA loves auditing home office expenses. Home office expenses are often arbitrary and over-declared, along with the percentage of time the home office is actually used, and the percentage of the house used for the purpose of earning income.

Operating a cash business

When there is a lot of cash being received by a merchant, there is more opportunity for the CRA to recover taxes on undeclared cash income. One common trick the CRA will perform involves the deposits going into the business or personal bank account which are significant, repetitive or unsupported. In these instances, they are declared as income, and a 50% gross negligence penalty is applied.

Adjustments / Amending returns

The CRA is on top of the business or taxpayer who declares a little income and then amends their returns after the fact to report the actual, and much higher balance. Not only is the prohibited, but it’s a great way to be audited.

If the amending  results in a refund, or a refund is issued and then the correct filing results in a balance outstanding, then – you can expect an audit.

Donations – Large and Tax Shelters

If charitable contributions are suspiciously large and do not seem to be possible or likely within the confines of a taxpayer’s income, such donations or contributions are very likely to be audited.

As well, charitable contributions made to organizations suspected of being involved in tax schemes are even more likely to be subjected to an audit.

As long as there are taxes there will be individuals and organizations selling (and conning) taxpayers into participating in tax schemes to reduce taxes. Some of these schemes are outright frauds, while others have no fraudulent intent, but for one reason or another fail.

The Canada Revenue Agency actively and aggressively audits taxpayers who are involved in a tax shelter, a gifting program, or any other tax scheme.

In many circumstances, taxpayers are able to receive refunds and benefits from these programs for several years prior to the CRA auditing, and then reassessing the donation. Unfortunately, since it can take a bit for the CRA to learn of the scheme, and refunds are issued / debts reduced, the participants often bring in family and friends and get them caught up in the program.

Typically, in these schemes, taxpayer may receive tens or hundreds of thousands of dollars of CRA refunds to which they were never entitled only to have the CRA come back and audit and reassess years later, along with gross negligence penalties and interest. $100,000 in illegitimate refunds can turn into more than $200,000 once penalties and interest and the passage of time have been taken into consideration.

The rule of thumb is that if it appears too good to be true, it is.

Shareholder loans

Shareholder loans which are not repaid within a year after the year-end of the corporation are often audited, because the CRA suspects they are not legitimate and were simply paper transactions.

Loans where shareholders took revolving loans from the corporation, paying each off just prior to the deadline and then taking a new loan, are also on the CRA’s radar for audit due to their tax benefits.

It shouldn’t need to be said, but taxpayers who are both shareholders and employees of the corporation should be very careful with shareholder home loans, and should have all supporting documentation available.

In order for a home loan to be treated as an employee home loan rather than a shareholder loan, the loan must be made because the person is an employee, rather than because they are a shareholder and should be available to all other employees.

Child-care costs

The CRA regularly conducts mini-audits to ensure that parents who claim childcare expenses maintain proper documentation, and that the children actually attend the establishment for child care and not just for playdates. Claiming childcare for children who hang out with their grandparents a few days a week while the parents are not both working out of the home, would prompt an audit.

Employment expenses

Employees who are issued a T2200 form by their employer are entitled to deduct certain employment expenses from their income. Perhaps the employee has to pay for their own vehicle to travel to sales calls, or perhaps they have to maintain a home office. As long as the employer requires that the employee pays these expenses in respect of their job, they likely can be deducted from income.

Since this is an abused area (each expense is paid for with pre-tax dollars and reduces the overall tax paid by the taxpayer) the CRA audits many employees with the T2200 to ensure that a) their form is properly completed and may be used to deduct the expenses in question and b) each of the expenses claimed was legitimate and for the purposes of their employment, as outlined in the T2200.

Previous audits

If the CRA keeps coming back and auditing and re-auditing every aspect of a business – and if they keep finding issues – that business or taxpayer can expect to be on the audit list for each and every year.

Criminal activity

All business profits are subject to taxes. This includes both legitimate and illegal businesses. As far as the CRA is concerned, if you are earning income you should pay taxes. Period.

So if a taxpayer is accused of or convicted of a crime and the CRA learns about the illegal business which was taking place, they often audit and reassess the taxpayer for taxes on the proceeds of crime – whether or not the taxpayer still has such proceeds. Often times, criminal activity is weeded out during an audit, as opposed to the CRA knowing there is an illegal business and pretending that it is legitimate.

These audits usually require the supporting documentation to justify expenses, and often there are none provided resulting in extremely large assessments.

 

Conclusion:

Keep your records together by year, and expect to be audited each and every year. When you are not, be thankful.

 

How To Avoid The Canada Revenue Agency (CRA) Phone Scam

As a former Canada Revenue Agency Business Collections employee – almost 11-years – from collector to Resource Officer and Manager, I understand the fear people have when they receive calls from the Canada Revenue Agency (CRA).

I also understand how scary it is when someone calls you, or leaves a recorded message for you, claiming to be from the Canada Revenue Agency (CRA), and demanding payment with threats of jail or immediate legal actions. I’ve been called as have many of my clients.

With a little knowledge and understanding of the CRA and the people who work there, I am going to list 10 signs that every Canadian needs to be made aware of in order to not be caught up in this scheme.

10 Facts Every Canadian NEEDS to Know About the Canada Revenue Agency (CRA)

 

10. Yelling and Screaming are NOT permitted, nor tolerated.

Regardless of what you have heard or experienced, the people who work in the Canada Revenue Agency are everyday people like you and I. If we yelled and screamed at our “client base” we would be disciplined or fired. They are no different.

9. Threats are NOT allowed.

The staff at the CRA will not threaten you with jail time, to send in the Sheriff, have you deported or to take every penny that you have.  Even is the call is not a scam you do not have to tolerate any threats from anyone at the CRA.

If you have been evading the paying of taxes, you already know that you could be charged and that jail time is possible. Any other type of collection action usually comes with pre-warning by a letter, Notice of Assessment or is started once you file / pay your taxes.

The CRA will not seize your principal residence!  Your cottage, rental properties, maybe, but house you and your kids live in… No.

8.  The Element of Surprise

If the call catches you by surprise, AND the person on the end of the phone is screaming at you, threatening to take your

7. Ask Questions.

In the instance you get a live person on the phone and they are trying to give you a hard time and force you to pay money, turn the conversation back to them and ask lots of questions. Ask them what the account number / social insurance number is, what periods or years the debt relates to (the debt they want you to pay). Ask them for a break-down of the total tax owing and the amount of penalties and interest – either the total amount or broken down by period or year. (They have this at their finger tips). Ask them what Tax Office they are calling from, and what the address and phone number is at that office. Ask them to send you a remittance voucher so that you can make that payment at the bank.

6. Defer

Tell them that while you would love to speak to them, you have an accountant who handles all your tax information and you would like to take down their information so your representative can call them back.

5. Do NOT Agree to Pay anything over the phone!

This rule applies not only to the CRA but to anyone else who ever calls your home / phone asking for money. Never, ever make a payment over the phone with your credit card.

4. Receipt Please!

If you are self-employed, you understand the importance of getting and keeping receipts.  Why would you buy a pre-paid gift card or charge card to send to some stranger who is not going to give you a receipt for payment?

You wouldn’t.

The CRA has recently allowed payment of some taxes by credit / debit card.  They will likely NEVER accept payment via gift cards, etc.

3. If you get such a call, hang up and report it to the Canadian Anti-Fraud Centre

The Canadian Anti-Fraud Centre can be found online at http://www.antifraudcentre-centreantifraude.ca or toll free at 1-888-495-8501.

If you believe you may be the victim of fraud or have given personal or financial information unwittingly, contact your local police service.

2.  Confirm, Confirm, Confirm.

If you want to confirm the authenticity of a CRA telephone number, call the CRA by using the numbers on its Telephone numbers page. The number for business-related calls is 1-800-959-5525. The number for calls about individual concerns is 1-800-959-8281

1.  The CRA NEVER…

Requests prepaid credit cards;

Asks for information about your passport, health card, or driver’s licence;

Leaves personal information on your answering machine!

Asks you to leave a message containing your personal information on an answering machine.

Emails seeking information or asking for payment.

 

 

So when in doubt, ask yourself the following questions:

Is there a reason that the CRA may be calling?

Do I have a tax balance outstanding?

Is the requester asking for information I would not include with my tax return?

Is the requester asking for information I know the CRA already has on file for me?

Are they too mean / demanding / aggressive?

 

It’s always better to defer the conversation than make the mistake of giving information or money to criminals.

Are There Really “Red Flags” At the Canada Revenue Agency (CRA)?

Are there “Red Flags” at the Canada Revenue Agency (CRA)?

How not to get noticed for the wrong things, this Tax Season.

One of the most commonly asked questions of me is about being “flagged” by the Canada Revenue Agency (CRA) and how to avoid getting flagged, or, what gets your flagged.

I hate to break everyone’s bubble, however, there are no red flags!

For the majority of Canadians who file their taxes year-in, year-out, and who make remittances, make their payments, open businesses, close businesses, make money, lose money, and everything in between, your tax account is just a record of transactions, conversations and payments received and made.  Even for those Canadians who should be doing the above and don’t or who fall behind and catch-up on one mass filing, their accounts have a bit more information due to CRA research, however, No flags.

For those engaged in criminal behaviour, however, there are no “flags”, because you are being investigated criminally and whether you know it or not, the CRA knows you and is watching your activities and comparing that to what you file.  Your tax account is known because it is being actively worked by someone.  There are words or phrases placed in your permanent diary which tell anyone who reviews your account what you are up to, but it certainly doesn’t mean you’ve been red flagged.

So why do people talk about flags?

They’re actually talking about stuations like some described below which catch the attention of the screeners on a case-by-case basis, and could result in them being audited outside of their normal audit review period.

1) When you get your tax returns completed and filed for the year, and there are issues, possibly mistakes, which the CRA catches and in anticipation of getting the solution, have a hard time getting a hold of you.

2) You are suddenly self-employed and you are not sure what to claim, or how much you are entitled to, or you claim things or amounts different from your industry standard.   The CRA compiles industry profiles which they use to assign you a “SIC Code” and they compare your returns with the Industry Standard to ensure you fall in line.

3) The dreaded “Net Worth Assessment”.  If you appear to the CRA to be unable to afford the lifestyle that you are currently living in, then the CRA can, and will, issue a Net Worth Assessment and force you to prove that you are not hiding income.  Yes, this can be a challenge, especially in light of the assessments being done from tax centres outside of the Greater Toronto Area who cannot fathom a million dollar house and a $75,000 income.  They don’t take too kindly to the concept of being being helped by family or personal wealth.  Just be warned that a tax return showing $1.00 of income for the year and an address in a wealthy neighbourhood is cause for further questioning.

4) Big changes from year-to-year.  If there are major changes in your income or expenses whether personal or business-related, are going to draw the attention of the CRA.  The CRA wants to make sure that you have not made a mistake, or worse, that you have bought into a tax scheme.  Expect questions, so get proof ready!

There are some tax situations that are just automatically looked at closer – each the year the CRA with the help of the Department of Finance choose a sector of industry to look at in closer depth usually because something has been detected in previous years or because there is a lot of cash floating around these business, such as construction, or dentists, doctors, IT consultants…

Home office deductions for example are frequently looked into as this is often a common problem for taxpayers claiming the home office in order to use deductions without actually utilizing their home as their office.

Even if you honestly never ever use your company vehicle for personal use, it will take some hard doing to prove to the CRA that this is true. Just driving back and forth to work in the business vehicle is classed as personal use. Your best protection here is to keep very detailed records concerning the business vehicles.

6) Renting for income:  Do not assume that rental losses are going to be accepted at face value by the CRA.  While the CRA will give you some grace time to start generating a profit from your rental business, it will still be watched with a close eye based on your industry, location and address(es).

7) Who prepares your return matters!

The CRA is starting to follow the IRS and taking a long hard look at tax accountants and tax preparers to see if there is a pattern among certain firms / indivuduals who either claim deductions they are not allowed to claim on your behalf, or who are missing certain expenses or deductions.  The CRA’s hope here is to weed out the bad apples, and educate the current crop to ensure they take advantage of the deductions and tax credits available to each client.

Should be a valuable change to the Canadian tax filing scheme.

But at the end of the day, doing it right, and on time, is the best way to stay out of the CRA’s bad books.

If, however, you have any questions, concerns or comments, please feel free to reach out to me at any time, at worlans@intaxicating.ca.

 

Money Mentors’ Advice for 2014 Taxes

I came across this article relating to Canadian Tax Filing for 2014, and thought it was worth a share.  The article can be read via the link below.

Money Mentors’ Advice for 2014 Taxes.

This article outlines how the Canada Revenue Agency (CRA) website, http://www.cra.gc.ca, can be used to keep up to date on any changes for 2014, and for 2015, which could help Canadians save money.

Money Mentors list themselves as being “the only Alberta-based, not-for-profit credit counselling agency.”   What I like about this article is that this firm also believes that credit counselling, money coaching, retirement planning, tax saving and community financial literacy are essential to contributing to a healthier financial future for all Canadians.  

Read the article, but as an outline, the topics covered include;

1) RRSP’s and TFSA’s

2) Charitable Donations

3) Medical Expenses 

4) Public Transit

5) Child’s Art/Fitness Amount

6) Childcare Expenses

7) Job-Hunting Expenses

8) First Homes

9) Students 

Enjoy, and please do not forget to get your Canadian Tax Return filed and paid – if at all possible – by April 30th!

If you have any tax-related questions, specifically relating to collection matters with the Canada Revenue Agency (CRA), you can reach out for a free consult with us via email at intaxicatingtaxservices@gmail.com, or to me, Warren Orlans, at worlans@intaxicating.ca.  We can also be reached on the phone or by text at 416.833.1581.

Please be patient as we are swamped and it may take some time for you to get a response.  Feel free to follow up and bug us in the same manner as the CRA bugs you.  We’re okay with that.

Also feel free to get more information about us at http://www.intaxicating.ca.

Thursday Thirteen Tax Tips: 13 Important Considerations Before Hiring Tax Representation

Trying to decide if it is time to hire a tax representative is a difficult decision and if made incorrectly, can cost hundreds if not thousands of dollars plus add significant amounts of stress and reputational damage to you and / or your business.

With so many people and organizations on the Internet promising to do so much for you, how do you know who to trust and more importantly, how can you tell if the specific tax matter you have is something they have experience (and success) handling?

Well, I’m going to give you some tips, so feel free to share them, about how I would go about finding a tax expert for my situation and what important questions you need answered before you hand over your hard-earned money, Social Insurance Number (SIN) and / or Business Number (BN).

The first thing that you must be comfortable doing is asking questions and if you do not understand the answer or if it seems like the response you get is part of a sales pitch, then think twice and get another quote.  It’s okay.  Anyone offering these services will either expect that you have spoken to more than one person, or will be confident that their expertise is what you need and know that you will come back.

Do they offer a free consultation?  It’s helpful if you do not know exactly how much trouble you are in, if at all, and having a few minutes to ask will put your mind at ease and help build a relationship for the future if it’s necessary.

During a 15-minute free consultation I usually do not know how many other tax representatives they have spoken to, if any.  As a result, I have to be clear, honest and set the price based on the amount of work involved, only.  It works for me, and it works for my clients.

keep-calm-youre-hired

Once I begin working with clients I get to hear what others promised, or wanted to charge, and often times I am surprised both by the recommended course of actions and the price quoted / charged.I thought it might be a good idea to expand on this topic and provide the 13 IMPORTANT considerations to look for before hiring tax representation:

13) Knowledge – Does this person or organization have significant knowledge in the area you need?

12) Experience – Knowledge is great to help you understand more, however, is their knowledge based on books they studied in school, or was it gained through hands-on experience?  If you are lucky, you can get both.

11) Fit – Can you work with them? Are they able to explain in a manner that you actually understand what happened, and what the next steps are.

10) Advertising – Odds are good that if they are spending a lot of money on advertising, they are going to have to charge you more in order to re-coup the costs.  A lot of advertising doesn’t necessarily mean they are the best, it just means they value advertising, or need clients..

9)  Social Media Presence – Taking into consideration that people do NOT advertise they have a tax problem online, it can be difficult to see if your prospective tax representation is worth your hard-earned dollars.  A good way to check up on a prospective hire is to have a look at their followers and who they follow.  It may seem great that a firm will have 5000 followers, however, followers can be bought, so a Canadian firm with 3000 followers from, say, Turkey might be a tip-off that something is not right.  Also look at their posts and comments via mainstream media.  Are they commenting on articles to educate or does everything they publish and promote look like it has been written by a marketing firm aimed at trying to get you to hire them.

8) Flexibility – Are they flexible in their pricing, or are they so set in their fees that they will not, or can not, recommend someone else or reduce their fees to assist.

7) Promises – Do they promise to save you money through reviews of your tax filings or do they take the easy way out and recommend bankruptcy, or a proposal?

6) Fear Mongers – If you notice that the tone of everything coming from a prospective firm / representative seems like they are trying to scare you, they are, and that’s a good sign to proceed with caution.  If they tell stories of the CRA hiding in your bushes, reading your emails or coming to arrest you, you should think twice.

5) What is their catch? – You know what you need, but what do they want, or what do they want from you?  There might be additional things relating to your tax issues that you did not know about and would benefit you, but if it’s not necessary and they won’t back away from it – like a financial analysis – then be concerned that they just want to put you though a cookie-cutter program instead of working towards solving your problem(s).

4) Do they play nice with others? – Blog posts aside, are they active in community networking groups (like on Linked In) and are they contributing to the discussions or do they have their own agenda and are just posting articles aimed at the wrong crowd – ie/ pitching their services to individuals in a group full of tax lawyers.

3) Sticks and Stones – How do they  refer to the Canada Revenue Agency?  Do they call the CRA the “Taxman”?  Do they have other negative nicknames?  I can tell you with the experience that 10-plus years of working for the CRA has afforded me that the CRA HATES that and do you really want your representation to start your negotiations off on the wrong foot?

2) Which Way is Up – Does their projected course of action come with terms, such as; “I think, this will work” or “I can try this…” or does the word “maybe” come up a lot?  The good part of that language is that it is a sign that they want to try a course of action and they expect the outcome to be positive or they have no clue what to do and after they run you through their cookie-cutter service, they hope you will be in a better situation.

1) You are Smarter – If you finish your conversation and get the feeling that once all is said and done you will be in a much better place both mentally and financially and you are armed with enough information and understanding of what got you there in the first place and that you can and are able to identify and address all future issues, then you might just be in the right place!

Good luck!

 

Warren

Your Questions Answered About The CRA’s Informant Leads (Snitch) Line

The Canada Revenue Agency (CRA) has employed the Informant Leads Line, or “Snitch Line” for a very long time, and with incredible results.Snitch line

The snitch line has been so successful that the CRA (Canada Revenue Agency) have constantly reduced their investigations workforce because they get more detailed information through tipsters than they would if they had employees trying to locate this information on their own.

Who uses this line?

The majority of calls to the Snitch line still come from ex-wives (and some ex-husbands), former business partners and neighbours who have been confided in and either felt compelled to notify the government of the fraud being committed or who were hurt, harmed or cheated by the person who has been committing the fraud.

The line is used to ”get even”, or have someone “pay their fair share”.

How private is the line?

It is important to know should you decide to call the Canada Revenue Agency’s Informant Leads Line that the CRA takes your privacy VERY seriously and they will never notify the person(s) / organization(s) that you call on that it was you who called their line.

The CRA will cite their “Privacy Notice”, meaning that they regularly collect personal information under the authority of the Income Tax Act (ITA) and the Excise Tax Act (ETA) and they will use that information as the justification for following up on information provided by callers to the Informant Leads Line to determine if there is an element of non-compliance with tax legislation, and if applicable provided to the corresponding compliance program for appropriate enforcement action.

Does this just go to the CRA?

Information provided on this line may also be referred to the Canada Border Service Agency (CBSA) or Human Resources and Skills Development Canada (HRSDC), in the event that the lead relates to one of the programs they administer.

Does it impact me?

The information provided is voluntary and will not affect any dealings you may have with the Government of Canada / Revenue Canada.

 

Here are some answers to the most common questions asked of me, relating to the Canada Revenue Agency’s (CRA) Informant Leads / Snitch Line, starting with:

1) When should I call the CRA’s Informant Leads Line:

When there is “Tax Evasion”, which is an illegal practice where a person or business avoids paying taxes or reduces their taxes by misrepresenting their activities.

2) How can I report tax evasion?

Over the Internet (I have linked the CRA page and provided it here in case you’re nervous about clicking the link)

Link: http://www.cra-arc.gc.ca/gncy/nvstgtns/lds/menu-eng.html#ntrnt

By phone, mail or fax

Phone: 1-866-809-6841 (toll free)

Fax: 1-888-724-4829 (toll free)

Office hours: 8:15 am. to 5:45 pm. (Eastern Time).

Mailing address:

National Leads Centre
Business Intelligence & Quality Assurance Division
Canada Revenue Agency
200 Town Centre Court Scarborough ON M1P 4Y3

3) Some examples of tax evasion are:

  • Not reporting all income
  • Claiming deductions for expenses that were not incurred or are not legally deductible
  • Claiming false GST/HST tax credits
  • Failing to remit source deductions
  • Providing false information on marital status or children to obtain benefits and credits

4) What happens to the information provided to the CRA?

The CRA diarizes everything and determines if they need to take immediate enforcement action or if they need additional information before moving forward. Either way, you will never be notified as to whether or whether not the CRA took action as they are prohibited from doing so under section 241 of the ITA and section 295 of the ETA.

5) Does the CRA pay for the information I provide?

No. The CRA does not pay for information received from informants who call the Snitch line.

The CRA does now have the Offshore Tax Informant Program (OTIP) which offers financial awards to individuals with information about major cases of international tax non-compliance resulting in more than $100,000 of additional federal tax being assessed and collected.

For more information, please visit the OTIP website, including how to make a submission.

6) What do I get for reporting tax fraud?

Well, besides feeling great, you are helping to ensure that all Canadian taxpayers are paying their fair share of taxes and this benefits all Canadians. The CRA will tell you that if everyone pays what they owe taxes might go down… I’m not holding my breath, but you never know.

7) Will the CRA ever reveal who provided the information to them?

Never!  However, you can provide them with consent to release your identity, should you want that person(s) / organization(s) to know. The CRA has a legal obligation not to disclose the identity of informants, any information that might disclose an informant’s identity or even information that might reveal the existence of an informant is removed, even in the case where an Access to Information request is made.

8) How can you send information by email?

You can submit general informant information to the CRA using their secure Internet portal. If you want to provide supporting documentation you are best to mail or fax it.

9) Does the CRA really look at EVERY lead, and take them seriously?

YES.

10) If I submit a lead, then want to revoke it, is there a way to do that?

NO.

11) What stops someone from phoning in a fake lead?

Well, before the CRA is able to take any action, they require more information that just “My ex has a job working for cash.” The CRA would need some or all of the information listed below to help them prioritize the severity of the tax evasion and let them know if they need to get more information or if they can get working on it right away.

Helpful information includes:

  • Names and contact information for the person(s) / organization(s) you suspect
  • Address of business / Taxpayer, phone numbers, email, etc.
  • Social insurance number (SIN) / business number (BN)
  • Date of birth
  • Spouse’s name
  • Business name – the registered name and / or the operating as name
  • Names of shareholders if a corporation is involved
  • Any related companies
  • Type of fraud you suspect:

     

    • Income tax (personal – T1 or corporate – T2)
    • Provincial tax (PST)
    • GST/HST
    • Non-filing
    • Fraudulent refunds
    • Canada Child Tax Benefit (CCTB)
    • Universal Child Care Benefit (UCCB)
  • Details of your observations
  • Documents: have you seen these documents? Do you know where they’re kept?
  • Does the person deal in cash only? Do you know what they do with the cash?
  • Net worth information, such as assets, including those outside Canada (cash, name and address of banks, house, land, cottage, vehicles, boats, etc.)
  • Liabilities (loans, mortgages, credit cards, etc.)
  • Personal expenditures (food, housing, trips, restaurants, hobbies, etc.)
  • Your name and phone number (this is optional)

The CRA will ask you if they can contact you if they require more information. That is up to you.

If at any point, the CRA determines this information is incorrect, fabricated or provided to them for the purposes of committing fraud, not only will they indicate the details on your permanent diary record, but they will also take actions against you.

Once you have submitted a lead to the CRA, it’s good to have an understanding of the fines and/or penalties which can be levied upon the individual / organization, as they can be as high as 200% of the taxes which were attempted to have been evaded.

In addition, the CRA publishes the results of its prosecution activities on its Convictions Web page.

Concerned that someone will call the CRA on you?

If you have found yourself to be in violation of any of these requirements and are worried that the CRA will find out, or that someone will call the snitch line on you, you should contact us at inTAXicating, and we can begin to discuss the steps to help you which may or may not include the CRA’s Voluntary Disclosure Program.

info@intaxicating.ca

http://www.intaxicating.ca

Remember:

It is ALWAYS better to get to the CRA before they get to you!

%d bloggers like this: