905-896-3333 * 905-827-6999 * 416-762-4200

Maryann's Power Point Notes


Power Point

First Name: 
Last Name: 
Email: 
Phone: 
Comments: 
 
* * Maximum of 2000 characters


Handouts from Guests Mr CRA and Miss HST


Video Library 

Website Navigation Guide
Cheat Sheet for Canada.ca (Creating an Business Account), Make Payments, Reach a Liason Officer, Stats Canada, and Financial Performance Data
Business and Professional Income Guide

Helpful Tips

Liaison Officer

First Name: 
Last Name: 
Email: 
Phone: 
Comments: 
 
* * Maximum of 2000 characters


Trade Record Sheets


*** Please make sure your trade record sheet is perfect - an incomplete trade could trigger an audit with RECO ** 

Trade Record Sheet 2017


CRA Letter



Chart


CRA Investor Chart

Ministry of Finance - New Form


Fact Sheet


Myth – The sale of a new or substantially-renovated home is GST/HST exempt if the home has remained vacant or has been occupied temporarily by the builder after it is completed.

Fact – Generally, the GST/HST must be charged on sales of new or substantially-renovated homes that were built or substantially renovated for sale, even when the home has remained vacant or has been occupied temporarily by the builder after completion. Please refer to GST/HST Memorandum 19.2.1, Residential Real Property – Sales, for more details, including possible, limited exceptions. For more information on the GST/HST and housing, go to GST/HST and home construction.


Tips


What are the key areas of compliance risk in the real estate sector?

There are five main areas of concern:

  • questionable source of funds
  • property flipping
  • unreported goods and services tax/harmonized sales tax (GST/HST) on the sale of a new or substantially-renovated property / GST/HST new housing rebate
  • unreported capital gains
  • unreported worldwide income

Getting Results



So who is most likely to be audited?


Technically, everyone can be audited. However, the CRA tends to zero in on certain categories of taxpayers. Some elements of your tax return could also raise red flags and lead to an audit. You’re especially at risk if:
  • You’re self-employed. Tax returns for self-employed people are usually more complicated. There isn’t a single piece of paper, like a T-4 slip, that the CRA can use to cross-reference the income you declared.
  • You work in construction, retail or the restaurant industry. The CRA has singled out those industries, where businesses are often heavily cash-based, for extra scrutiny due to high rates of tax evasion.
  • You keep reporting rental and/or business losses. Are you really bleeding cash or are you stashing it away in the Cayman Islands? The CRA will wonder.
  • You reported drastic swings in income, especially if self-employed. See above.
  • Your income doesn’t match your postal code. Are you making significantly less than your neighbours? The CRA could start to wonder how you can afford to live where you do.
  • You have offshore assets. Owning assets abroad is also something that could attract unwanted scrutiny.
  • You received wire transfers from abroad of $10,000 or more. 
 
Triggers for Home office expenses: You’re allowed to declare a certain percentage of your residence as a home office, but claiming more than 10 or 15 per cent sends a signal.

Advertising Never Lived In


The recent case involved an Ontario couple that attempted to claim an HST new housing rebate for a house they purchased in Milton. The purchase agreement was dated in October 2011 for a price of about $425,000. The purchase of the house closed on April 10, 2013 and it was immediately listed for resale on April 21, 2013 for $517,000 as a “Brand New Never Lived in Home.” The house sold shortly thereafter for about $510,000.
 
Of course they had to pay taxes owed, late penalties etc.
 
Went to Appeals:  The couple argued in tax court that when their “financial and employment circumstances … changed, they decided they had to sell the new house by the time it was built but that her mother-in-law had moved into the house in the interim.” A relative living in the home would have satisfied the condition for the rebate.
Both the CRA and, ultimately, the Judge had serious doubts that the mother-in-law ever moved in since both the house’s listing and the advertising refer “in unqualified terms to the fact that the house was brand new and never lived in.” As the Judge wrote, “It is hard to imagine how the presence of someone living in the house could not be apparent to prospective buyers looking at a brand new never-lived-in home. It is equally hard to imagine a realtor taking such a risk.”
The judge reviewed the home’s utility bills for the short period of ownership. The gas bill showed an almost immaterial gas consumption, and the hydroelectric and water bills showed minimal amounts of electricity used and “0.00 cubic meters of daily water use.”
As a result, the judge denied the couple’s claim for the HST new housing rebate. He also pointed out that this was consistent with the CRA’s assessment of tax on the gain on the sale of the house, as opposed to a tax-free gain as a result of claiming the principal residence exemption.

Criminal or Not


Internationally, Canada has long been considered lax on white collar crime, with few prosecutions and prison sentences measured in months, not years. But after the Panama Papers were made public last April, the new Liberal government quickly announced a nearly $500-million investment in the CRA to bolster tax enforcement.
The number of criminal convictions for tax evasion has dropped dramatically from 137 in 2011-12 to only 17 so far in 2016-17, yet the criminal fines imposed have almost tripled from an average of about $46,000 to over $123,000 for each offender.

http://www.cbc.ca/news/politics/taxes-cra-facebook-big-data-1.3941416

The Canada Revenue Agency is scrutinizing the Facebook pages, Twitter feeds and other social media
posts of Canadians it suspects could be cheating on their taxes.

That's just one example of the agency's increasing focus on what it can learn by collecting and analyzing
many kinds of data — both its own internally generated information and what it calls "publicly available
information."

"The CRA does practice risk-based compliance, so for taxpayers identified as high risk, any relevant,
publicly available information relating to the specific risk-based factors for the taxpayer may be
consulted as part of our fact-gathering processes," said spokesperson David Walters.

Among those considered high risk are wealthy Canadians with offshore bank accounts, said Jean-
François Ruel, director of CRA's Strategy and Integration Branch.
"If we go with high-risk, high-wealth individuals that do offshore [banking], then we would look at all
information that is public for compliance action."

Tobi Cohen, spokesperson for the privacy commissioner, said CRA notified it of its plan to collect
publicly available information from social media in connection with "tax fraud and non-compliance risk
analysis, audits and investigations."

However, David Christopher, of the advocacy group Open Media, said his organization opposes
government agencies monitoring what Canadians are saying on social media.
"When Canadians post something on Facebook, they believe that they are sharing that with their friends
and with their family. They don't believe that they are sharing that with some government bureaucrat in
Ottawa," he said.

"Unfortunately, Facebook's privacy settings are notoriously complex and many people might think that
they are posting something to their friends and it ends up getting shared with the whole world."
The revelation that the Canada Revenue Agency is checking social media posts comes as the agency is also expanding its use of cutting-edge technology and data analysis to better catch tax cheats, to target people for audits and to improve its service for Canadians.

Big data
Business intelligence, also known as big data, is a rapidly growing area within CRA. In 2016 alone, the
agency posted three separate privacy impact assessments centred on its plans to use business
intelligence techniques in its operations.
Former CRA commissioner Andrew Treusch says technology is changing the way the agency operates.
"Evolving technology is having a significant impact on our approach to compliance," he wrote in the
agency's 2016-17 Report on Planning and Priorities.
"Data analysis and business intelligence are providing us with better insight into taxpayer behaviours,
allowing us to spend less time and effort on lower-risk groups of taxpayers and focus our resources on
dealing with deliberate non-compliance."
In the report, the agency says business intelligence, which includes "mining accessible data," is a key
area.
"This is because of the far-reaching opportunities it presents to enhance strategies for compliance,
services and debt collection. Business intelligence encompasses big data to improve non-compliance
detection (predictive analytics) and behavioural economics (such as 'nudging') to improve compliance."

Future techniques
An internal CRA document, which CBC News first found on the website of the U.S Internal Revenue
Service, outlines CRA's plans to use business intelligence techniques in the future.


The document, prepared in 2014, describes plans to move into such areas as predictive analytics, which
can use data and algorithms to help officials decide whether someone who hasn't paid their taxes should
get a gentle reminder, a phone call or an audit. 'When Canadians post something on Facebook, they believe that they are sharing that with their friends … They don't believe that they are sharing that with some government bureaucrat in Ottawa.' - David Christopher, OpenMedia spokesperson
A chart in the document indicates CRA also planned to get data to analyze from "web and social media."
Ruel said while the agency was looking into the prospect at the time, it is not currently planning to
include social media analysis as part of the business intelligence side of its operations.
"A lot of steps and a lot of work in terms of privacy would have to be done first and it's not one of the
priorities right now."However, he said the business intelligence unit does analyze data from CRA's interactions with Canadians through its own Twitter and YouTube accounts.
"When they communicate with us, we analyze this information to make sure that we understand what is
happening," Ruel said. "If there is concern around scams, for example, we will take that information and
then create a communications strategy to make sure that people have the information that they need."

 

 


Article 2


http://www.newswire.ca/news-releases/the-government-of-canada-cracks-down-on-tax-cheating-in-real-estate-transactions-628880843.html

The Government of Canada recognizes the importance of ensuring a healthy, competitive, and stable housing market for all Canadians, while also working to improve tax fairness. To that end, the Government of Canada has taken significant steps to address tax cheating in real estate transactions.

In recent years, the Canada Revenue Agency (CRA) has increased its real estate audits in both the Greater Vancouver and the Greater Toronto areas as increased real estate speculation was observed. In addition, starting with the 2016 tax year, the Government of Canada requires that Canadians report to the CRA the sale of any principal residence to ensure that only eligible homeowners get tax benefits.

From April 2015 to March 2017, the CRA audits of real estate transactions resulted in more than $329.4 million in assessed income that had not been reported. During this time, the CRA applied over $17 million in penalties, primarily associated with Canada's two major real estate markets in Toronto and Vancouver.

Canadians work hard for their money and the Government of Canada recognizes that many families count their principal residence as both their home and most valued asset.‎ The CRA will continue to strengthen relationships with key partners such as provinces, territories, and municipalities to further expand, obtain, and exchange information on real estate transactions, thereby enhancing the CRA's ability to combat tax evasion and avoidance.

Quote

"For many Canadians, buying a home is one of their proudest moments and represents one of their most important investments. Our Government has committed to protecting the fairness and integrity of the tax system for all Canadians, notably by cracking down on tax cheating in real estate transactions. This means that, without exception, every taxpayer abides by the same tax laws."

The Honourable Diane Lebouthillier, Minister of National Revenue

Quick Facts

  • On October 3, 2016, the Government announced an administrative change to the Canada Revenue Agency's reporting requirements for the sale of a principal residence. For more information, go to Reporting the sale of your principal residence for individuals (other than trusts).
     
  • Builders of new residences or rental properties are required to collect and remit the GST/HST to the CRA when they sell, rent out for the first time, or appropriate the property for personal use.  Additionally, purchasers of new residences must ensure they abide by the rules when applying for new housing rebates.
     
  • From April 2015 to March 2017, the CRA completed over 21,000 files related to real estate. Files are selected for audit based on the risk of non-compliance. The CRA plans to continue enhancing its compliance procedures in the real estate sector.
     
  • Details of the CRA's audit activities can be found at: How does the Canada Revenue Agency address non-compliance in the real estate sector?