Now that we Americans are in the midst of tax season (as I think Canadians are also) I am wondering could anyone tell me how aggresive your CRA (Canadian Revenue Agency) is in the collection of income taxes. I only wonder becuase here in the states the IRS (Internal Revenue Service) has issued a letter indicating they are going to be a lot tougher on self-employed people which includes ladies in the adult entertainment business. In the real world, I think SP's and dancers make a lot of cash and report a negligible amount of income, if any, and want to know if they are at a higher risk of audit in Canada. I wonder how they justify the nice cars and other "toys" they have. I know many dancers with huge amounts of cash (a lot from me!) and it ceases to amaze me how they don't get caught up in with an income tax problem in Canada.
Tax Cheats
- Thread starter petitelover
- Start date
From what I've read, the USA leads the way when it comes to the government's ability and expertise in sniffing out tax evasion. They spend a lot of money on collecting and analyzing information for this purpose. Canada is catching up, but I've read nothing that indicates they are yet at the same level. But I wouldn't take that as a signal to consider Canada as being soft on tax collection. They've recently started using what's called electronic lifestyle audits to compare spending habits (debit/credit transactions) with income reported on tax returns. More advanced data mining is most certainly on the way. Governments will soon, if not already, share cross border information to help identify tax cheats. Revenue collection is a huge priority for most governments, so it will only get harder to hide income earned.
CRA's collection dept. is so vigilant and results oriented they actually outsource some of their services to companies and other gov't and non gov't agencies who need collections done. I've dealt with a few collection agents and middle level managers on behalf of a few clients and family members - they definitely are aggressive and somewhat arrogant. The client (taxpayer) is automatically guilty of cheating the system in their minds.
Here Here, and if they don't have evidence to support their claims they fabricate it to justify their position.K Douglas said:CRA's collection dept. is so vigilant and results oriented they actually outsource some of their services to companies and other gov't and non gov't agencies who need collections done. I've dealt with a few collection agents and middle level managers on behalf of a few clients and family members - they definitely are aggressive and somewhat arrogant. The client (taxpayer) is automatically guilty of cheating the system in their minds.
For eg: I hadn't filed my GST returns for a while (3 periods) because the amount owed to me, and what I owed them, was negligble at best. They sent me a letter stating that I owed them $17,000.00 in gst and $5100.00 in penalties and interest. I thought the envelope contained my next payment form so filed it with the rest.
Well, they froze my account.
When I called them up to find out wtf was going on, they told me what I owed them. I then asked them: how the heck do you figure I owe you that much? That's supposing I had an income for 9 mnths of $240,000.00 for only 9 months, that's like $320,000.00 a year! I said, it does say that I'm a cabinet maker/carpenter right? They said yes, I said, I know of NO carpenter that makes that kind of money. What did you base it on? They said "we estimated"...I said "you estimated WRONG because know what I owe you"?? they said, Not exactly...I said "I owe you $312.00"...I said "I bet you estimated that amount owing to justify you freezing my account, cuz you probably couldn't justify that action for $312.00 could you"?? Their reply? "ummmmmm.....when do you think you can file and pay the outstanding amount"? I said, tomorrow morning.....
Anyhow, just for a second there I realized why there are those in the world who will stop at nothing to overthrow a government. And this is because they did this to me, can you imagine how someone feels if they or their loved one is imprisoned or executed unjustly? If our government can manufacture evidence in order to support their position.........who is to stop them from doing worse?
My understanding is that the IRS is more sophisticated than the CRA in terms of tracking down anyone who is underpaying taxes. The IRS do more to correlate what you say you paid the supplier versus what the supplier says you paid him, things like that.
Well, I have never done corporate books before but it is my understanding that (at least in canada) when you pay corporate taxes, you don't report how much you paid who on the total of what you paid. Same as GST reporting: they don't report who you paid what to, only how much you paid out.
However, you have to maintain records of what you paid to who so when the auditors come in, they can review (typically in my experience through spotchecks and any transactions that catch their attention).
However, you have to maintain records of what you paid to who so when the auditors come in, they can review (typically in my experience through spotchecks and any transactions that catch their attention).
True but in terms of crackdowns, Canada is bit more aggressive.ed_v said:From what I've read, the USA leads the way when it comes to the government's ability and expertise in sniffing out tax evasion. They spend a lot of money on collecting and analyzing information for this purpose. Canada is catching up, but I've read nothing that indicates they are yet at the same level. But I wouldn't take that as a signal to consider Canada as being soft on tax collection.
goodtime said:True but in terms of crackdowns, Canada is bit more aggressive.
I wonder if the CRA get's a lot of calls as a result of the "X" factor. x-spouse, x-girlfriend, etc. Who better to know detailed info than an "x." In the states, the "X" factor is quite useful in prosecution of various offenses. I would guess the majority in Canada and in the US are a result of the "x" factor - only a guess.
I know of a few cases where this has happened, one of my former clients. His ex was a tax lawyer they had a bitter custody battle and she ratted on him about some certain "questionable" write offs. Even with my assistance CRA made his life a living hell for 2 years, they audited 5 years worth of returns looking at everything.petitelover said:I wonder if the CRA get's a lot of calls as a result of the "X" factor. x-spouse, x-girlfriend, etc. Who better to know detailed info than an "x." In the states, the "X" factor is quite useful in prosecution of various offenses. I would guess the majority in Canada and in the US are a result of the "x" factor - only a guess.
Interesting - I guess the CRA is on the aggressive side - good for Canadian residents that pay their fair share of taxes and bad for the ones that don't.K Douglas said:I know of a few cases where this has happened, one of my former clients. His ex was a tax lawyer they had a bitter custody battle and she ratted on him about some certain "questionable" write offs. Even with my assistance CRA made his life a living hell for 2 years, they audited 5 years worth of returns looking at everything.
I guess if you are an "x" and have a name, SIN #, address and inside information about some type of income tax evasion the person is pretty much cooked. Ouch, better be nice to your X!
They did exactly the same thing to me. My mistake was to consider them as a branch of my benevolent government, always ready to help. They just made up a debt right in fron of me...unbelievable! See a lawyer when dealing with those atboy said:Here Here, and if they don't have evidence to support their claims they fabricate it to justify their position.
For eg: I hadn't filed my GST returns for a while (3 periods) because the amount owed to me, and what I owed them, was negligble at best. They sent me a letter stating that I owed them $17,000.00 in gst and $5100.00 in penalties and interest. I thought the envelope contained my next payment form so filed it with the rest.
Well, they froze my account.
When I called them up to find out wtf was going on, they told me what I owed them. I then asked them: how the heck do you figure I owe you that much? That's supposing I had an income for 9 mnths of $240,000.00 for only 9 months, that's like $320,000.00 a year! I said, it does say that I'm a cabinet maker/carpenter right? They said yes, I said, I know of NO carpenter that makes that kind of money. What did you base it on? They said "we estimated"...I said "you estimated WRONG because know what I owe you"?? they said, Not exactly...I said "I owe you $312.00"...I said "I bet you estimated that amount owing to justify you freezing my account, cuz you probably couldn't justify that action for $312.00 could you"?? Their reply? "ummmmmm.....when do you think you can file and pay the outstanding amount"? I said, tomorrow morning.....
Anyhow, just for a second there I realized why there are those in the world who will stop at nothing to overthrow a government. And this is because they did this to me, can you imagine how someone feels if they or their loved one is imprisoned or executed unjustly? If our government can manufacture evidence in order to support their position.........who is to stop them from doing worse?
