CRA publishes Tax Warning in the format of Tax Alert on their public database. Violation of any rule on Income Tax Act by any party, if serious enough, will be published periodically onto CRA?s website. The following are the recently published tax alert.
Warning: Claiming false expenses or losses when you make your tax returns could subject you to fines, penalization or even conviction.
CRA (Canada Revenue Agency) has recently discovered a fraudulent way where taxpayers claim losses or expenses that amount to be the same as their personal expenses.
Taxpayers involved submitted information slips using a CRA business number. The amounts were equivalent to their personal expenses. Slips included T5008 statement for Securities transactions, T5 for investment income as well as the T4A for Pension, Retirement and other income. These amounts from slips were reported on T1 tax returns to show that they were business losses. According to Income Tax Act such deductions for expenses which are personal are not allowed.
Consequences that are going to be Serious
The CRA was able to identify taxpayers who participated in this scheme. Also, they are in the process of taking action. According to the Income Tax Act as well as the Excise Tax Act, the CRA could take action.
If convicted you are liable to pay 200 % of the tax and a jail term of up to 5 years. Also CRA will publish the details of conviction.
You could be reassessed even after you get a refund
If you participated in this scheme and received a tax refund, keep your record books safe as CRA could do a reassessment within 3 years.
Even after three years, the CRA could do a reassessment in case of alleged fraud. Therefore, even if you are not reassessed, don?t interpret it as an acceptance of your tax returns.
Get independent Professional advice
When you participate in arrangements to reduce tax, you need to do that under the advice of an independent tax professional. Contact Tax SOS at (877)982-9234 or (416)623-9234 or complete the Contact Form TODAY!
When tax payers fail to comply with tax laws the CRA has the authority act. Fines up to 200% of the dues and interest need to be paid. Jail sentences up to 2 years could be imposed.
CRA is Aiming at You: Holders of offshore account holders who have not reported them
CRA is receiving information from French government about holders of HSBC accounts.
CRA has started audits on these accounts to see if they are declaring their income for purposes of tax.
Out of 1000 accounts on which CRA has got information, they are auditing the large ones. The rest also will be audited.
CRA is working in corporation with the Organization for Economic Co?operation and Development, which is participated by seven countries. Also, it collaborates with the Joint International Tax Shelter Information Centre.
The CRA has been able to find $1billion of unpaid federal tax last year connected to Canadian taxpayers holding offshore accounts and their voluntary disclosure program has brought another $138 million. This year, these figures have been surpassed in five months.
According to Canadian law, it is illegal not to report income of foreign origin. CRA?s international endeavors help CRA to increase the speed and scope of the tax recovery.
If you have tax problems of a similar nature, no matter being caught by CRA or not, you need urgent help by experienced tax professionals. At Tax SOS, we take care of many clients who are in the same boats of violating CRA?s rules, no matter intentionally or unintentionally. Call us to understand your risk and options. Contact us at (877) 982-9767 or (416)623-9234 or complete the Contact Form TODAY!