Tax evasion in Canada is a very serious criminal offence, and many Canadians are faced with court each year as a result of tax non-compliance. Depending on various factors, tax evasion can result in hefty fines, house arrest and a jail term. However, although tax evasion is taken very seriously, it does not always mean jail time.
Many of those convicted with tax-related offences are those who ignored the problem in the hope that it would never be discovered. If you have missed the tax deadline there are many different methods that the CRA utilizes to uncover unreported income and so these issues simply have to be attended to.
Leaving them hanging will only allow the problem to grow – and you will bear the penalties.
CRA can find out about undeclared income by auditing one of your suppliers, your clients or even your accountant, and if this happens and they see something questionable they will take a close look at you too. Contractors beware: even if you are not having taxes deducted at the source, your income source may be filing tax slips with the government which will lead to an arbitrary/notional assessment.
So, how can you deal with a tax problem before it gets to the point of being tax evasion. By becoming compliant. That doesn’t mean calling the CRA directly to report your unfiled returns, as this is never a good idea – in fact it is outright dangerous. Many a well-intentioned taxpayer speaks with a CRA agent that sounds friendly, but the agent is acting simply to get information from you so you can implicate yourself. Instead, speaking with a representative of a professional tax solutions organization can help you work through the intricate process and solve your tax problem.
Having a tax problem can be very stressful, both personally and professionally, and can impact greatly various aspects of your life. There are a number of different programs offered by the Canada Revenue Agency to alleviate some of the stress caused by a tax problem and can mitigate financial, punitive and criminal consequences that can accompany noncompliance. While none of them will eliminate the debt entirely, some can reduce or get rid of the interest and penalties leveraged on a tax debt.
One such program is the Taxpayer Relief Program. The Taxpayer Relief Program is offered by the CRA as a way to assist taxpayers with a tax debt due to extenuating circumstances. That being said, this relief is only available in certain situations.
Taxpayer Relief Reasons:
2. Health issues – including addiction and mental health issues
4. A natural disaster like a fire or flood
5. An error on the part of the CRA
6. An extraordinary circumstance
With the items listed above it is at the discretion of CRA to decide who they will approve for relief and even with one of the above present you could still be denied. Relief applications must be fully documented and contain supporting evidence. It is only with experience that a professional, in dealing with tax problems, can know if that aspect of the application carries enough weight to win the argument and how to properly present it. A relief application, in nearly all instances, should be prepared by a professional. You are asking the government to forgive your mistakes, errors and negligence – not surprisingly they are going to hold you to a very high standard to give you this relief and still be able to show that CRA is treating all taxpayers fairly.
If you are approved for Taxpayer Relief the penalties associated to your tax debt may be reduced or eliminated and any interest associated to the penalties may also be cancelled.
If CRA hasn’t caught on to you yet and hasn’t contacted you, another avenue to come clean and put the problems behind you is the Voluntary Disclosure Program. This is another official program where, if your disclosure is complete, voluntary, involves a tax debt at least 1 year old and involves penalties, you may be able to declare income that CRA is unaware of and avoid penalties, interest and prosecution. There is one caveat: if they determine that your disclosure is not complete (perhaps they dig something up from another tax year or you have forgotten to include something) you could have the application struck down, after telling them about the income which can open a whole other can of worms. It is recommended that you have a professional who specializes in VDP review your case, advise you if you qualify and prepare the application for you.
If you are nervous that your inability to file your tax return may lead to a notional assessment or discovery by the CRA, speak with a company today to get the problem ironed out.
For more information about the Taxpayer Relief Program, or to find out how to become tax compliant, please contact Tax Solutions Canada today by calling 1-888-868-1400 or visit us online at www.taxsolutionscanada.com
Written by Tax Solutions Canada