BREAKING NEWS: CRA Auditors Not Stupid, Have Figured Out “Cash Payments” Gambit
Put your clients on notice! Canadian Revenue Agency Auditors are upping their game. As of last year, the feds pledged over $500M over the next five years (in addition to their existing budget) for the purpose of pursuing tax cheats.
You don’t want your clients caught in that net – here’s what they need to know:
Hiding Cash from the CRA
While it’s tempting to accept cash and NOT collect HST and NOT declare all your income, it’s just really, really NOT worth it to do so. Particularly with the new funding from Ottawa, CRA auditors are now more plentiful and have an even stronger mandate.
When the CRA Auditor Cometh
Yes, they will ask to see bank statements of all your accounts, including your personal accounts. They will look at your sales slips and your invoices and reconcile it with what has (or has not) hit your bank account. They will look for trends and fluctuations in your sales. They can and will ask you for any financial document to find out if you are hiding cash.
Read the article: 7 ways the CRA is watching you
Nah, it’ll be fine…
Okay, but just saying, if the CRA determines you have failed to report income or collect HST, you could be charged a penalty of 10% of the amount you failed to report. Also, if the CRA decides that you have been grossly negligent in your failure to report income, you may be charged an additional 50% penalty on the taxes you owe. In egregious cases of tax evasion, you could even see jail time.
Read the article: Tax behavior that raises “red flags” for the CRA
Be the OPPOSITE of a major shoe company: Just Don’t Do It! Staying on the straight and narrow is the only way to protect yourself and your business. And if it irks you to hand over the cash, just remember, they pay a lot more tax than we do over in Europe.
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