CRA Call Centre Advice Is Incorrect 25 Per Cent of the Time

If a taxpayer has a tax question, it stands to reason that the Canada Revenue Agency would best know the answer, but according to a recent CBCreport, business owners who sought tax advice from the Canada Revenue Agency helpline were given incorrect information 25 per cent of the time. The survey also found that 44 per cent of callers had difficulty connecting to the helpline, and had to deal with incredibly long wait times and poor customer service. In fact, it took the average caller nearly three attempts to reach a CRA agent, and in some cases more than 14 attempts.

The results are much worse than CRA’s previous estimates of 92.5 per cent accuracy and mirror similar findings by the Canadian Federation of Independent Business (“CFIB”). The CFIB conducted its own testing (found here: http://www.cfib-fcei.ca/cfib-documents/5550.pdf) in 2010 and 2012 and determined that call centre employees were providing wrong or incomplete answers 19 per cent of the time. Other problems included long wait times, lackluster customer service and inaccurate information, earning the CRA a mark of C- in both 2010 and 2012.

Given the complexity of the Canadian tax code, it’s not surprising that Canadians need to ask for help to do their taxes. In fact, the CRA helplines handle about 3.3 million business inquiries and 14 million individual inquiries per year. What is surprising, however, is that the CRA itself finds it difficult to understand the tax code. Receiving inaccurate information has serious legal and financial consequences for taxpayers trying to comply with a difficult tax code. Acting on false information- even if it comes from a CRA agent - is not a valid defense and taxpayers can find themselves facing a grueling audit with thousands of dollars in taxes, interest and penalties on the line. Furthermore, filing a grievance with the CRA Complaints and Disputes department does not eliminate a taxpayer’s liability.

If you are facing tax issues that require knowledge of the tax code, do not rely exclusively on the information given by CRA – speak with the tax professionals at Tax Solutions Canada to understand all of your options before you end up making a tax mistake that could cost you thousands of dollars. Call us today at 1-888-868-1400. 

Everything You Need to Know About Asking CRA for Taxpayer Relief

When the Canada Revenue Agency (CRA) assesses you with interest and penalties, it is their procedure that they apply to every late payment and return.

As can be expected, this broadly applied rule is often unfair to the taxpayer.

CRA, despite their reputation as very aggressive and difficult to deal with, recognizes this and has a process that allows taxpayers to be treated fairly. It is called the Taxpayer Relief Program.

The bad news: the program starts by first demanding immediate payment of the taxes plus huge penalties plus daily compounding interest and then teases you with the promise of getting relief from these same interest and penalties.

It is kind of a “you are guilty so here is your penalty + interest and you can prove your innocence” type of scenario.

The good news is that the program works – but you have to do absolutely everything right. After all, you are asking your ‘enemy’ for the relief! 

CRA have made the program appear easy but have built in many complex tripwires that can quickly disqualify you (so they can get the interest and penalties anyway).

To be successful you need to navigate the program according to the game - and the hand is stacked against you.  Experience is the only way to increase your chances of success and that means you need professional help. This is not a legal fight, so lawyers are generally the wrong professional as far as a set of skills (and far too expensive).  It is not just filling in forms – you have to build a strategy that heavily depends on your fact situation and position your request in a manner that plays to your strengths. Because of this, the accountants who are good at financial statements and filling in forms generally are not skilled at this or simply do not do this as their main practice area, and thus are not the right fit either.  The answer lies with one of the few tax solution specialist companies that has experience using CRA’s bureaucracy and rigidity against them.   

Here are some of the main factors a successful Taxpayer Relief application needs to take into account:

• Taxpayer Relief time limitations – The case of re: Bozzer clarified that individuals are eligible for relief for up to 10 years retroactive from the date of the Taxpayer Relief application (and no longer that the tax year in question must itself be within that 10 year period).
• To qualify, your application needs to lay out grounds in one or more of the following areas: extreme financial hardship, medical issue, death, error on the part of CRA, extreme circumstances.  Then you need to show support and how this reasonably caused the interest and penalties to occur.
• Error on the part of CRA would include undue time delays by CRA in assessing the taxpayer. This is very common with objections and most recently with the long, drawn out legal fights that CRA has had with tax shelter schemes (such as Global Learning and Gifting Initiative or GLGI) and suspended dealings with objections to old assessments until the first batch of cases was through the courts.
• Document, document, document – the more you can prove, the better. CRA’s bureaucracy loves “show me don’t tell me” packages. Make it easy for the CRA agent to tick off his boxes leading to a recommendation to approve your application.  Remember that as soon as the bureaucrat sees a hole or weakness in your application, the “DENIED” stamp can come out and he can stop working on your file.

If you are facing a rejected application for Taxpayer Relief, you may resubmit with rebuttals for a second review.  This is yet another game rigged for you not to succeed – yes, CRA appoints another agent to review your file but this agent has his own second reviews done by the same buddy whose file he is now reviewing, and who wants to show up a friend?  A very experienced professional at a tax solutions company knows exactly how to work this potential weakness into one of two advantages for you: (a) get a proper second review done or (b) catch the CRA in not doing it properly and bring this forward at a judicial review.

Taxpayer Relief can offer significant savings when it comes to penalties and interest - but these waters need careful navigation in order to obtain approval. Tax Solutions Canada has the knowledge and expertise required to do so. Call us today at 1-888-868-1400.

Undeclared Offshore Holdings? Foreign Assets Becoming Easier to Find For the CRA

This past week, Canada signed the Multilateral Competent Authority Agreement on the Automatic Exchange of Information (MCAA), becoming part of a global coordinated effort to exchange financial account information efficiently and securely with other tax jurisdictions.

Under the MCAA, foreign tax authorities will provide information to the Canada Revenue Agency (CRA) relating to financial accounts in their jurisdictions held by Canadian residents. The CRA will, on a reciprocal basis, provide corresponding information to the foreign governments on accounts in Canada held by residents of their jurisdictions. In order to facilitate the exchange of information, financial institutions would be required to identify accounts held by non-residents and report certain information relating to these accounts to the tax authorities in which the accounts are held.

The MCAA greatly improves the CRA’s ability to detect and address cases of foreign assets and tax evasion. It is part of a broader effort by the Canadian government to combat international tax evasion such as mandatory reporting of electronic fund transfers of $10,000 and over, the Offshore Tax Informant Program, and the creation of a dedicated Offshore Compliance Division.

Canadian taxpayers with unreported assets overseas are encouraged to utilize the Voluntary Disclosure Program before they are discovered by the CRA. The Voluntary Disclosure Program is a second chance opportunity for taxpayers to voluntarily disclose noncompliance in exchange for the removal of interest and penalties. Given the excessive interest and penalties that can apply on errors and omissions (for example, interest currently accrues at a rate of 5% compounded daily and penalties can be as high as 50% of the understated tax), a voluntary disclosure can be incredibly helpful in reducing the overall tax liability. However, it is important to note that voluntary disclosure, when done incorrectly, can have serious repercussions. In the event a taxpayer’s VDP application is rejected for failing to meet the requisite conditions, the CRA can proceed with an audit based on the information included in the disclosure and apply full interest and penalties.

In light of Canada signing the MCAA, taxpayers who have not made full and proper disclosure of their foreign assets to the CRA are encouraged to seek expert advice immediately and to consider the benefits of the Voluntary Disclosure Program.

For more information about this important signing or about the Voluntary Disclosure Program and how to apply, please call Tax Solutions Canada today at 1.888.868.1400. 

Attention Sole Proprietors/Self-Employed: Your Income Tax Deadline is Approaching - Tips for Getting Organized

June 15 is the filing deadline for those who have income other than from “T”-slips (for the most part those who are not employees or pensioners).

Bigger businesses have in-house accounting departments and accountants, controllers and CFOs to worry about these matters. Employees have their T4s and file online – real simple.

However, the taxpayers who have the most stress are those caught in the middle. For the self-employed, this is can be an ugly time of the year.

Is this you? Working 6 or 7 days a week to finish the renovation job, looking for a new project and battling your bank manager to increase your line of credit so you can pay the crew that does the heavy lifting on-site while you wait for the client’s cheque to clear?  Oh, your wife is reminding you it is time to pay the HST installment and the kid’s summer camp deposit is due this week!

After 12 hour days (remember it’s you running everything to do with day-to-day business – from wrong supplies delivered to site, to the electrician/plumber/whoever not showing….), the last thing you have energy for is record keeping.  If bookkeeping was your idea of fun you would have become an accountant! 

Look into the cab of the pick-up trucks parked outside Home Depot any early morning and guess what you see – under the fast food wrappers and Timmie’s cups – paper, paper and more paper.

Every one of these contractors is probably great at his trade and simply useless with paper.  Some know what to do but are too overwhelmed to get to it, whereas some are confused by it and never seem to have enough cash to get an accountant.

I know where you are coming from.  Real estate agents, mortgage brokers, drywallers, small business owners, etc., - different way of earning a living = same fear of tax deadlines. There is no short cut - either you are organizing it or you are paying someone else to do it.  Most of us need to turn the final accounting over to an accountant.

Here are some simple organizational tips to help you get things sorted:

·         Sort the pieces of paper by year (if you have more than one business then sort by month).

·         For each year’s batch sort the expenses into types of expenses.

·         You can find your sales through your invoice book or bank deposits or by adding up contracts you did. 

·         If you have a home office you will need to also gather, by year, the utility, repair and property tax bills plus your mortgage statements showing how much interest you paid.

·         For your vehicles that are used in the business get the leases/finance agreements and highlight on the monthly bank and credit card statements the bills for gas and repairs.

·         Go through any credit, store or debit card statements for these years and where you know it was a business expense highlight it.

·         Gather all statements and assessments from CRA and sort by date by type of tax.

·         Look through these organized documents and identify missing documents. If you are missing some bank statements you can print these off the bank’s history enquiry or pay for back statements.  For, say, one month’s missing electricity bill at your shop just estimate it.

You are now ready to do the bookkeeping.  If you have no experience in bookkeeping take these organized papers to your accountant and get it done properly.

If you are missing a lot of information (coffee spills, wind blows through and credit card slips don’t quite look the same after the laundry cycle!), gather what you have and speak to your accountant about how to fill in the blanks. A good accountant has seen worse, and will not judge you but get you on track.

Whatever you do, do not delay filing.  Do not incur late filing penalties or become guilty of tax evasion by being a habitual non-filer. 

If you have not filed for two or more years, before you start on the above get a professional tax solutions company on your side.  Filing a batch of years will likely trigger an audit and in our experience the good accountants are not as good as accessing CRA’s programs that reduce and eliminate interest and penalties as specialist companies that do not do accounting and tax returns.

If you have filed late in the past and are now facing a tax debt as a result, one that grows day by day, please call Tax Solutions Canada - we can help you get things sorted out: 1-888-868-1400.

6 Ways to Get Your Voluntary Disclosure Application Rejected

If you know that you have undisclosed or incorrectly disclosed information on a tax return, or have
not filed a return, you may be eligible for the Voluntary Disclosure in order to avoid penalties, interest, and even prosecution - but this is a complex process requiring expert guidance - you only have one shot!

Only one shot? Yes, and there are a number of ways to get your VDP application rejected. Here are just a few of the most common:

·        Contact CRA, triggering them to contact you before you make your application (once CRA I aware, it is no longer voluntary, and is therefore invalid)

·        Disclose only one tax year when you owe another – disclosure must be complete

·       Disclose one type of tax when you owe another (e.g. HST and Income tax often go together) – disclosure must be complete

·       Be dishonest or omit information from the application

·       Not managing the VDP process properly

·         Filing the application incorrectly

 

 What you need to qualify:

·        Disclosure must be complete

·        Disclosure must be voluntary

·        Must involve a tax debt at least 1 year old

·        Must involve a penalty

It is even possible to test the CRA’s acceptance of your application on a no-name basis. This process is somewhat more complicated but with the right experience is well recommended to start the clock of protecting you from the consequences of non-disclosure.

If you have undeclared income, unfiled returns or have claimed expenses or deductions that are not entirely valid you would likely benefit from a professionally handled application under the Voluntary Disclosure Program.  It will save you on penalties and interest, avoid criminal prosecution and most importantly no more sleepless nights or looking over your shoulder. 

Lastly, do not be afraid of the tax debt that will come to light.  Professional tax solution companies like ours have the experience needed to extract fair and reasonable payment plans from CRA. Please call us today at 1-888-868-1400.