CRA Rams It Up Our Ass Again

[skit123]

Five months ago, my mother -in-law was diagnosed with cancer. As this was the first serious illness in my wife's family, it certainly brought to the surface all the emotions you would expect. On the day we received the news, and being a small business owner, our payroll remittance was due. Unfortunately, I forgot about getting to the bank that day so I remitted a day late. Three weeks later I received a penalty for remitting late. On the advice of my accountant, he assured me that we could appeal on compassionate grounds. No such luck! Yesterday I received a letter stating appeal denied. Perhaps if I stated in my appeal letter that i was an oppressed aboriginal, or I save gay whales for Jesus I would have better luck. Anyway, just had to vent. There are a lot of great things about this country....unfortunately, dealing with the gestapo at cra isn't one of them.

 

[Thunderballs]

The media will be your friend on this one.

 

[xix]

The honest person will always get it when they don't expect it. One guy told me once, the cop said to him "Honesty doesn't pay" then gave hime a speeding ticket. He went to court and won, ticket out the door.
I hope you got the short end of the stick and not the long one.

 

[Rockslinger]

Not sure if the unpublished policy is still in effect, the CRA use to have a 3 day grace period for first time offenders. If it is only a few dollars, just pay it and move on.

 

[Rockslinger]

gotta love the HST now I have to start charging you all 13% on top of my rate!

Hey young Emm, you are learning at a young age that Canada is a nation of tax collectors. We are all tax collectors, except those on welfare. If you ever work for a "legit" business, you will find half of your gross salary taken off for taxes.

BTW: The 13% HST already includes the 8% PST so you are not doublely screwed, err I mean taxed.

 

[Rockslinger]

Well this will be my first year claiming so im still figuring it all out.

Young Emm, you will go far. When I was your age, I was a starving student trying to get laid for free. Hee, hee, hee. Insert "starving student" smilie here.

I doubt I will ever see you at the corner of Bay and King begging for spare change. However, if you see me there begging, please be generous. Hee, hee, hee. Insert "panhandler" smilie here. Oh, I usually wear a Coors Light baseball cap and a "Lottery Winner" T-shirt. Hee, hee, hee.

 

[Dougal Short]

This sucks indeed. I have a small business and have found CRA to be decent with things like a remittance that is one day late. Try you accountant again or see about another appeal

I agree. My bookkeeper neglected to submit when she was sick and neglected to "remind" me. We were fined, but she called them and they reversed the penalty, but pointed out that if it happened again, they probably wouldn't.

If this is truly the first time, I'd suggest you call them directly and make a personal appeal, rather than going through your accountant. You might be surprised.

I am currently still trying to resolve an income tax issue from last year. I am finding that personal phone calls are well received and the various folks I talk to at RevCan actually appear to be humans.

Sorry to hear about your wife's Mom. I hope that that situation ends well!

 

[nottyboi]

Eff CRA

gotta love the HST now I have to start charging you all 13% on top of my rate!

I feel as if the gov't is pimping me out, what else can you call it?

I claim 120,000 a year, get taxed in a very high bracket. Then on top of that I get to absorb the HST cost, Whenever I buy something I am taxed again.

Average tax rate : 30.28%
HST: 13.00%
PST: 8.00%
= 51% of my income

Then whenever i go to buy something:

HST: 13.00%
PST: 8.00%

Another 21%

I should start smoking then I can get my moneys worth through the health care system.

You should incorporate, then you only pay 18% corp tax and can pay yourself a tax free div of up to 30K a year... PLUS you can claim all your expenses tax free as reimbusements and the crop can deduct then as expenses.. do I get a free call for this advice? lol....

 

[afterhours]

by the way is an SP supposed to charge and remit HST on her services?

 

[red]

I am surprised by the answer you got. I would try again- sometimes you get a bad auditor but generally they are ok to deal with.

 

[rhuarc29]

Eff CRA

gotta love the HST now I have to start charging you all 13% on top of my rate!

I feel as if the gov't is pimping me out, what else can you call it?

I claim 120,000 a year, get taxed in a very high bracket. Then on top of that I get to absorb the HST cost, Whenever I buy something I am taxed again.

Average tax rate : 30.28%
HST: 13.00%
PST: 8.00%
= 51% of my income

Then whenever i go to buy something:

HST: 13.00%
PST: 8.00%

Another 21%

I should start smoking then I can get my moneys worth through the health care system.

Yeah, you get screwed until you make $320K plus, THEN the tax burden decreases (ie. the tax brackets stop increasing). You could make $2 000 000 or $320 000 and you still are in the same bracket.

 

[Rockslinger]

You should incorporate, then you only pay 18% corp tax and can pay yourself a tax free div of up to 30K a year... ..

Should check with a tax accountant or lawyer. There are some criteria that must be met. I seem to rcall that Bobby Orr and Ralph Sazio incorporated themselves and it failed.

 

[CapitalGuy]

Emm, why are you claiming $120K???? You work in a cash business.......CRA does not expect a teenager to make six figures. Claim $25K and don't pay any taxes at all. Say you work part time at the Gap. Or as a house cleaner. No one will question.

 

[Rockslinger]

Say you work part time at the Gap.

The Gap would likely issue a T4. Or, the CRA might actually call The Gap and ask if young Emm is an employee. An independent housekeeper might work if the CRA doesn't ask for a list of the houses cleaned.

 

[CapitalGuy]

The Gap would likely issue a T4. Or, the CRA might actually call The Gap and ask if young Emm is an employee. An independent housekeeper might work if the CRA doesn't ask for a list of the houses cleaned.

I know. My point to her was simply that she is in a great position to lie about her income and not get caught. Lots of credible reasons for a teenager to have little or no income.

 

[Rockslinger]

Lots of credible reasons for a teenager to have little or no income.

Years ago our CRA auditor told us that they targeted the following 4 areas of the "underground" economy.
1) Construction. My friend at one of the banks said that contractors routinely walk in with thousands of dollars in cash.
2) Bar and restaurant staff. In Quebec, I think they actually "impute" a tip amount.
3) I forgot.
4) I forgot.

 

[Rockslinger]

Claiming 25k a year wont do this for me, when the condos are all going for 750k Plus

This girl, err woman, has smarts. The CRA will probaby issue a "net worth" assessment when they see her address is One Bloor East and only income of $25K a year. Of course, she can use the argument that she won a lot of money at poker games. Hee, hee, hee. Insert "pokerface" smilie here.

Query: Who was that woman that the CRA tried unsuccessfully to assess when she said her condo and fur coats were all "gifts" from an elderly gent?

 

[big dogie]

Five months ago, my mother -in-law was diagnosed with cancer. As this was the first serious illness in my wife's family, it certainly brought to the surface all the emotions you would expect. On the day we received the news, and being a small business owner, our payroll remittance was due. Unfortunately, I forgot about getting to the bank that day so I remitted a day late. Three weeks later I received a penalty for remitting late. On the advice of my accountant, he assured me that we could appeal on compassionate grounds. No such luck! Yesterday I received a letter stating appeal denied. Perhaps if I stated in my appeal letter that i was an oppressed aboriginal, or I save gay whales for Jesus I would have better luck. Anyway, just had to vent. There are a lot of great things about this country....unfortunately, dealing with the gestapo at cra isn't one of them.

You just don't have to wait till the last minute to make your payment either. The last payperiod of the month I do the calculations fill out forms and pay online. On the 15th of the next month bank automatically pays it for me, do that and you will never be late again.

b d

 

[tboy]

You should incorporate, then you only pay 18% corp tax and can pay yourself a tax free div of up to 30K a year... PLUS you can claim all your expenses tax free as reimbusements and the crop can deduct then as expenses.. do I get a free call for this advice? lol....

Glad someone else said it.

Emm's gross income may be $120,000.00 but that isn't her taxable income.

In fact, she doesn't have to incorporate, but she should get a BIN (gst number). If she is including GST in her "RSP" her actual RSP would be $239 + $11.00 GST.

Then from that GST collected she could deduct ANYTHING that she purchases that has GST on it.

For eg:
Clothes
Underwear
Condoms
Hotel Room
Meals (as she is away from home on business)
Sundries in the room (snacks, drinks for her customers is deductible).
Transportation to and from her "working" location
Computer to manage her finances
Cell phone costs
Land Line Costs
Internet access
Business use of home (for her office)
and the list goes on.


So, if she is charging $239 an hour that means (before deductions above) her "real" income should only be $114,000.00 but she'd have to remit the GST.

Now since she effectively IS charging GST and not remitting it, I'm surprised CRA hasn't come after her.

As it stands now (pre-hst) there is no PST on labour only related services. PST is only applicable if there is a "product" changing hands. For example: a plumber's time is GST only, but the parts he supplies is GST and PST. Unless Emm sells a customer her underwear, she would be GST only.

Now the above list would have the gst payable on those items deducted from her GST payable. The difference would be remitted to CRA.

Further, from her taxable income, the actual cost of the above would also be deducted from her Gross sales of $114,000.00. So say if she books a hotel room for 2 days, total cost of $275.00. Gets 4 1 hr bookings, $239.00 x 4 = $956 - $275 = $681

So if you average out the "cost" to earn her $114,000.00 as a percentage, $72%, her actual earnings would be $81,207. Plus that $81K includes all the other deductibles above so her actual taxable earnings should really be down around $75K.

If you're paying tax on anything more than that? She should really get an accountant!!!!!!

 

[Rockslinger]

Ralph Sazio was the landmark case for a personal services corporation - that is a corporation set up for what in substance is an employee so that the individual can claim more expenses and be subject to the small business deduction (lower tax rates than personal rates, up to a threshold amount of taxable income).

Hey JFK, thanks for refreshing my memory. Yes, Ralph was in a "master-servant" relationship. Young Emm is not unless she becomes a one man only mistress. Another factual difference is that Ralph was ugly as sin, I assume young Emm is better looking. Hee, hee, hee.