CRA Whistleblower Program: Who Does it and How it Could Happen to You

The CRA Whistleblower Program, also known as the Informant Leads Program, is one where anyone can report an individual or corporation for not complying with tax laws. The mandate of the Informant Leads Program is to co-ordinate all leads received from whistleblowers and to ensure that the appropriate departments receive those leads for enforcement action.

What information does CRA want to learn? Names and contact information of suspects, SIN numbers, dates of birth, spouse names, business names, names of shareholders, names of related companies, the type of tax fraud you suspect, details of observations, any copies of documents, information on documents you have seen and what they indicated, location of documents, information about individuals and businesses dealing in cash, information on assets, liabilities, expenses or suspects and more. The list goes on.

Providing your own contact information is optional, but as announced in the 2013 Economic Action Plan, there may be financial incentives to providing your information when snitching. Specifically CRA launched the Offshore Tax Informant Program (OTIP) as part of the 2013 Economic Action Plan, which offers financial awards to individuals who report to CRA on non-compliance of taxes that result in over $100,000 in additional federal tax being assessed and collected.

It seems that CRA is paying for information from the USA. The National Post reported that a Utah man has collected a bounty after turning in a suspected Canadian fraudster living in that state. The Utah Securities Commission awarded its first ever whistleblower $15,000.00 USD, to a financial advisor who reported on activities that led to criminal charges being laid against “a Canadian national” living in the state. Read the full article here.

CRA has made it easier than ever for someone to blow the whistle on you. They can do this by phone or anonymously through the CRA website. How long do you think it will take for Canada to issue its first financial rewards under OTIP?

Who is likely to blow the whistle on you? It is usually those with a motive, like ex-spouses, business partners and employees - but in the case of the UTAH man it was actually a financial advisor. It makes it very difficult to know who to trust, so if you are someone who suspects that someone may blow the whistle on you, it pays to consult a tax firm that specializes in these cases.

You need to have an expert guide you through the one-shot programs at CRA for bringing your tax records up to date – and you must act before CRA contact you in any way in respect of such tax information.

There are a number of things that you can do to ensure that a past indiscretion as it relates to your taxes is resolved before CRA gets to you. Also, in the event that you do not come under investigation by CRA and they start sniffing around asking questions you will want to learn how to handle this without exposing yourself to unnecessary attacks, excessive penalties and interest and, worst of all, risk criminal prosecution.

For more about the CRA Whistleblower Program and how to avoid unnecessary hassles and penalties, please contact Tax Solutions Canada today at 1-888-868-1400.

Tax Evasion Tip: Working for Cash? Get to CRA Before They Get to You

Working for cash and thinking because it’s cash and there is no paperwork you’re all good? Think again - particularly as it relates to sub-contractors, people in the construction trades, waiters and waitresses, or any industry where cash businesses is common (repairmen, auto body shops, service industry).  Often these individuals and business owners think that because they deal in cash, they are safe as far as taxes and CRA is concerned.

Anytime you are receiving income which you are not reporting you are playing with fire.

Canada Revenue Agency is always adding technology and other techniques to respond to the demands of Government to collect taxes from the underground economy. 

CRA has an arsenal of tools and techniques that they use to catch tax cheats.  

If you have undeclared income anywhere in the world you are more and more likely to find yourself in serious trouble with the tax authorities.  We are seeing more cases like this than ever before.  And that is because CRA are getting better at their job. 

Here are some typical examples of how people get caught.

You may assume that because you were paid cash that the other person will not declare what they paid you as an expense on their tax returns. They may have directly said this to you. You may think that because no invoice was exchanged, there is no record and so no proof. Often individuals who pay in cash will still declare the amount paid as an expense on their returns. This is the person who was trying to enter into an illegal transaction with you – so we know they cannot be fully trusted.  If CRA comes knocking they may not have a receipt but in an effort to prove the expense, they may furnish CRA with your information.

This will inevitably lead to CRA coming and knocking on your door. CRA then can proceed to audit you… so you may think – go ahead because there are no records. Well, CRA has a number of methods they will deploy to determine that you earned more than was declared. Here are some examples:

·        They can audit your bank account and assume that every cash deposit is in fact income – it will be your burden to prove otherwise (such as the money was a gift).

·        They can perform an indirect determination of income by expenses. They can look at your current lifestyle and expenses and estimate a minimum you must be earning in order to pay for the lifestyle that you maintain.

·        They can do a net worth assessment – see what you own and conclude that earned the money to pay for it.  If there is not enough money on the tax returns you filed – watch out.  You are getting an aggressive assessment plus penalties plus interest.  Proving your innocence is very difficult to do. 

It only takes one individual or transaction to get you onto CRA’s radar resulting in a world of pain. Consequences you could face due to CRA determining you have undisclosed income can include retroactive penalties and interest and even prosecution. This past year alone over 40 business owners and individuals have been convicted of some form of tax evasion.

These convictions are to deter other tax cheats.

Stop looking over your shoulder (or your spouse’s shoulder if they are tax cheat).  With snitch lines and technology more people are being caught and while the number of convictions seem low thousands more are paying huge administrative penalties.

The undeclared income problem is a huge headache for the Canadian Government.  Our system relies on everyone paying their fair share.  CRA is putting increasing resources to find this income and tax it.

Tax agreements to share information with other countries – that bank account, business or property you inherited and rent out overseas are now getting focussed. 

I will share one simple example.  A man had inherited a small commercial building in Lisbon, Portugal.  For twenty years he accumulated the profits in a bank account in Portugal intending to leave it to his children.  He never spent one cent of this money.  His Toronto construction business ran into problems and he needed c ash flow to complete the project.  He brought $30,000 from Portugal.  He got caught in a CRA audit (one of his employees had failed to declare his income properly and CRA audited him and then widened the net to include this employer).  CRA saw the $30,000 increase in cash flow, asked questions and found the Portuguese bank account.  This hard working, otherwise man who was already struggling to keep his business afloat now had a tax bill that included penalties and interest that tripled the amount he had to pay.  A lien went onto his house.  His bank account was frozen and he went bankrupt.  The $30,000 had led to uncovering undisclosed income of almost $1,000,000.  The CRA auditor was a hero and this otherwise good man saw a lifetime of hard work blow up in his face.

CRA want you to come clean and if you do so they have a program that if handled correctly allows you to just pay the tax and reduced interest but no gross negligence penalties.

We always recommend getting to CRA before they get to you. Correctly use the Voluntary Disclosure Program and save yourself. This is a one shot opportunity.  We recommend that you do not risk it as an amateur or use an accountant who does this maybe one time a year.  There are professionals who are experts in this area.  What price can you put on your freedom and peace of mind?

If your tax debt will involve a penalty, is more than one year old and CRA has not yet approached you about the tax year in question, you may qualify to make a VDP application. Once a VDP application has been accepted, CRA essentially agrees to accept your income declaration and will not charge you penalties, interest that would have accrued on the penalties or prosecute you for failing to declare income.

If CRA is already asking questions, you still have options.  These options are more complicated and you likely need the help of someone who has deep experience dealing with CRA and difficult tax problems to get guidance.  Do so long before you consider having a direct conversation with CRA. CRA agents are going to try and trick you so it is usually better to put someone between yourself and CRA.CRA put up a webpage on this topic which outlines their position on not declaring cash income and consequences if caught. You can access it here: http://www.cra-arc.gc.ca/nwsrm/txtps/2014/tt140707-eng.html?utm_source=mediaroom&utm_medium=eml.

If you know that you have earned cashed that has not been declared and want advice feel welcome to reach out to us and our experienced. Call Tax Solutions Canada today at 1-888-868-1400.

Take a Break from Your Tax Problem

We all know how stressful a tax problem can be to deal with – and how hard it can be to find out exactly how you should be dealing with it. Not to make light of the situation by any means, but why not take a break from that stress and educate yourself at the same time?

We’ve created a tax and CRA crossword puzzle with some common tax terms to give your brain a break but also give you some important information.

Test and expand your knowledge here: http://ow.ly/E8eWg.

For more about what you need to know and do to deal with a tax problem, be it a tax debt, a tax audit, or impending CRA enforcement action, please call Tax Solutions Canada today at 1-888-868-1400.

Student Faces $11,000 Bank Account Garnishment Over a Disputed Tax Amount

You do everything right. You go to school, get excellent grades, qualify for scholarships – it seems like you’re on the fast track to success. Then CRA pops up and issues an $11,000 bank account garnishment that financially cripples you. This was the case with Heather Gilberds, a PHD student at Carleton University.

In May of this past year, Yahoo Finance Canada published an article about Ms. Gilberds and the actions that ensued at a result of the initial issue. According the Yahoo Finance article:

1.      Ms. Gilberds received more than $45,000 in scholarships in 2010 – this should have been tax free as Ms. Gilberds was a full-time student.

2.      Ms. Gilberds used a tax filing service to file her returns and unbeknownst to Ms. Gilberds they filed the wrong forms for at least three tax years. This led to a re-assessment to CRA of over $11,000.00.

3.      Since this time, Ms. Gilberds has been back and forth with CRA and the tax preparation company she used to prepare the returns.

While Ms. Gilberds was under the impression that the returns were being investigated/re-assessed, CRA collections came along and issued a Requirement to Pay, which is essentially a bank account garnishment, seizing the $11,000.00 that was alleged to have been owed.

According to the article, Ms. Gilberds is not seeking to obtain representation to deal with her problem with CRA which is what thousands of taxpayers involved with CRA do each year.  In Ms. Gilberds’ case she was possibly gtrying to preserve her cash after $11,000.00 was taken. Here is the issue: no matter the dispute, unless you have filed an Objection or your matter is before the court, CRA will continue to pursue you to collect unpaid tax debts. This can include a wage garnishment, contacting your business’ customers to pay directly to CRA (called a Requirement to Pay), freezing your bank account, placing a lien on your home and much, much more.

All without a warning or a hearing.  Any other creditors would need a court order.  Not CRA.

When a CRA problem flares up, it is best to disclose as little as possible to them and seek representation not by tax preparers, but by a company that specializes in dealing with CRA problems. You can access the full Yahoo Finance article here https://ca.finance.yahoo.com/news/ottawa-student-says-cra-took-11k-her-unjustifiably-155317677.html.

If the CRA has frozen your bank account, or if you are currently dealing with any kind of collection and enforcement action from CRA, call Tax Solutions Canada today to find out about how to get back on solid ground: 1-888-868-1400.

Revenue Canada Admits Its Letters and Notices are Confusing – So It Is NOT “ALL YOUR FAULT”

The well known site ca.finance.yahoo.com has just published a well-written article.  The full link is: https://ca.finance.yahoo.com/news/revenue-canadas-letters-full-gobbledegook-090000176.html.

Did Canada Revenue Agency really need to hire a consulting firm (from the USA no less) to tell them the obvious?  Of course not, but a rant over wasted taxpayer funds and inept management of critical government departments will not help you.

According to the article, CRA has admitted that their letters are confusing and difficult for many to understand: “A study of the agency last month confirms the millions of communications that bureaucrats send to taxpayers each year are poorly organized, confusing, unprofessional, unduly severe, bureaucratic, one-sided and just plain dense.”

Does this sound familiar? Here is what will help you:

Tax Solutions Canada focuses entirely on disputes and resolutions with CRA.  Our professional team deliberately includes ex-CRA senior talent who now work on your side of the table.  They know where to look in the documents and how to get CRA to give clear and unambiguous answers.

It is abundantly clear to us that many of the taxpayers who have been sent to us by their accountants and lawyers got into the problem because they did not know what to do.  Scary as it sounds, some of these accountants and lawyers were confused by the documents they had received from CRA.  We hear stories like: “but look, the Notice/Letter/Statement did not say I owe money or needed to make installments”.  Well it did say so, just not in a way that a taxpayer would understand. 

It is our view that with this documented admission by CRA a taxpayer who now owes significant interest and penalties because they did not understand a Notice/Letter/Statement that was badly worded and laid out in a confusing way has clear grounds to apply for relief from interest and penalties.

If you owe interest and penalties feel welcome to call and speak with one of our professionals – we want to hear your story and work for your fair treatment.

Time to make CRA accountable for bad work and not the taxpayer.