What Do Lionel Messi, Cristiano Ronaldo and Floyd Mayweather have in common aside from being top atheletes in their respective sports, and extreme wealth?
Ronaldo and Messi with the Spanish Tax Authroity, and Mayweather with the IRS, which just goes to show you that no matter how much money you have, or don’t have, you still have to report income, file on time and pay your taxes!
In Ronaldo’s case, the Spanish Hacienda tax authority believes Ronaldo failed to pay €14.7 million in taxes pertaining to income earned on his “image rights” between 2011 and 2014. The belief is that he used (and still uses) a shell company in the British Virgin Islands and Ireland, to hide at least €78m in image rights.
Ronaldo’s camp claim that he has fulfilled all his tax obligations, maintaining that the majority of his image-rights income is earned abroad and therefore not liable for Spanish tax.
How does Ronaldo’s situation differ from Lionel Messi’s tax case?
Barcelona star Lionel Messi and his father Jorge were found guilty of tax fraud in July 2016 after it was found they had hidden image-rights income from the Spanish authorities. Messi was fined €3.6m and sentenced to 21 months in prison (which was suspended) for defrauding €4.1m between 2007-09.
The Messi family had previously paid over at least €10m in back taxes and charges, long before their case made it to court.
In Messi’s case, the court determined there was a total failure to fill his tax obligations on image rights income.
A huge concern stemming from the The Supreme Court’s judgement in the Messi surrounded the role that Messi’s tax and financial advisors played and how both parties were not indicted as part of the prosecution since they there was evidence that they advised the player on how to evade taxes.
In Spain, a guilty verdict for an aggravated tax crime means a mandatory jail time of two to six years, while conviction of the lesser offence brings a suspended sentence. If Ronaldo admits to the details in front of the judge within two months after being accused, and pays over the amounts allegedly defrauded, his punishment could be reduced.
Messi’s 21-month prison sentence for tax fraud was reduced to a €252,000 fine, while his father’s 15-month prison sentence was reduced to a €180,000 fine.
These fines are in addition to the re-payment of the taxes originally owing plus any penalties and interest accrued to the balance.
Floyd Mayweather, and his estimated net worth of $340 million is in trouble with the IRS and has apparently filed a petition asking for a temporary reprieve from unpaid taxes from 2015 until after his fight with Conor McGregor in August.
Apparently, while he has substantial assets, those assets are restricted and primarily illiquid. The upcoming fight against McGregor, however, would provide Mayweather with enough liquid cash to pay the IRS debt from 2015 in full.
Mayweather, made $220 million alone from his 2015 fight against Manny Pacquiao. It is unclear how much he owes the IRS in taxes. Given a 15-month lapse since the 2015 tax due date, Mayweather would owe 7.5% in penalties plus accruing interest on top of what he was already scheduled to pay.
Forbes estimated Mayweather’s net worth at $340 million in January.
So the moral of the story is this;
Not everyone wants to pay their taxes, and some will go to great lengths to reduce or avoid paying taxes. If that is something that you feel you must do, you have to be prepared for the consequences of your actions when and if the government comes back to you.
File on time.
Pay on time.
Don’t pay the government more than you should.
If you need help because you’re carrying a balance with the CRA and you want to discuss options, contact us today!
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.
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.
Insolvent or Tax Troubles? Don’t Let the CRA Decide!
In my experiences which includes almost 11-years working in the Canada Revenue Agency (CRA), you should never allow the CRA to decide whether you can fix your tax problems or whether you should go bankrupt.
From the stand-point of a CRA Collections officer, going bankrupt is great because it removes the account from their inventory of accounts to collect / resolve.
Your file disappears from their inventory and re-appears in the CRA’s Insolvency Unit inventory.
From the perspective of the Collections Department, it’s case closed!
There are 3 ways a CRA Collections Office resolves one of their accounts;
1) Collect it / fix the compliance issue(s)
2) Write it off because they cannot collect it
3) Move the account to the Insolvency unit
The CRA’s Collections Officers are not allowed to tell you to go bankrupt. In fact, they are taught in their training that they are not allowed to do that, and that sentiment is reinforced at all future training they attend. As someone who trained CRA Collections staff for 5-years, I can confirm this fact.
Collections staff are not allowed to even suggest that you go bankrupt. They might confirm it, but that’s all they can do.
What CRA Collections can do, however, when they feel you are insolvent, is to force you into bankruptcy via their collection actions, which include but are not limited to;
- Bank garnishment
- Wage garnishment
- Lien on a property
- Enhanced garnishment to accounts receivables (in the case of a business)
All the while, why applying these garnishments, the CRA refuses to release the hold on the accounts.
They freeze every source of income that you might have and you are faced with the decision to come up with the funds to pay them, or file for a proposal or an assignment in bankruptcy.
In some cases, a bankruptcy is unavoidable and the right solution, but not in every case, which is why I strongly recommend speaking to someone who is looking after your interests first and foremost.
There are tax-related companies who are fronts for insolvency firms, so they might appear to want to help you, but they want you to file for bankruptcy, and there are other tax-service firms which gather your information and they unable or unwilling to help you, pass you along to a trustee.
You don’t want or need either of those.
You need a tax firm which has the experience in CRA’s collections, and who have the relationships with not only Insolvency firms, but mortgage brokers, reputable accountants and investment professionals so that you’re options are laid out for you to decide the best option.
Not the CRA.
In order to resolve your tax issues you need to disclose the details so your options can be determined, and you need your tax help to do the same.
Ask your tax-help the following questions;
- Are you committed to finding me a tax-solution first.
- If that solution is not going to be accepted by the CRA, what other options do you feel would work.
Don’t be weary if a firm wants to charge you a small fee to diagnose and plan out your solution.
You should be weary if they want to charge you a significant amount of money to diagnose it and not give you a plan. If they want to keep the plan a secret, and not educate you along the way, it’s because there is no plan.
Likely their solution it to drag you along the process knowing that the CRA will come along and lower the boom and then suggest to you that your only option is to conveniently have them file bankruptcy for you.
Don’t ask the CRA if you should go bankrupt. You might not like the answer.
If you owe money to the CRA and you’re not sure if the debt is a tax matter which can be resolved, or if bankruptcy or a proposal are better options, just ask! Send an email to email@example.com and let’s talk! We’re here for you.
Imitation is the sincerest form of flattery.
If you are fighting a losing battle, find your most successful competitor and do what they do!
If you are one of the many people who have paid tens of thousands of dollars to a prominent tax lawyer because they told you a lawyer was absolutely required to save you from the “taxman,” you are going to be really disappointed to learn the firm itself no longer feels that way.
As a result of a drawn-out and very public dispute with the Law Society of Upper Canada over their retention of client retainer fees to keep them from the reach of the Canada Revenue Agency (CRA), DioGuardi Tax Law has been forced to reinvent themselves into our firm, inTAXicating, by saying when people owe tax to the Canada Revenue Agency, a lawyer is no longer the most effective choice for ending the problem.
From their press release, Philippe DioGuardi is reported to have said “People who owe tax are vulnerable to the Canada Revenue Agency’s aggressive collection tactics. They need fast and affordable ways to fix their tax trouble before the CRA comes after them with bank and wage garnishments or liens against their home and other property.”
Something I have been saying for the past 10 years!
In an effort to possibly save their business, the press release goes on to explain that hiring lawyers for CRA collections matters is time-consuming (read: expensive for clients) and slow: “They know what I know about fighting the CRA. And because they’re not lawyers, they can work more quickly to end people’s tax debt trouble for less than a lawyer would charge. Frankly, when the trouble is that you owe tax, you don’t need the hassle of hiring a lawyer to fix it.”
Unfortunately, the aggressive negotiation tactics DioGuardi’s firm is known for and which the CRA despises are still at the centre of their campaign. They also boast a network of resources to assist people who need help with financing, and to slide people into bankruptcy when they cannot get financing.
DioGuardi’s previous radio advertising warned Canadians against searching for Tax Solutions on the Internet (so you will not find answers or firms like inTAXicating) and against so-called Tax Solutions firms, which are really Bankruptcy firms offering to “help” you with your tax debt by plunging you into bankruptcy after drawing out your tax file to incur more fees.
So inTAXicating now has a little competition … kind of … in the field of tax solutions and assistance with CRA issues. You can either choose 17 years of tax experience – 11 of which were spent recently working in and managing CRA collections – or you can choose a firm which used to believe only lawyers can solve tax problems, but now tells you lawyers are not needed to solve tax problems, and oh, hey, they also used to work somewhere in the CRA 25 years ago.
Once this model wears out, watch for them to morph into Tax “Brokers” so they can do the work, and get paid after the fact, all in an effort to “protect” your money from the “Tax Man”. It’s all the same everything, just dressed up in different clothing.
For us, nothing has changed.
If you have a tax question, issue, lien, or concern with the CRA, or RST, or need help regarding an audit or Taxpayer Relief, or just want to ask a tax question, then send an email to firstname.lastname@example.org and you will have your answers. If you need to hire us, we’ll tell you. If you can handle it yourself but need a little guidance, we will tell you.
Our reputation is as important as your reputation.
inTAXicating Tax Services. Canada’s only Tax Solution option!
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.
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?
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.