There is a trend taking place in the last twelve months. The number of CRA reviews that I am dealing with have increased noticeably. Many of these reviews are not for an earth shattering amount of GST or income taxes being reviewed. They are what I would call random audits to see if the taxpayers randomly chosen are being honest and then extrapolate from there.
Many mature businesses have endured this at least once during their life time – a CRA tax audit. Most businesses survive an audit with no issue. This happens when the business has an adequate set of financial records that is easy for the CRA auditor to examine. So what makes up an adequate set of financial records. First of all, the CRA audit has changed from twenty years ago. In the past, an actual person came to the business premise to examine the books and records. Hence if the ... Read More
CRA's Voluntary Disclosure ProgramSometimes taxpayers make mistakes with their annual tax filings. These mistakes come in many forms: an omission, an understatement, a misclassification of an income, an information return left unfiled, or perhaps the tax advisor may have inadvertently misinterpreted the Income Tax Act. The examples are endless.
A second chanceTaxpayers who find themselves in these types of stressful situations can stress no more; the CRA has a program that ... Read More
Increasing Risk of Being Selected for an Audit In our last blog we mentioned that it is no secret that the Canadian government and the CRA have recently been finding new ways to raise revenue. Recent news articles in the Globe and Mail have reported that the CRA has been devoting more resources into uncovering routine common filing errors made by honest taxpayers rather than investing additional resources into uncovering intentional errors. Our recent experience with the CRA confirms this as ... Read More
Self-prepared returns are easy targetsIt is no secret that the Canadian government and the CRA have recently been finding new ways to raise revenue. In recent years, the CRA has devoted more resources towards identifying common filing errors in order to reassess additional taxes, interest and penalties to taxpayers. Statistically, the CRA is aware that tax returns prepared by the taxpayer or unlicensed professional accountants are more likely to contain errors, intentional or ... Read More
A Brief Analysis of Real Estate Gains & Canadian Income TaxRecently there has been a lot of media attention focused on financial gains being made in Vancouver’s housing market and the favorable tax treatment given to real estate used as a principal residence through the Canadian Income Tax Act. Without getting into the technical details of this tax treatment and all of the possible complex scenarios, the simple rule is that as long as a taxpayer or an immediate family member ... Read More
The average small business owner in Vancouver has a limited budget to deal with their marketing, accounting, IT and high location rental costs. Successful businesses tend to be surrounded by strong support networks, which include bookkeepers and tax advisors. As a result, their books and records are orderly, current, and their tax filings are consistent with their accounting records. For these businesses, a CRA audit is merely a small project to attend to with the help of a professional ... Read More
Penalties and interest charges are the most common tools the CRA uses to enforce compliance with the Canadian Income Tax Act. ‘Compliance’ refers to filing the tax and information returns in their entirety and on time. When a taxpayer (a person or a corporation) files late, there are late filing penalties on unpaid balances. There is another serious penalty in the Income Tax Act that is catching some taxpayers by surprise. This penalty arises when a taxpayer fails to report an income amount ... Read More
What Canadians Need To Know About the U.S. Foreign Account Tax Compliance Act In March 2010, the U.S. enacted the Foreign Account Tax Compliance Act (FATCA). FATCA requires non-U.S. financial institutions to report to the U.S. Internal Revenue Service (IRS) accounts held by U.S. taxpayers. Failure to comply with FATCA could subject a financial institution or its account holders to certain sanctions including special U.S. withholding taxes on payments from the U.S. The U.S. ... Read More
Vancouver Tax Audit Services: the CRA's Negligence Penalty The CTV news show W5 aired an episode on February 9, 2014 called Punitive Penalties about a program named the Fiscal Arbitrators where 1804 Canadian taxpayers paid thousands of dollars to be part of what they thought was a legal tax scheme. The scheme did not end well as the participating taxpayers were later reassessed by CRA. The “news” part of this story is that CRA also slapped the taxpayers involved with gross negligence ... Read More