How the CRA Catches Tax Cheats?
The Canadian Government has put hundreds of millions of dollars into the Canada Revenue Agency to catch tax cheats. Professional Accountant Toronto has noticed the effect of this. One of the ways the CRA catches tax cheats is through a net worth audit. The CRA, on a net worth audit, does its own investigation into a taxpayer’s income. This is where a Professional Accountant Toronto is valuable.
When the CRA gets all your financial data from others, including banks, and then uses estimates and assumptions to guess at how much income you really made, a Professional Accountant Toronto can ensure that they don’t make wrong assumptions or use problematic methods. Unlike other areas of life, you as taxpayer have the burden of proving the CRA wrong. The CRA can make assumptions, even without proof. These assumptions in a net worth audit often prove difficult to disprove after the fact. This leaves taxpayers who have not kept proper records, who live beyond their obvious means, or otherwise appear healthier than the CRA thinks they can legitimately be at risk.
This particularly affects wealthy immigrants from cultures that like cash and who bring wealth from their home country to Canada. If, on a net worth audit, the CRA assumed this money and wealth to be taxable income, the taxpayer and a Professional Accountant Toronto have an expensive, uphill battle to fight the assessment. The best method, short of keeping full records and declaring all amounts, is to get a Professional Accountant Toronto on board as soon as you know you face a net worth audit. Prevention is always cheaper and more effective than after the fact cures.
Disclaimer: Articles are for general information only and do not constitute tax advice. They cannot be relied upon.
Sam Faris is a Toronto-based Chartered Professional Accountant who practices as an independent consultant on high-level Canadian tax matters and handles disputes with CRA. He has recently published an article a business magazine: HERE.