# CRA Communication Blackout



## dogleg1 (Jul 4, 2016)

I hav


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## AltaRed (Jun 8, 2009)

dogleg1 said:


> With his permission CRA sent me tax forms for him for these years and in each year entered a figure for 'reported income'. He claims he had essentially no income in these years so I asked CRA to explain where these figures came from.


CRA is not going to 'invent' income. Surely the tax forms CRA sent you tell you something?

If CRA says it was 'reported income', then that means financial institutions or employers have submitted T4, T3 or T5 data or similar to CRA and that is what CRA is using to include in the tax forms. There is something that doesn't 'smell right' about this. Either the person you are helping is lying to you, has short term memory loss, or there is a case of mistaken identity (SIN or name)


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## OptsyEagle (Nov 29, 2009)

Have you gone on the CRA account access site to see if this person has any T-slips filed by employers or financial institutions?


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## off.by.10 (Mar 16, 2014)

AltaRed said:


> CRA is not going to 'invent' income. Surely the tax forms CRA sent you tell you something?


I wouldn't bet on that. I'm not sure about the CRA but with our provincial revenue agency, it's fairly common practice to hit you with inflated numbers they pull out of nowhere (or near enough). Then you have to defend yourself and prove the proper numbers. It's "guilty until you prove otherwise, to their satisfaction".


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## Eclectic12 (Oct 20, 2010)

Not sure about the inflated part ... but the rest makes sense. From what a co-worker has said, if CRA has forms filed with them that is what will be the starting point. If they don't have forms where previous tax returns had other sources of income (investments, bank accounts) then assumptions will be made for those sources.

Usually this step is long after several letters asking the tax payer to file the missing tax returns has happened.

Rather than asking CRA to prove their numbers ... my co-worker's experience is that he had to file adjustments to the assumed numbers, with as much supporting documentation as possible. His situation was easier as there were T4 forms from the employer and RRSP contribution forms from financial institutions so what had to be adjusted was things like adding charitable donations and making the RRSP deduction from income.


Cheers


*PS*

No idea what a CRA communication means but I would not wait it out, I'd file the adjustments to what CRA has recorded.


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## dogleg1 (Jul 4, 2016)

I a


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## ian (Jun 18, 2016)

My understanding is that CRA use many different methods. 

The first is straightforward. They get the data from T slip summaries submitted to the CRA by the issuers.

The second is directly from an audit of a third party. Lets say you claim a business expense of 10K for consulting, cattle feed, whatever. The CRA may then look at the recipient's tax return to determine if the payment included in income.

The third is public records-sales of condos to identify flippers who do not declare income

A fourth is by doing a net worth analysis with imputed income between taxation years. The target should be very aware of this since it is a part of an audit.

No doubt there are more, but these are just a few of the ways that I have seen the CRA determine income.


As an aside, I have zero tolerance for people who cheat on their tax or want to worm out of paying it. Through bankruptcy or other means. We live in great country, better than most people realize. There is cost and an obligation to pay that cost.


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## Eclectic12 (Oct 20, 2010)

dogleg1 said:


> ... They did not take into account that the person was not working for a major part of the time due to illness.


Where the tax payer is not responding ... how is CRA to know there is an illness that results in no income?




dogleg1 said:


> ... How all this can be sorted out is not clear to me.


I would think the answer is in the comment about illness. Support documentation is any medical documentation and likely a doctor's note spelling out the illness. It also puts on record a reasons for the difference and need for a change to what CRA estimated.





dogleg1 said:


> ... It seems that CRA has just turned their back on the situation, however, it might come back to haunt him later on.


??? ... adjust the income on the tax returns in question, including doctor's notes, medical reports etc. That puts on record that the tax payer disagrees with what CRA has assumed for income for those tax years.
https://www.canada.ca/en/revenue-ag...about-your-tax-return/change-your-return.html


Doing nothing opens the tax payer up to doubts that there is a disagreement and/or that the issue is being worked on in a timely manner.


Cheers


*PS*

My understanding is that in tax court, one is guilty until proven innocent. It seems more effective IMO to file adjustments to the returns versus chasing CRA to "defend" their estimates. This idea of waiting or that one will make CRA explain the estimate seems a waste of time with lots of risk.


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## AltaRed (Jun 8, 2009)

Eclectic12 said:


> My understanding is that in tax court, one is guilty until proven innocent. It seems more effective IMO to file adjustments to the returns versus chasing CRA to "defend" their estimates. This idea of waiting or that one will make CRA explain the estimate seems a waste of time with lots of risk.


Good advice. It is the taxpayer in this instance who is on the wrong side of the tracks (didn't meet his obligations). It is the way it should be if you really think about it.


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## off.by.10 (Mar 16, 2014)

Eclectic12 said:


> It seems more effective IMO to file adjustments to the returns versus chasing CRA to "defend" their estimates.


Definitely. First, file the missing paperwork to tell your side of the story. Then see what they say about it. Some fines are likely unavoidable but it may not go much beyond that. It sounds like they're at the "please file your paperwork or we'll file it for you" stage. Better act now than wait for the "we're taking your money" stage.


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## Eclectic12 (Oct 20, 2010)

Re: "please file your paperwork or we'll file it for you" stage

Based on my co-worker's comments/experience, I suspect this stage is long gone. 

He said the letters he ignored asking for the missing tax returns to be filed warned about penalties but had no dollar values. The first letter that had numbers was the notice of assessment (NOA) where CRA *had* filed the paperwork, based on what they had/assumptions to then be able to calculate the penalties, interest etc.

My take on it is to file the adjustments, with an exploitation as well as much supporting documentation as possible, as quickly as possible. If accepted, should this fail to wipe out the interest/penalties then file under the Taxpayer Relief Provisions. https://www.canada.ca/en/revenue-ag...ints-disputes/taxpayer-relief-provisions.html


Cheers


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## ian (Jun 18, 2016)

IF this person really wants to clear this up then the person should meet with, or arrange a call, directly with the CRA. Have the discussion, make a commitment to follow through with filing, and then follow up with that commitment. I had a friend who was in this exact situation. He went in to to speak with the CRA, committed to move forward with filing, and everything went smoothly from the moment he made contact and met his initial and subsequent commitments to file.

Hard to accuse the CRA of going black when the taxpayer has ignored all letters from the CRA. What would you think if you were the CRA after years of no file and ignored letters????

Ill health is not an excuse for tax liability. It may be an excuse to have the penalties and interest waived.

Bottom line....CRA are not mind readers. Try dealing with them in a business like and polite fashion. Keep in mind that they deal with many low lifes and bottom feeders. Not saying your friend is one but his/her actions may be implying that to the CRA.


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## gardner (Feb 13, 2014)

Eclectic12 said:


> The first letter that had numbers was the notice of assessment (NOA)


I also advise you to move fast. After a notice of assessment, you have 90 days to file an objection. If you do not file an objection in that period, then whatever BS crap the CRA came up with becomes fact in law, and there will be no way to fix it short of the supreme court.

https://www.canada.ca/en/revenue-ag...ess/objections-appeals/objection-process.html

EDIT:

Read this: https://www.canada.ca/en/revenue-ag...gency-cra/complaints-disputes/income-tax.html


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## dogleg1 (Jul 4, 2016)

I a.


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## AltaRed (Jun 8, 2009)

I understand how a lot of heavy hits on an individual can cause them to almost cease to function, but I am not sure the basic theme of what has been said in this thread is being understood. CRA has no reason to do ANYTHING outside their protocols if there has not been reason to do otherwise. 

It is not clear to me that this individual has submitted anything to CRA to make good (chosing to ignore instead) and thus CRA may well correctly assume they are dealing with a shifty tax evader stalling until the CRA goes away. The CRA is not going away. The onus is on you, along with the man, to take the initiative to put all the data together and submit it, along with some context/explanation of what has happened in this man's life in those turbulent years. 

Key point as I see it is: The ball is your (the man's) court, not CRA, to submit the necessary returns (or T1-ADJ if CRA has completed the T1s on his behalf using whatever they have/wish for data).


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## ian (Jun 18, 2016)

Exactly. So instead of griping, get on with doing the things necessary to move this forward to a conclusion with CRA. 

One thing is for certain. If he continues to do nothing this situation will only grow worse. I hear you on the illness but this is something that cannot be put off any longer. And it will be completely down to him, not to CRA. How on earth do you expect CRA to, as you put it, negotiate a reasonable settlement, if your friend has not even filed a return? Working hard has nothing to do with it. Everyone works hard. This is about getting the data into CRA so that he can start a reasonable conversation/negotiation with them.

CRA are not mind readers. They can only act on the information that is provided to them.


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