The Canada Revenue Agency has been a busy little beaver when it comes to rooting out taxpayers who are not up-to-date in paying their tax bills or who are trying to avoid the tax man altogether.
The folks at CRA use a variety of tools and methods to identify noncompliance and take action to address what they describe as tax cheating.
They admit they can make an honest mistake now and then but also say they have systems in place to correct such situations.
I am not certain that they are prepared to move easily off their position, but let’s give them the benefit of the doubt.
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A CRA report on compliance activities in 2008-09 demonstrated how substantial an operation this is for the agency.
CRA obtained more than 787,000 tax returns from individuals and corporations that had failed to file, which resulted in additional recoverable taxes of more than $2.3 billion.
It conducted close to 374,000 audit and review actions, which also included 12,800 underground economy audits and close to 1,200 audits of taxpayers suspected of earning income from illegal activities.
Small-to-medium-sized businesses were also in the CRA cross hairs, a sector in which it claims it detected almost $2.2 billion of unreported income.
Audits of large domestic and international businesses identified an even larger pool of tax money owing, which amounted to more than $5.2 billion.
Although it is not considered a full audit, CRA reviewed the books and records of 4,371 businesses to ensure they were properly maintained.
In a constant effort to close down donation tax shelter schemes, CRA staff identified more than 17,000 participants in such programs who were claiming almost $500 million in donations. Anyone participating in such an arrangement is pretty much assured of lighting up the CRA radar screen and receiving a reassessment notice.
In 2008-09, CRA criminal investigations led to convictions in 98 percent of the cases, resulting in 323 convictions for fraud or tax evasion. The convictions resulted in fines of close to $30 million and offenders sentenced to 81 years in prison.
Although the report seems designed to put the fear of CRA into taxpayers, it ends with a friendly, almost paternal reminder to taxpayers to file their returns on time and to be sure to report their income, deductions and credits accurately.
However, if you have not been filing on time, you can take advantage of the voluntary disclosures program, which allows you to blow the whistle on yourself without fear of penalty or prosecution.
Larry Roche is a tax analyst with Farm Business Consultants Inc. Contact: fbc@fbc.ca or 800-860-7011.
