If You Are Earning In Cash, Can CRA Still Penalize You For Tax Evasion?

CRA or Canada Revenue Agency is the organization that keeps track of businesses and individuals and their income all through the year. It is the job of this organization to ensure that, the citizens pay their tax on time and in the proper amount. People who are in various professions or own businesses, have to file their taxes according to the regulations created the authorities. There is also a section of the population who earn in cash and they tend to think that such rules of taxes and authority backed regulations do not apply to them. If you think like that about Tax Audit and Reassessment, then it is time to reconsider.

Understanding The Premise – The first thing you need to know is that, despite getting paid and earning in cash, you will still fall under the purview of CRA and tax authorities. This means, you will have to pay your taxes and not doing so, will mean getting penalized by the CRA. You may think that getting paid in cash means, not having any records of earning, but that is also not true. CRA has an array of tools and techniques which is also ever growing to catch the tax cheats and collect tax from the underground economy.

Things That Happen Normally – One of the biggest reasons for thinking about easy tax evasion is the proclamation of your clients. There are multiple instances, where you are promised that the client will not be showing the payment for your work. It allows you to think that there is a leeway to evade paying taxes, but that is not true at all. The client will show each and every penny earned and spent notwithstanding the promises made. Due to that, the CRA will know about the source of your income. Additionally, to save their own skin, the client will definitely provide with your information.

As a result, to the information provided by your cash paying client, the CRA will know about your attempts at evading tax. They will come to your door, serve you with the notice and then ensure that you pay your taxes properly. If you have not been doing so for a long time, then you will be given the chance to pay for all the back taxes, failing to do so will result in fines and serious jail time. So, you need to know about Tax Audit and Reassessment and pay the amount due, otherwise, the CRA can penalize you.

How Filing Tax Returns in a Timely Manner Helps Avoid Penalties

In Canada, tax evasion attracts numerous penalties. When a Canadian taxpayer fails to file their tax returns in a timely manner, the Canada Revenue Agency, or the CRA, demands an explanation for it from an individual in a timely manner.

Whether or not a taxpayer would get a waiver solely depends on the reasons cited by them for their inability to file their tax returns in time. That is to say, the CRA may consider waiving the taxes if it gets a satisfactory explanation regarding their failure to pay taxes in time.

Generally, the CRA takes a few months’ time in assessing the suitability or validity of the tax waiver application filed by an individual. In case it is rejected after a few months, an applicant is liable to pay a late filing penalty.

The penalty for the failure to report income on a yearly basis

A taxpayer is required to pay a penalty based on whether they report corporate taxes or personal taxes. It is important to remember that the CRA has a zero-tolerance policy in dealing with non-payment of taxes. Furthermore, a failure to report taxes for more than three consecutive years results in another form of penalty:  the penalty associated with the repeated failure of reporting the business earnings. Other than the residents of Quebec, Canadians from other parts of the country are required to pay it. This form of tax is imposed by the provincial and federal administrations on taxpayers.

In case one owes an outstanding amount of taxes for more than 3 years, both provincial and federal governments charge 10 percent each on the payable amount. It increases depending upon the number of years for which the tax amount is due.

If you have failed to file your taxes in time, you can still get a tax waiver from the CRA provided you bring it to the attention of the CRA on your own before it finds it out. Non-resident Canadians are only required to pay territorial and provincial taxes if they come under the tax bracket of these taxes.

The penalty for omissions or false statements

Apart from the failure to file your tax returns in a timely manner, there is also the provision to pay a gross negligence penalty for reporting taxes with false statements or certain omissions. Your best bet to avoid this penalty is to make sure that you check prior to reporting your earnings and the other elements on the tax filing form. If penalized, you will be required to pay a fine equivalent to a maximum of $100 or fifty percent of understated or overstated tax as deemed fit by the CRA.

Your best bet to get a waiver from the penalty is to make sure that you admit it through Voluntary Disclosures Program. For big corporations, it is of paramount importance to file the T2 Corporation Income Tax Return in a timely manner. In the event of the violation of tax guidelines in this regard, the CRA reserves the right to penalize a party with a monthly penalty for a maximum of forty months.

Companies, especially larger corporations are also required to file Part VI Tax in Schedule 38 in case an organization is eligible for the same. Otherwise, it can attract the CRA late filing penalties which can result in a penalty of ten percent of undisclosed income in a given year. This penalty is generally imposed when a company fails to report annual income for more than three consecutive years.

Are you stuck with tax issues? If yes, we can help you with our services related to tax audit and reassessment in North York, Ontario. Remember that a stitch in time saves nine. So, without a delay, get in touch with us now!

How A Tax Consultant Helps Weed Out Tax-Related Troubles

Sometimes tax issues can pose a stiffer challenge to taxpayers in Canada. The Canada Revenue Agency or the CRA underlines multitude of tax requirements. At times, they can be overwhelming to a Canadian taxpayer.

It is important to meet the tax requirements in a timely manner as a failure to do so can invite numerous tax-related issues. Our experts who are associated with tax audit and reassessment in North York, Ontario can bail you out of it.

How can tax a consultant help you?

While handling tax issues may seem little tricky to normal taxpayers, it is the daily job of a tax consultant. Apart from valuable advice regarding how to manage your taxes, an advisor can also help you prepare tax returns in a professional manner. These services can be of great assistance in resolving the challenges linked to filing your tax returns.

Also, there are several other ways in which you can also benefit from the professional services of an experienced tax consultant. With several years of experience under their belt, they can better negotiate with the concerned authorities of the CRA to minimize your taxes. By virtue of their thorough knowledge of the tax laws, they can help you avoid legal actions that can be detrimental to you or your business.

In order to reap the benefits listed above, it is imperative that you assign the task to a seasoned tax consultant in Canada. Make sure you hire someone who has an adequate of dealing with the CRA for various tax-related issues.

Concealing any information related to tax is not a good idea

When it comes to dealing with tax problems, every minute detail matters. So, for desirable outcomes, make sure you discuss everything with your tax consultant without hiding anything from them. This is important in the light of forming strategies to bail you out of any existing or potential trouble. Do not forget to bear in mind that the quality of their service will depend upon their understanding. And being free and frank in sharing every minute detail with them will help your tax consultant understand the important details and formulate a strategy based on their understanding.

Get in touch with our experienced tax consultants to get rid of your tax-relate troubles

Are you seeking a reliable solution to tax troubles like tax debts, tax audit, unfiled back taxes, or unreported income?  Do you have any other issues related to taxes other than these? If yes, then do not worry.

Our experts can help you out with their out-of-the-box tax resolution options. From resolving simple tax problems to complex ones, you can rest assured that you will be able to overcome your difficulties by acting in accordance with the huge wealth of knowledge on a variety of subjects which our tax experts bring to the table.

What Should You Do If You Receive A Tax Reassessment Notice From CRA? Tax Audit and Reassessment in North York Ontario

If you have received the notice for CRA tax audit, then it is crucial to prepare for the tax reassessment notice as well. It is not something inevitable in every case, but there are situations where you may have to deal with this problem. The first thing you need to remember that, if required, the CRA can go back years to check your past tax returns at any time. So, even if everything has gone perfectly this time, there are chances that any previous year can become the reason for the reassessment. Therefore, if something like this happens, you will need professional help to handle the Tax Audit and Reassessment requirements.

Knowing about the scenarios – The first thing you need to decide is whether you are going to accept the notice and pay the amount or want to question the findings and the amount payable. In the first scenario, it is quite possible that, the amount you are to pay is a huge one. If you have the money, then there is nothing to worry about, but when you do not have the money, such a reassessment notice can turn into a huge problem. Not paying the money will mean accumulation of interest charges huge will make paying the amount harder than before. So, it is quite clear that, if you receive a reassessment notice, then the first step will be hiring a Tax Audit and Reassessment in North York Ontario professional to begin negotiations with the CRA and decide on a payment plan.

Trusting a professional – On the other hand, if you are not happy with the reassessment and want to challenge it, then it is possible to do so. After receiving the notice, you have 90 days to follow with a Notice of Objection, but that does not mean you should be doing that immediately. It is quite possible that despite filing the notice nothing changes. So, it will be way more beneficial for you if a tax professional is hired to handle the whole process. Being an experienced and competent person associated with this field, he/she will know the process of filing the notice and also the best ways of handling the whole matter. You need to provide all the supporting documents to prove that the reassessment is inaccurate. In short, the process will be a confusing and complicated one. Therefore, trusting a Tax Audit and Reassessment in North York Ontario professional will be your best choice to handle the CRA reassessment process successfully.

How the CRA Handles Canadian Tax Evasion

Despite the sincere efforts of the Canada Revenue Agency (CRA), the fact remains that there are still some businesses and individuals that evade taxes. By far, such elements are responsible for various problems related to tax evasion in Canada.

In line with its policies and guidelines, the CRA adopts a zero-tolerance policy for tax evasion as it does in case of tax avoidance. However, tax evasion and tax avoidance are two distinct terms. While the latter refers to the deliberate act of not paying the taxes despite being eligible for it, the former is associated with the act of overlooking the tax law which necessitates a business or an individual to pay their taxes.

Over the years, the CRA has recorded many tax problems associated with the collection of taxes. While some businesses report lesser taxes than they should while submitting their returns. Others either file wrong information about their income or take more deductions than permissible in accordance with the CRA guidelines. By virtue of these practices, the business entities report lesser income or profit than usual and make an effort to elude the prospect of paying the actual taxable amount to the Canadian Revenue Agency.

Another practice which most businesses adopt to get away with paying a fewer taxes is to conceal the purchase of an item in a different area of jurisdiction. For example, businessmen buy articles from other locations and without reporting their purchase in the tax returns, pay a minimum amount of money in the form of VAT.

With that said, the CRA has both measures and resources in place to nab those who evade taxes. The price of Canadian tax evasion can be heavy – a fine ranging from one thousand to twenty-five thousand dollars to a jail term of up to twenty four months. The Informant Lead Program is a program designed to catch the offenders of both tax evasion and tax avoidance red-handed. It is aimed at collecting the information of both known and unknown tax evaders.

When it comes to filing taxes, honesty is the best policy. Besides, getting professional help from a legal consultant can be of great help, especially when you are entangled in a legal issue. Do not delay it any further – get in touch with our experts for services such as tax audit and reassessment in North York, Ontario and other tax related services now!

How the CRA Calculates Business Taxes Related to Partnerships

According to the Canadian tax laws, any business which is run by two or more individuals in collaboration with one another is referred to as a partnership. If you are a part of a registered partnership business, here’s what you need to know about it.

Entering a Business Partnership

Are you a part of a business which involves one or more persons other than you? If yes, then chances are you may have wondered how it will have a bearing on your individual tax returns. Until the time the incorporation of your company is complete, you are required to submit your taxes individually in accordance with the Canadian tax laws. However, you need to consider certain other aspects in case your business profits are shared between you and your partner.

Starting a Partnership

Before beginning a partnership, it is imperative that you conclude a contractual agreement of your partnership business. This will make it easy for you and your partner or partners to understand how the business revenue, expenses and tasks would be divided among yourselves. Additionally, it will also give you a clear indication of what amount of money you need to declare while filing your individual tax return.

While the laws in Canada do not mandate an agreement to operate a partnership business, it is strongly recommended because it provides an individual with greater protection whenever there is a dispute among the partners. It goes without saying that a written agreement is more credible than a verbal agreement among the partners.

Having an agreement in writing will also help protect both your property and income from legal issues. If required, do not hesitate in seeking professional help in this connection.

Taxes and Income Associated with A Business Partnership

Contrary to corporations, a business partnership does not comprise tax obligations. All you need to do is report your share of profit from the business in the form of self-employed income. Report it on lines 135 and 143 while filing your tax return.

Additionally, you are also required to fill out for T2125 for the statement of your professional or business activities. In case you are a part of a business with assets valued at more than$5 million, you are required to fill out for T5013.

If the total turnover generated by your business surpasses the margin of $30,000 annually, you should collect GST/PST/HST. Ensure the timely payment of your sales tax bill on either a quarterly or yearly basis.

For any questions related to filing tax returns or tax audit and reassessment in North York Ontario, contact us now!

How You Can Submit a Canadian Tax Return

The submission of tax returns can be a complicated affair. Nothing illustrates it better than the procedure of working out various deductions and tax rates related to CRA taxes. For the sake of convenience of Canadian Taxpayers, some easy methods to submit the tax return in Canada are given below.

Some Simple Methods to Submit a Canadian Tax Return

While doing your taxes may look tedious from the outset, it is not rocket science. As a taxpayer, you have three ways to file your CRA tax returns. Read on to find out which one suits you in the best possible manner.

Filing Your Taxes Online

A majority of Canadian taxpayers can pay their taxes on the internet using Netfile. You can use the online service if you meet the following criteria:

  • You are a resident of Canada
  • You have filed your tax returns before (at least once)
  • You are either a Canadian citizen or reside in Canada permanently

If you meet the requirements listed above, the rest is easy. All you need to do is perform some simple steps as indicated by your tax preparation software such as downloading the copy of your tax filing. Once this is done, you need to enter your Social Insurance Number to log into Netfile.

As the residents of Quebec are required to file two tax residents, they are required to perform an additional step. In order to ensure that the process is carried out without any error, it is necessary to ensure a proper alignment between the right tax return and the right service.

Filing Your Taxes by Mails

You can file your taxes by mail as well. If you make up your mind to mail your taxes, you are required to mail it to the address provided on T1 return. An important thing to note here is that you are required to submit your return by mail if you happen to be a student or have filed bankruptcy in last year’s return.

As for the tax returns, you can work them out using tax preparation software like Ufile, TurboTax or any other program. Thereafter, take a printout and mail it to the Tax Centre of your zone. If you are living in Quebec, send a print out of your provincial return via mail to Revenu Quebec.

Using The CRA Auto-Fill Service

If you have ultra-simple returns for filing, you might want to make use of the CRA auto-fill service instead of the other options. By virtue of this service, you can complete some parts of your tax return without the need for manual effort.

Due to the fact that the government already knows about your RRSP contributions and T4s, the information can be filed automatically.

Want detailed information about the procedure concerning the submission of CRA tax returns or Tax audit and reassessment in North York Ontario? Contact us now!

What’s new in CRA tax filing in 2018?

Each year, income tax slabs and tax credits undergo a change – thanks to the changes introduced by the CRA from time to time. The main objective behind the introduction of changes to the existing tax practices is to ensure the average Canadians are able to reap the benefits of improvement in services.

Read on to find out more about the new aspects related to CRA taxes in the current year.

The Deadline to File CRA Tax Return

The deadline for filing CRA tax in 2018 was April 30. If you, your common-law partner or spouse are self-employed but have not filed the return yet, do not worry. You still have time until June 15, 2018. However, the outstanding balance will still be due April 30.

Late filers will have to pay a 5% penalty on their unpaid balance. In addition, they will also need to pay 1% of the payable balance for the number of months by which their return is delayed, up to a maximum of 12 months. There’s more – unsettled balances also attract an additional penalty in the form of interest charges that are calculated on a daily basis. These charges apply to late-filing penalties too.

Revision to Canadian Tax Credits That Will Come into Effect in 2018

As for Canadian tax, a new credit, coupled with two revised credits, will be applied in 2018. It is important for Canadian taxpayers to know about it. Here’s what you need to know.

The Canada Caregiver Credit

The Canada Caregiver Credit is the substitute of the family caregiver credit. As a non-refundable tax credit, it is for the infirm members of a family who are above 18 years of age but are dependent on the earning member of a family. This may include a spouse, parent, children or other members of a family with physical and mental challenges. If any of your family members meet this criterion and you are living with them, this credit is applicable to you.

The Disability Tax Credit (DTC)

Though not new, the nurse practitioners in Canada can certify the Disability Tax Credit.

The Medical Expenses Tax Credit

This retroactive credit covers the expenses incurred in conceiving a child. Even as you are not subjected to other medical conditions, the credit still applies. Because it is retroactive, you can request a virtual overhaul of your income tax returns so as to include expenses related to fertility.

New Services Pertaining to Tax from The CRA in 2018

To do away with the tedious paperwork involved in filing a paper return in 2018, the CRA will send income tax forms to Canadian taxpayers who file paper returns. Yes, that’s right – you need to worry about going to Canada Post or other similar locations to collect your printed tax guides or forms anymore.

For those who have been filing electronically thus far, they have two options – they may either download forms on the internet or request for paper copies from the CRA.

Submit Your Tax Returns Over The Phone

For taxpayers who belong to the low-income of fixed income group, the CRA had introduced the concept of filing taxes over the phone by answering a few questions using an automated service. The simple, secure and free service was only intended for select individuals who were available until April 30, 2018, from February 26, 2018.

The CRA BizApp

As a major step to facilitate mobile users among small business owners, the CRA has launched the new CRA BizApp. Available for 21 hours a day, it lets users access the following accounts;

  • Payroll
  • Corporation income tax
  • Excise duty

GST/HST accounts, except for those that are controlled by Revenue Quebec

The good thing about this app is that viewing the outstanding balances aside, it also allows for the settlement of the expenses, check the transactions and expected GST/ HST returns, and seek information about them. You can get access to these services by signing in with the login credentials offered by the CRA. If you have not got one yet, you are required to register for the same.

Other Improved Services

Besides the ones listed above, certain other services have also undergone an improvement in 2018.  These include the following:

  • Adjustment of tax returns using ReFILE
    Additional information about an account via email
  • Enhanced security of accounts with automated alerts
  • Payment of taxes in person’
  • Auto-populated feature to file one’s return

However, to access these popular services, a user needs to be registered for My Account and also CRA’s mailing service on the internet, as soon as they receive their notice of assessment. If you have questions and doubts regarding filing your CRA taxes, or tax audit and reassessment in North York Ontario, feel free to contact our experts at your earliest convenience.