It is so common to hear “Offence wins games, but defence wins championships,” from a basketball coach in the game break. The key point of a defence is that you are to control the game instead of your opponent. Why I am talking about game strategy here then?Well, the same defence strategy can apply to tax compliance situations for taxpayers as well.But you have to be smart on defence. Recently, CTV Toronto news says “ the CRA is more aggressively going after taxpayers.”Why? The reason is obvious as the federal government needs tax money to operate. Here is the link to the video:
CRA are more aggressive on taxpayers!
The news only touched the personal tax side. On the business side, for a lot of small and medium sized business owners face headwinds resulting from 2018 budget as well as TOSI rules( you refer back to the previous blog, click here). And furthermore, the CRA has been diligently requesting reviews on business deductions, attacking a lot of IT contractors’ Personal Service Business and even charities non-compliance.
The CRA’s attentions are not only on income tax compliance but also on exercise tax like HST/GST area. It is not rare to see the CRA has denied over $500,000 of Input Tax Credits and assess penalties and interests as the suppliers did not remit the tax.
So the question is : what can taxpayers do then?
Play defence #1:
As explained by the tax expert in CTV news video, “ we gotta look forward”. Whenever there is an event/situation may trigger tax positions, go and consult professionals and find out the truth. Tax rules get more complicated, it is always good idea to ask questions and get professional answers.
Play defence #2:
No matter if it is personal tax matter or business tax matter, get professional help in assessing the situations. Before the CRA knocks your door, you have been well prepared for the game. Once professional advice is being sought, understand the potential impact and take appropriate actions. Doing nothing is one of the options but you will be left with anxiety in the long run. Professional solutions are very cost effective strategies to help you understand the potential dollar impact and assess the optimal solutions. Common tax weakness areas for many businesses are like unreported income, shareholders’ compensation, non-deductible expenses, personal service business (incorporated employee), specified investment business, GST/HST non-compliance,etc.
Play defence #3:
Obviously, risk will never go away but can be mitigated. Appropriate tax compliance is essential to ensure that all tax compliance points are covered as well as risk of being audited/deduction being denied is reduced. If any compliance issue is noted, bring it forward to your accountants and correct the transaction as soon as possible. When it is time to review the tax and other information returns with your accountant, ask the question to make sure you understand the situations.
Some general questions that you can ask:
- Any issue noted in preparation and filing required tax returns?
- What are the tax change affecting my situations?
- What is the CRA assessment from prior year’s return?
- What’s the percentage of tax payable over taxable income? Is it consistent from prior year?
- Is there any tax planning point for next year?
If you have any concerns on your tax matters and need professional assistance, please call us or drop us a line. We surely can help.
Recent Comments