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CRA Is Coming For Your Undeclared Income

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koreanjames

Active member
Oct 4, 2011
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As always, excellent post.

Sophia Sinclair said:
Not according to the government. I was a waitress many moons ago and asked them why servers get paid less than minimum wage, thinking that tips (mostly undeclared) would be the answer. They told me it had nothing to do with that and was based on the type of work being performed. My then boyfriend's good friend was a tax lawyer and explained to me that if I claimed 10% of my overall wages as tips the gov't would leave me alone and they did. Trust me when I say that we relied on our tips, not our wages to survive. I don't know at what point the government started making servers declare all earnings, tips included, but it certainly has something to do with technology and the fact that most consumers don't deal in cash anymore but debit/credit, showing a record of tips given.

When it comes to escorting, I have a numbered co./sole proprietorship and an accountant/small business consultant that has classified me as an entertainer. He explained to me that as long as I file every year on time and pay on time the gov't will leave me alone. Yes, I pay HST even though I technically don't charge clients it, but it's a small price to pay IMO to keep the gov't off my back and is offset by the small portion of wages that I don't include. He also said that many business owners try to claim silly write offs, another flag for the gov't, which is why I use his long standing, reputable services. As for not stating 100% of what I make, many business owners don't, pocketing the odd cash job here or there. Some even use it for their hobby fund because they can hide it from their SO and the gov't. Every nail salon I know doesn't charge you tax if you pay them cash and JTK has already pointed out other examples. For the record I do claim 100% of my rental property income and my other business income as well.

I feel for anyone who has been audited because I've been told by clients who have that they'll try everything to find something to nail you on because they have to justify the hours, etc. and that if you've been audited once, they'll bug you every 5 years or so, regardless of whether you were wrongfully audited in the first place or not.

As for Absalom, "judge not, lest you be judged".
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doggee_01

Active member
Jul 11, 2003
8,353
1
36
IRIS said:
Who the f..k are you? A perfect totally honest saint, who never did any trick? As I read your post you nothing more than an envious , jealous, low class guy who can't swallow our hourly rate.
Thinking about your own TAX and leave ours alone.
That line: " My heart bleeds for you..." shows us perfectly what type of guy you are. Sarcasm is for winners Absalom, so you don't have the right to be sarcastic here.
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well said my dear well said
 
D

doggee_01

Active member
Jul 11, 2003
8,353
1
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Sophia Sinclair said:
Not according to the government. I was a waitress many moons ago and asked them why servers get paid less than minimum wage, thinking that tips (mostly undeclared) would be the answer. They told me it had nothing to do with that and was based on the type of work being performed. My then boyfriend's good friend was a tax lawyer and explained to me that if I claimed 10% of my overall wages as tips the gov't would leave me alone and they did. Trust me when I say that we relied on our tips, not our wages to survive. I don't know at what point the government started making servers declare all earnings, tips included, but it certainly has something to do with technology and the fact that most consumers don't deal in cash anymore but debit/credit, showing a record of tips given.

When it comes to escorting, I have a numbered co./sole proprietorship and an accountant/small business consultant that has classified me as an entertainer. He explained to me that as long as I file every year on time and pay on time the gov't will leave me alone. Yes, I pay HST even though I technically don't charge clients it, but it's a small price to pay IMO to keep the gov't off my back and is offset by the small portion of wages/earnings that I don't include. He also said that many business owners try to claim silly write offs, another flag for the gov't, which is why I use his long standing, reputable services. As for not stating 100% of what I make, many business owners don't, pocketing the odd cash job here or there. Some even use it for their hobby fund because they can hide it from their SO and the gov't. Every nail salon I know doesn't charge you tax if you pay them cash and JTK has already pointed out other examples. For the record I do claim 100% of my rental property income and my other business income as well.

I feel for anyone who has been audited because I've been told by clients who have that they'll try everything to find something to nail you on because they have to justify the hours, etc. and that if you've been audited once, they'll bug you every 5 years or so, regardless of whether you were wrongfully audited in the first place or not.

As for Absalom, "judge not, lest you be judged".
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so next time i see you do i get a HST rebate :) lol kidding just kidding
 
U

User 123

New member
Jan 21, 2017
318
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Sieggo said:
That may not help you. I'm not sure if the CRA can get access to Bitcoin records, but if they can they'll be able to determine who hasn't declared their income from that source.
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Anyone can view Bitcoin transactions on the blockchain but there's no way of knowing who the wallet address belongs to. The only way the CRA can crack down on crypto is if they force all the exchanges to disclose their transaction and client records. And even then it would be still very difficult.
 
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sempel

Banned
Feb 23, 2017
3,649
25
0
squeezer said:
I don't blame the ladies, waitresses/waiters who fudge the numbers a bit to put a little extra in their jeans and for the self-righteous claiming they follow the law to the tee then stop paying for sex.
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There's a difference between following/breaking laws that hurt nobody versus ones that do. Who is the victim in a consensual, paid liaison? Nobody. Who is the victim if someone cheats on their taxes? Every other citizen. Your statement amounts to saying it's bad to steal but if you're hungry, no worries, steal away.

_Melissa said:
First of all servers make less than minimum wage BECAUSE they make tips. I don’t think it’s fair to have to pay tax on extra money that has nothing to do with the companies pay roll. Pay taxes on the hourly wage fine but not on tips. That’s so stupid.
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There are many jobs that don't pay a wage - people mostly get tips or are consultants and have nothing to do with a company's payroll so this makes no sense at all. If a waitress earns $10/hour and $50/hour in tips, she should only pay tax on the $10? WTF?

Sophia Sinclair said:
Not according to the government. I was a waitress many moons ago and asked them why servers get paid less than minimum wage, thinking that tips (mostly undeclared) would be the answer. They told me it had nothing to do with that and was based on the type of work being performed. My then boyfriend's good friend was a tax lawyer and explained to me that if I claimed 10% of my overall wages as tips the gov't would leave me alone and they did. Trust me when I say that we relied on our tips, not our wages to survive. I don't know at what point the government started making servers declare all earnings, tips included, but it certainly has something to do with technology and the fact that most consumers don't deal in cash anymore but debit/credit, showing a record of tips given.

When it comes to escorting, I have a numbered co./sole proprietorship and an accountant/small business consultant that has classified me as an entertainer. He explained to me that as long as I file every year on time and pay on time the gov't will leave me alone. Yes, I pay HST even though I technically don't charge clients it, but it's a small price to pay IMO to keep the gov't off my back and is offset by the small portion of wages/earnings that I don't include. He also said that many business owners try to claim silly write offs, another flag for the gov't, which is why I use his long standing, reputable services. As for not stating 100% of what I make, many business owners don't, pocketing the odd cash job here or there. Some even use it for their hobby fund because they can hide it from their SO and the gov't. Every nail salon I know doesn't charge you tax if you pay them cash and JTK has already pointed out other examples. For the record I do claim 100% of my rental property income and my other business income as well.

I feel for anyone who has been audited because I've been told by clients who have that they'll try everything to find something to nail you on because they have to justify the hours, etc. and that if you've been audited once, they'll bug you every 5 years or so, regardless of whether you were wrongfully audited in the first place or not.

As for Absalom, "judge not, lest you be judged".
Click to expand...
Agreed, a great post. Wondering if you could explain your statement about the type of work justifying less than minimum wage. I think most people think minimum wage is just that - the minimum allowable. So I personally have always wondered why restaurants are allowed to underpay their staff and thought the tips was a justification - the environment allows a server to earn the minimum wage or more. Plus I thought some places top-up employees who don't earn enough tips to make the min wage requirements.

koreanjames said:
Likely yes , he is wrong.

Many small business are incorporated , and in many cases it is much more advantageous tax wise for the corporation to pay out the sole employee-shareholders via an almost tax free dividend compared to what would be a much heavier taxed conventional t4 (sole proprietor).

The corporation would still have to pay full hst and (just like as you if you were a sole proprietor), and the corporation would still pay Corp. Income tax (I believe 12–13%).

It is a far cry from 1/3 of pre-taxed income.

In Jessica’s case , she is definitely properly declaring a signifant amount of income as she is paying hst in quarterly installments; as the hst pay outs demanded by cra is based on he amount of income claimed. If absolutely minimal income is claimed, then cra would only care to get their hst once a year, vs. every few months (or every month) as more income is claimed.
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I am curious about Jessica, only because she is only a PT SP. Sophia is a FT SP and indicates she claims the appropriate taxes. I'm sure Jessica does the same with her legit business but who knows if she runs the SP stuff the same way. Many people have their regular job and side jobs and guess what, most of the side job stuff is hidden.

Locogp40 said:
No, I believe the HST would be considered as included in her donation. Of course you should be issued an invoice for services just so she can have proof of amounts for any audit.
Now, let's have a show of hands of those complaining of undeclared escort income wanting to leave a paper trail :spy:
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Unless the service/good is HST exempt, yes it is being charged within the rate of the donation. Go to a restaurant that has whole dollar prices and you'll see the HST included (e.g. Dominos has a deal for $8.85 - with tax it's $10. You pay $10 and the tax is included in that rate. SP's are no different. Their pre-tax rate is 13% lower than the rate we see in reality.
 
J

Jasmine Raine

Well-known member
Jul 28, 2014
4,048
48
48
koreanjames said:
Likely yes , he is wrong.

Many small business are incorporated , and in many cases it is much more advantageous tax wise for the corporation to pay out the sole employee-shareholders via an almost tax free dividend compared to what would be a much heavier taxed conventional t4 (sole proprietor).

The corporation would still have to pay full hst and (just like as you if you were a sole proprietor), and the corporation would still pay Corp. Income tax (I believe 12–13%).

It is a far cry from 1/3 of pre-taxed income.

In Jessica’s case , she is definitely properly declaring a signifant amount of income as she is paying hst in quarterly installments; as the hst pay outs demanded by cra is based on he amount of income claimed. If absolutely minimal income is claimed, then cra would only care to get their hst once a year, vs. every few months (or every month) as more income is claimed.
Click to expand...

This is all correct. While my mainstream business would be considered by most, a small business, I purposely incorporated for the taxation difference. It is this business that I pay HST on. I don't make enough with my SP income for HST and that income is claimed personally and expensed personally which work for me in other ways. I like to travel around. One client on a trip and it becomes a business trip to expense. Who is not going to like that? Lol

I think what people need to do and don't do enough of, is invest in a proper accountant. Like a mechanic, a good accountant is hard to find but once you do, hold on to them. Taxation is not necessarily a bad thing, you just have to know the best way to use it for you. Yes, you can pay out in some ways but you can get back in so many other ways. A good taxation account will know this.

That is part of the problem though. Too many people use H&R block once a year and they are not the type of people who would be able to sit down with an escort and help them figure out the best way to run this as a business. Too many SPs are afraid to claim and not just taxation fears but many women have lots to lose by coming out. Just like men do. I think some men forget that.

Waitressing and other jobs like them, they have it a bit different. They don't have expenses to claim against. It is straight up income that is not taxed at all during the year and should be expected to be by the end of it. It kind of sucks for them. They get paid less because they get tips, but then those tips are taxed in a kind of lump sum way at the end of the year.

Some jobs are not suited for taxation and that is where issues start to arise because it is not fair. Incorpated business vs a sole proprietor is crazy in some ways. And really, in my opinion, the sole proprietor small business get the shaft. Same as the working middle class. I think things need to be equalled out better and more people would be willing to pay. As much as anyone wants to pay taxes. I mean let's be real, none of really want to.
 
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Butler1000

Well-known member
Oct 31, 2011
28,835
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When I was a server I just had my tax guy figure out my income so I paid about 1000 bucks per year on top of whatever they took off my checks.

I figured as long as I was paying in I wouldn't get flagged and I was right.

I did see a few students I worried with get nailed because they tried to get refunds. Greed will get you every time.
 
E

essguy_

Active member
Nov 1, 2001
4,432
16
38
Of course the CRA has to do these crackdowns every now and then (and of course, they'll tell us they're doing it) - it's just a way to keep us "honest". In reality, the underground economy is something that every Govt will tolerate up to a point. Without it, there would be higher unemployment, higher inflation, etc. Not to mention the fact that the cash you pay or receive eventually gets taxed multiple times - either through HST or when you buy a good or service from somebody who does pay taxes. So while it may look good to go after the cash payments part of our society - it's mainly for show and to get the odd obvious cheats. Just too bad if eg: a waitress or some other minimum wage earning worker suffers as a result of an audit. Full disclosure: I pay all my taxes and have been audited 3 or 4 times, can't remember - because I just hand it off to my accountant. BUT, I am not against hiring somebody and paying cash (obviously, haha). Personally, I'd love to see Canada go to more of a consumption tax model - with reduced income taxes at source.
 
S

squeezer

Well-known member
Jan 8, 2010
18,105
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sempel said:
There's a difference between following/breaking laws that hurt nobody versus ones that do. Who is the victim in a consensual, paid liaison? Nobody. Who is the victim if someone cheats on their taxes? Every other citizen. Your statement amounts to saying it's bad to steal but if you're hungry, no worries, steal away.
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Do you really believe if they collected every single cent of cheated tax dollars your taxes would be lowered? I have a piece of swamp land for developement at a great price if you're interested and I'll pay all of the capital gains incurred, I swear.
 
M

managee

Banned
Jun 19, 2013
1,731
2
0
Anything that you earn, whether that’s a corporate bonus, a cash exchange for services or a tip should absolutely be taxed. That said, given the legal precariousness of the P4P scene in Canada, I feel they get a pass, for now.

That said, I’m not sure I could afford to see tax compliant SP’s or MPA’s.

I netted more money as a server in a year than I did in my first two years in corporate, thanks to undeclared income and selfishness. Paying taxes sucks, but if you choose to live and work in this country, it’s part of the deal.

I’m also a big fan of closing ALL tax loopholes for corporations and high income earners.
 
W

wanttodo

Member
Dec 30, 2014
734
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18
How much do MPA's take home a year, tax-free? Even $70K is equivalent to a $100K job paying tax.
 
S

sempel

Banned
Feb 23, 2017
3,649
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squeezer said:
Do you really believe if they collected every single cent of cheated tax dollars your taxes would be lowered? I have a piece of swamp land for developement at a great price if you're interested and I'll pay all of the capital gains incurred, I swear.
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Unknown and government dependent. The further left the government, the higher the tax will be because that's how they operate.

There are billions of dollars in uncollected taxes. Many people employ strategies to take advantage of the system and the holes. Nothing wrong if someone pays their share according to the rules. Different is someone isn't paying taxes or cheating the system (e.g. declaring personal things as part of business).

What I do believe is that if the government collected more money by people paying their full taxes, they might do certain things

1) refund some
2) lower tax rates
3) nothing

The HOPE though is that they will spend all tax monies fairly and properly or adjust rates appropriately. How many programs are shorted or cut due to a lack of sufficient revenue? Could Canada lower it's corporate tax rates a little to match the US if more money was in the pot? I think BS like the Canada 150 celebrations would be more palatable if there was clearly more money in the pot which would be the case if everyone paid up. I won't say I've never paid cash in the hopes of getting a discount. However, the crime is the vendor, not the payee. How the vendor accounts for it is the issue.
 
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doggystyle99

Well-known member
May 23, 2010
7,906
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Businesses or independent contractors whose income is at least $30 000/year must have an HST number and must submit the 13% HST received minus the HST paid to the government.
Those who do not submit HST and earn higher than that amount will eventually be audited. If you do get audited respond in a timely manner otherwise the CRA will take it upon themselves to freeze your banking account and deduct what they deem adequate amount for your income.

Better if you are going to be an independent contractor get a business and an HST number registered, collect HST, pay HST on deductible items and keep receipts and subtract it from the collected amount and pay it to the government, you'll be surprised the amount of things you can actually write off.
 
K

koreanjames

Active member
Oct 4, 2011
832
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Totally agreed with this point. They throw so much of the tax dollars into the trash already if not kick backs and cheats to Friends. There will never ever lower taxes.... and if they make it look like they will they already have some sort of back door system in place where they will get all of it back (and more). The best example of this is the majority demographic that voted Wynn in power, and that income demographic will get hit the hardest re this lower-middle class audit witchunt


squeezer said:
Do you really believe if they collected every single cent of cheated tax dollars your taxes would be lowered?.
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This will never happen - the trick is to take as much as possible up front and give the people no choice about it whatsoever. Since the majority of people is working class collecting a t4 This model will guarantee unlimited cash flow for the govt. if the common person were actually given a choice re paying taxes (reduced at The income level and pushed to the consumption level) this model itself would mean that basic guaranteed cash flow survival for the govt would be put in jeapordy.

essguy_ said:
Personally, I'd love to see Canada go to more of a consumption tax model - with reduced income taxes at source.
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This is completely true. Like mechanics, vehicles, homes , doctors , movies .... basically anything in life for that matter .... no two accountants are created equal. The saddest part about the H&R Block 100$ crowd is that they thjnk they are saving so much money re their tax processing .... meanwhile to do taxes for someone in the demographic re 100$ accountants is ridiculously easy. People in that demographic could actually learn somethings that will generate potentially tens of thousands of dollars downstream if they actually tried learning and understanding the tax system themselves.... while eventually “graduating” to the advice and services of a real accountant to genuinely avoid all their money slipping down the drain.

Jessica Rain said:
Too many people use H&R block once a year and they are not the type of people who would be able to sit down with an escort and help them figure out the best way to run this as a business.
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