Tax evasion

[backflush]

Considering that escorting is legal and tax evasion is not, do you know of anyone getting busted over not paying their fair share of taxes. Hey, It got Al Capone into the slammer.

Some girls I have spoken to have hinted at making over 200K a year (I'm sure that's the exception though). That's $58,000 in income tax @ 29%

 

[scubadoo]

You would be surprised to know how many people who do not pay their income taxes get caught. There are many ways to discover someone who is not paying their proper share.

 

[Ryan]

A little intelligence and effort on the part of the SP is all it takes to get away with it. It's those that think that can do nothing and slide in under the radar that get snagged.

Ryan

 

[backflush]

If I were an SP I would apply for a business # and file every 3 months. That way you can claim driver and other expenses, plus claim income for RRSP's.

 

[lasslicker]

The majority of SPs are at the game for a limited time, and have very little to worry about with respect to paying taxes.

Unless you are living a life of conspicuous lavishness, or have very jealous acquaintances it is easy to stay out of trouble with Revenue Canada.

 

[ham2004]

CRA is a non-discrimanating agency

Every few years the boys and girls at the Canadian Revenue Agency setup target groups to examine. One year it will be small business owners, another time it will be the produce exporters, sometimes it will be the average joe paycheque that gets checked.

As a rule they go after "all" offenders, but they do not call it tax evasion, it is "failure to comply with the Act", which states that anyone who recieves money for services rendered or goods sold, must report any profit to them. This information is what we are taxed on.

SP's and MP's who are not T4'd, can go a long time before they are tracked down, but if they are then its up to the Tax Department and the Tax Court to sort it out. Usually with penality and interest its double the amount of tax that should have been paid. Also don't forget that the feds would also want GST collected and remitted on anyone making more than $30,000.00

I could just see the input tax credit for gst at the office -

 

[fuji]

For some escorts it's easy come, easy go. Some of them have zip, nada, nothing saved up even though they see thousands of dollars a week. Others have it stuffed under their mattress or something. I know of one that had thousands upon thousands of dollars stolen out of her apartment. So, I'd say a fair number not only don't report their income, but don't actually manage to keep it in their hands. It comes and goes as cash. Damn near impossible for the CRA to track that I'd think.

However, obviously a lot are smarter than that, and save up for their future. The tax issue comes up when it comes time to buy a house. Since they've never declared any income and don't have a "job" the bank takes a dim view of loaning them *any* money. So then they pop up with $300k and buy the place outright. The real estate folks are obviously happy. The bank is happy. The escort is happy..

But some day the CRA will knock on the door and say, "So, where did that $300k come from anyway?" and for that kind of money you have to have a paper trail or you start getting into crap.

 

[ThePunkPanther]

a silly question...

so what about agencies? have any of them found themselves with the ccra knock on the door visit??? given that there'd be more people involved and presumably more money and its all cash and so on.

just a question...

 

[walterppk1]

But some day the CRA will knock on the door and say, "So, where did that $300k come from anyway?" and for that kind of money you have to have a paper trail or you start getting into crap.

Something called net worth assessment has become more standard. In Ontario if you can not justify your "net worth" (value of home(s) cars(s) big ticket items) then the can arbitrarily levy a taxation against you for what they deem to be the offence.

In Manitoba they have taken it to another level to combat organized crime whereby if you can not show where that money came from (which contributed to you net worth) then you loose the item(s) (ie. Can be evicted from you house). Not dissimilar to what was done to nail the mob members in Veronica Guerin. http://movies.yahoo.com/shop?d=hv&id=1808403428&cf=info&intl=us

The reality of it is there are many in all industries who do not comply. If you use a bank there is a paper trail. If you do not they can get you with “net worth assessment”. So if it is worth the Feds while they can nail just about anyone.

 

[ThePunkPanther]

that being said...

and given ccra's virtually unlimited power... i can imagine them seeing an agency as a more cost effective target.

but then they probably get audited like most business's do everywhere all the time ergo m'eh.

 

[Hugh Jorgan]

Cra

I personally know of one escort who was audited.....they conducted a "lifestyle" audit to estimate/derive her annual income.....looked at things like rent, vacations, vehicles, credit card statements, bank statements, etc.....in the end she owned tens of thousands of dollars in taxes and penalties.

It would be hard to audit agencies per se, since I doubt any are incorporated and therefore would be run as sole proprietorships.....in which case the CRA may or may not identify the agency depending on how/if the owner declared the income on their personal T1.

Smart girls will declare some form of income so as to estabish earnings, credit possibilities, etc. The trick is not to declare very little income but then have tons of cash transactions running through your bank account, or lots of high end purchases appearing on your credit card statements......only put cash in the bank to cover regular expenses, etc and what you want to see declared as income....the rest...keep as cash and spend the cash.....do not use a credit card and pay it off with cash later.