Tax Survival for Canadians: Stand up to the CRA by Dale BarrettTax Survival for Canadians: Stand up to the CRA by Dale Barrett

Tax Survival for Canadians: Stand up to the CRA

byDale Barrett

Perfect | March 15, 2013

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Take control of your money and stand up to the CRA!At any given time, there are thousands of Canadians involved in disputes with the CRA, for reasons such as owing back taxes or making an honest mistake on a tax return. Whatever the reason is for the dispute, the CRA can be an intimidating organization. If you are currently in a dispute with the CRA or fear you may become involved in one, you can remain feeling powerless or you can choose to educate yourself about the CRA, the audit process, and your rights as a taxpayer; you can gain the confidence to take a stand against the CRA!When dealing with the CRA, it is advantageous for you to be informed and vigilant of the situation and of all your options. It is important to remember that CRA agents work solely for the CRA; they will not look out for your best interests. By reading Tax Survival for Canadians, you will learn to protect your interests during an audit, how to ask the right questions, and how to utilize the tax laws to work in your favour.Left unchallenged, the CRA can utilize many methods to collect including asset seizures, liens, garnishes, and court cases, which have the potential to result in prison sentences! Author and Canadian tax lawyer Dale Barrett understands how devastating those consequences can be for you and your family. He has written Tax Survival for Canadians to put the power back into your hands by providing you with the best strategies to deal with the CRA. It covers topics such as ―· Canadian taxpayer rights· What to expect during an audit· Common CRA tactics· Tax amnesty and the Voluntary Disclosures Program· Tax liens and salary or wage garnishment· How to gain taxpayer relief· ― And more!Tax Survival is the complete guide for Canadians looking to take control of their situation to reach a fair resolution with the CRA. - 20120910
Dale Barrett, BCL, LLB, is an experienced Canadian tax lawyer dedicated to providing expert tax advice to hardworking Canadians who may feel powerless in resolving their tax problems. Barrett works with his clients to protect their interests and defend them against the CRA. His firm, Barrett Tax Law, specializes in assisting small-busi...
Title:Tax Survival for Canadians: Stand up to the CRAFormat:PerfectProduct dimensions:168 pages, 9.7 × 8.2 × 0.5 inShipping dimensions:9.7 × 8.2 × 0.5 inPublished:March 15, 2013Publisher:Self-Counsel PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:1770400397

ISBN - 13:9781770400399


Table of Contents

Introduction xvii1 Introducing the Canada Revenue Agency (CRA) 11. Your Relationship with the CRA 21.1 Your rights 21.2 Your obligations 22. What the CRA Knows about You 32.1 Information slips 42.2 Information arising from “requests” for information 62.3 Information from other countries 62.4 Information from financial institutions 62.5 Information from tax returns of third parties 72.6 Information gathered from third parties about unnamed taxpayers 72.7 Information gathered from the taxpayer 83. Confidentiality 8CONTENTSiv Tax Survival for Canadians: Stand up to the CRA2 Record Keeping: What to Keep and for How Long 131. The Importance of Maintaining Complete and Organized Records 152. Why the CRA Is Not Fond of the Self-Employed 162.1 Employee versus self-employed 172.1a Level of control the company has over the worker 182.1b Source of tools and equipment required to perform the work 182.1c Ability of worker to hire assistance or subcontract the workto third parties 192.1d Degree of financial risk taken by the worker 193 Filing Tax Returns 211. The Filing Mechanics 212. Personal Income Tax Returns (T1 Return) 223. Corporate Returns (T2) and Other Business Returns 244. Filing Deadlines 244.1 Individual income tax return 244.2 Partnership information return 254.3 T4 and T4A information returns 254.4 T5 information return 255. Consequences of Not Filing 255.1 Interest accrual 265.2 Penalty imposition 265.3 Fines or imprisonment 266. Tax Preparation 266.1 Tax software 276.2 Using an accountant or a tax return preparer 277. Things to Consider When Preparing Your Return 287.1 Amended tax returns 287.2 Waiver in respect of the normal reassessment period or extendedreassessment period 287.3 If you have not filed your return 28Contents v4 Business Taxation in Canada 291. Business Structures 291.1 Sole proprietorship 301.1a Tax forms for sole proprietorships 301.2 Partnerships 311.2a General partnership 311.2b Limited partnership 321.2c Tax and filing requirements for partnerships 321.3 Corporations 332. Goods and Services Tax (GST) and Harmonized Sales Tax (HST) 343. Payroll Taxes 354. Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) 375. Employment Insurance (EI) 376. Trusts 376.1 Testamentary trust 376.2 Inter vivos trust 385 Tax Audits and Reviews 391. Risk Factors That Increase the Odds of Being Audited 411.1 Excessive expenses and deductions 421.2 Major changes in income or expenses from year-to-year 431.3 A business that has repeated losses 431.4 Expenses that are not similar to others in your industry 431.5 Underreported earnings 441.6 Lifestyle analysis 441.7 Large charitable donations 451.8 Tax shelters and gifting programs 451.9 Child-care costs 461.10 Home office deductions 461.11 Evidence of Criminal Activity 461.12 Informant tips 47vi Tax Survival for Canadians: Stand up to the CRA1.13 Prior audits 471.14 Being self-employed or running a business 471.15 Discrepancies between GST or HST returns and income tax returns 481.16 Rental income 481.17 Shareholder loans 481.18 Errors and missing information 481.19 Employment expenses 491.20 Investment gains and losses 492. How the CRA Reviews Your Tax Return 492.1 Pre-assessment review program 492.2 Processing review program 492.3 Matching program 492.4 RRSP excess contribution review program 493. CRA Special Projects 506 What to Expect If You Are Audited 511. The Audit Process 511.1 Step 1: The audit letter 521.2 Step 2: The audit — information gathering and analysis 521.3 Step 3: The proposal letter 541.4 Step 4: The reassessment 542. What the CRA Can Do During an Audit 552.1 Requirement for information 553. Types of Audits 563.1 Correspondence audit 563.2 Office audit 563.3 Field audit 563.4 Lifestyle (net worth) audit 574. Preparing for an Audit 594.1 Business use of a vehicle 594.2 Meals and entertainment 60Contents vii4.3 Business use of the home 614.4 Lost or missing records 617 How to Achieve the Best Results from an Audit 631. Know Your Rights 642. Don’t Withhold Requested Documents 643. Don’t Provide Too Many Documents 644. Keep Informed by Reading Materials Published by the CRA 655. Audit Tips 658 Business Audits 691. Being Selected for a Business Audit 691.1 Computer-generated lists 691.2 Audit projects 691.3 Leads 701.4 Secondary files 702. Types of Business Audits 702.1 Corporate tax audit 702.2 GST and HST audits 702.3 Payroll audit 713. Avoiding Delays in a Business Audit 719 Notices of Assessment, Penalties, and Interest 731. CRA Notices 742. Objecting to the Assessment or Reassessment 742.1 The objection process 763. Collections Action 784. Penalties 794.1 Late filing penalties of income tax returns 794.2 Late filing of GST or HST 794.3 Repeat failure to report income penalty 804.4 Gross negligence penalties 80viii Tax Survival for Canadians: Stand up to the CRA4.5 Penalty for late or insufficient installment payments 814.6 Third-party civil penalties 814.6a Planner penalty 824.6b Preparer penalty 825. Interest 8210 Interest and Penalty Relief 831. Taxpayer Relief Program 831.1 Extraordinary circumstances 851.2 Financial grounds 851.3 Actions by the CRA 861.4 Ten-year limitation 862. Voluntary Disclosures Program (VDP) 863. Administrative Appeals 874. Remission Orders 9111 CRA Collections 931. Collection Call from the Call Centre 932. The Collections Officer 943. National Collections Centres 964. When the Debt Becomes Collectable 975. Trust Debts versus Income Tax Debts 976. Objections, Tax Court Appeals, and Collections 976.1 Frivolity penalty of 10 percent 996.2 Diary promises and good faith 996.3 Payment plans 1006.4 The essentials of life 1006.5 Creators of high-quality employment 1007. CRA Collection Powers 1007.1 Requirement to pay 1007.1a Bank account seizures 100Contents ix7.1b Seizure of trade receivables 1017.1c Payroll garnishment 1017.2 Certificates of debt and liens 1017.3 Asset seizures 1027.4 Jeopardy orders 1027.5 Section 227: Director’s liability assessments 1027.6 Section 160: Assessments for non-arm’s length capital transfer 1037.7 Notional assessments: GST and payroll 1037.8 Arbitrary assessment office memo: T1 and T2 10312 Bankruptcy and Your Taxes 1051. Discharge of Taxes in Bankruptcy 1062. Advantages and Disadvantages of Bankruptcy 10613 Criminal Investigations 1091. CRA Criminal Investigation Procedures 1101.1 The start of an investigation 1101.2 Search warrants 1111.3 Informants 1122. Charges Resulting from Criminal Investigations 1123. Taxpayer Rights during the Criminal Investigation 11314 Fight the CRA in Court 1151. The Tax Court of Canada 1151.1 Informal procedure 1181.1a Filing a Notice of Appeal 1181.1b After the Notice of Appeal is filed 1201.1c Important preparation for the self-represented 1201.2 General procedure 1211.2a Filing a Notice of Appeal 1211.2b After the Notice of Appeal is filed 121x Tax Survival for Canadians: Stand up to the CRA2. Federal Court and Federal Court of Appeal 1232.1 Judicial review 1232.1a Process to file an application for judicial review 12415 Tax Schemes 1291. Tax Protesters 13316 First Nations Taxation 1351. Indian Act Exemption for Employment Income Guidelines 1361.1 Guideline 1 1361.2 Proration rule 1361.3 Guideline 2 1361.4 Guideline 3 1361.5 Guideline 4 1372. GST and HST 1373. First Nations Self-Taxation 1373.1 Property tax 1373.2 First Nations sales tax 1373.3 First Nations goods and services tax 1383.4 First Nations personal income tax 1383.5 Provincial-type taxes 13817 When You Need a Little Help 1391. Taxpayers’ Ombudsman 1391.1 Complaint process 1402. The Authorized Representative 1412.1 Authorizing a business representative 141Conclusion 147Contents xiSamples1 Notice of Objection 232 Request for Taxpayer Relief 883 Informal Procedure: Election Limiting Amounts in Issue 1174 Informal Procedure: Notice of Appeal 1195 General Procedure: Notice of Appeal 1226 Judicial Review: Notice of Application 1257 Judicial Review: Requisition for a Hearing 1278 Authorizing or Cancelling a Representative 1439 Business Consent Form 145Tables1 Informal Procedure vs. General Procedure 116 - 20130417