CRA’s Offshore Tax Informant Program

/in , /by

career-111932_1920

The Program

Over the past year the Canada Revenue Agency (CRA) has implemented an ‘Offshore Tax Informant Program’ in hopes of fight international tax evasion. The CRA promises to compensate individuals who help catch tax evaders.

Program Success 

The Financial Post has reported  that this program has generated over 1,000 calls and has led to over 100 active cases. The success of this program banks on the CRA actually putting forth resources to investigate these cases which can take number of years.

Why Now?

Programs like this have been around for number of years,  the Internal Revenue Agency (IRS)  in the United States has had a similar programs since 2006. Other agencies such as the Securities and Exchange Commission (SEC) have similar programs as well. It was just a matter of time before the CRA followed suit.

With falling tax revenues and increasing deficits the governments are scrambling to find a solution. These program have been launched in hopes of  ensuring public confidence in the tax system and to increase tax revenues.

At the beginning of April 2013 the International Consortium of Investigative Journalists (ICIJ) released a report which indicated the issue of world tax evasion and included names of 450 Canadians. In the months following Gail Shea the National Revenue Minister committed $30 Million to find tax evaders. The report by ICIJ help shed the light on how much money was actually being stored offshore. Other governments around the world are also taking note of this problem.

In the Future

However despite having knowledge of the individuals that hold off shore bank accounts the CRA has yet to prosecute anyone. The investigations will be time consuming and complex, it could be years before we see any cases in court.

Read more

CRA Auditing – HST New Housing Rebates

/in , , , /by
Goods and Services Tax/Harmonixed Sales Tax (GST/HST) New Housing Rebate

Goods and Services Tax/Harmonized Sales Tax (GST/HST) New Housing Rebate

The Canadian Market

The housing market in Toronto and the suburbs has been booming over the last several years. This has allowed investors from all over the world to cash in. The strategy was to purchase a newly constructed home or condominium unit from the builder and sell it a few months later for profit. This strategy seemed like people had finally figured out how to pull ahead in this struggling economy. For some this had even become a full time job with endless rewards. With the Canada Revenue Agency (CRA) only taxing half of the capital gain this was the right way to retain your money.

HST New Housing Rebate

With the CRA looking to increase tax revenues they started reviewing the New Housing Rebate applications  and determined a large number of people had claimed the GST/HST New Housing Rebate incorrectly. They were able to determine a large number of investors never even moved into the newly constructed property but they had sold it few months after they took possession. In this case they would not qualify for the rebate and they would be required to pay the HST balance to the CRA. A lot of investors had already sold the property and had failed to collect HST on the sale, which would mean they were still required to pay back the HST. This was a sticky situation with some investors on the hook for over $24,000. In some instances the CRA waited 3 years to reassess the taxpayer. Read more