dave@lsuc.uucp (David Sherman) (01/11/89)
Taxpayers are sometimes confused when they are advised not
to claim a particular deduction or credit, where their lawyer
or accountant is sure they do not qualify for it. "But I've
been claiming that for years, and they've always allowed it!",
they say.
It is important to understand what has and has not happened when
you file your return and receive an assessment. Your return *has*
been looked at; the arithmetic has been checked; the deductions
and credits for which you are required to file receipts have been
checked against those receipts.
But your return has not been audited. The eight weeks or so
between filing the return and when you receive your assessment
(and refund, if there is one) don't allow time for millions of
taxpayers' returns to be audited. Only a small percentage of
returns are selected for audit, usually some months after
the original assessment.
So if you claim, say, the disability credit, and your claim is
allowed, and you never hear from Revenue Canada again in respect of
that year, that doesn't mean they are "letting you" claim it.
It just happens that your file hasn't been reviewed or audited --
you lucked out. You certainly aren't setting any kind of precedent
for saying that the claim should always be allowed.
(On the other hand, if you are audited, have a full discussion
with the auditor about your situation and do not receive a
reassessment, you can fairly safely assume that Revenue genuinely
agrees with your claim.)
The above should not be taken to suggest that you should make
all kinds of frivolous claims in the hope that you won't be
caught. First of all, if you are eventually reassessed (within
the three-year period), you will be required to repay the
amount of tax owing, plus interest compounded daily at an
interest rate which is approximately equal to the banks' prime
rate. Second, if your claim was fraudulent or completely
unsupported by the facts, you may be subject to serious penalties
-- up to double the tax which you were trying to avoid paying.
(This is in addition to the tax and interest.) So you should
only make claims which are justifiable.
David Sherman
Tax Lawyer
--
Moderator, mail.yiddish
{ uunet!attcan att pyramid!utai utzoo } !lsuc!davehenry@utzoo.uucp (Henry Spencer) (01/16/89)
In article <1989Jan11.095319.12575@lsuc.uucp> dave@lsuc.uucp (David Sherman) writes: >The above should not be taken to suggest that you should make >all kinds of frivolous claims in the hope that you won't be >caught... Dave mentions that it can get expensive if you get caught, but also of note is that Revenue Canada's software undoubtedly makes some attempt to try to spot deviations from the norm, and if you get too enthusiastic you might well attract its attention. -- "God willing, we will return." | Henry Spencer at U of Toronto Zoology -Eugene Cernan, the Moon, 1972 | uunet!attcan!utzoo!henry henry@zoo.toronto.edu
paulg@hcr.UUCP (Paul Gooderham) (01/17/89)
In article <1989Jan16.105305.5278@utzoo.uucp> henry@utzoo.UUCP writes: > >note .. that Revenue Canada's software undoubtedly makes some attempt >to try to spot deviations from the norm... I'll buy that! When I moved from an apartment building to a basement apartment in a house, I claimed mega-bucks (paid to XXX Property Mgmt Corp.) on my special Ontario tax form while I had only paid mini- bucks to my new landlord. This set a flag in Revenue Canada's software and I was contacted to prove I paid the mega-bucks. I asked company XXX for a statement to that effect and they demanded $25! And after all the thousands I paid them! I balked and told Revenue Canada. They said they would look after it. And they did!
eastick@hammer.me.toronto.edu (Doug Eastick) (01/18/89)
In article <4620@hcr.UUCP> paulg@hcr.UUCP (Paul Gooderham) writes: > >I'll buy that! When I moved from an apartment building to a basement >apartment in a house, I claimed mega-bucks (paid to XXX Property Mgmt >Corp.) on my special Ontario tax form while I had only paid mini- >bucks to my new landlord. This set a flag in Revenue Canada's >software and I was contacted to prove I paid the mega-bucks. > >I asked company XXX for a statement to that effect and they demanded >$25! And after all the thousands I paid them! I balked and told >Revenue Canada. They said they would look after it. And they did! In my student co-operative (Neill-Wycik) we (the students) are often asked for statements that a student paid ~$250/month for rent. (Note: this is not classified as a "residence"). Last year my roomate tried to avoid the hassle and sent his statement along with his return. Revenue Canada then asked him again for the same statement! What a system. BTW: we get our statements free-of-charge. -- Doug Eastick eastick@me.UTORONTO.BITNET UUCP: ...!utai!me!eastick eastick@me.toronto.edu
dave@lsuc.uucp (David Sherman) (01/30/89)
henry@utzoo.uucp (Henry Spencer) writes: >dave@lsuc.uucp (David Sherman) writes: >>The above should not be taken to suggest that you should make >>all kinds of frivolous claims in the hope that you won't be >>caught... > >Dave mentions that it can get expensive if you get caught, but also of >note is that Revenue Canada's software undoubtedly makes some attempt >to try to spot deviations from the norm, and if you get too enthusiastic >you might well attract its attention. Indeed. But there's nothing wrong with attracting Revenue Canada's attention, as long as you aren't doing anything wrong. An audit needn't be feared. Also, note that even if an auditor reassesses you adversely, there are avenues of appeal both within Revenue Canada and to the courts which can be pursued. David Sherman -- Moderator, mail.yiddish { uunet!attcan att pyramid!utai utzoo } !lsuc!dave
mason@tmsoft.uucp (Dave Mason) (01/30/89)
In article <1989Jan29.173547.25428@lsuc.uucp> dave@lsuc.uucp (David Sherman) writes: >... > An audit >needn't be feared. Also, note that even if an auditor reassesses >you adversely, there are avenues of appeal both within Revenue Canada >and to the courts which can be pursued. An article in Sunday's Toronto Star talks about a recent study by some law types at Osgoode Hall & UofToronto. It points out that even if you are caught, the courts will probably treat your $100,000 tax avoidance (or even tax fraud) much more favourably than some other hienious economic crimes (like a welfare mother not reporting the $200 extra she gets a month delivering papers to extend her welfare payments so she can live and still care for her children). The study also claims that 1 in 4 people do cheat to some extent on their taxes. ../Dave