# Tax Implications of Joint Accounts



## Gypsa1 (Sep 5, 2010)

I know there's a thread on here about joint accounts but I couldn't find an answer to my question.

I know someone who works for the "govt", Bill. Bill won't tell me what he does exactly but he works in some sort of auditing capacity I'm guessing.

So let's say Alison receives cash from waitressing tips or Joe receives cash for plumbing jobs. This is undeclared cash or income.

One can't just take this undeclared cash and put it in his personal bank account because there is a 1% chance he may be randomly audited right?

However, Bill was saying that if you have a joint account, and you deposit cash into this account, the CRA won't really be able to do much, even if the account is audited.

So what will CRA do exactly? Is opening a joint account a good way to launder money?


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## Square Root (Jan 30, 2010)

Do you really expect us to help you break the law? Pay your taxes like we do.


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## ghostryder (Apr 5, 2009)

Gypsa1 said:


> So let's say Alison receives cash from waitressing tips or Joe receives cash for plumbing jobs. This is undeclared cash or income.
> 
> One can't just take this undeclared cash and put it in his personal bank account because there is a 1% chance he may be randomly audited right?
> 
> ...



LOL! You're funny.


CRA can go to Alison's employer and get their records from their point of sale system, credit card & interac provider. Then they can see how much she had in sales, and how much she gets on average in tips through CC & interac and then use that to extrapolate what tips she probably got on the cash sales. 


Read more here: http://decision.tcc-cci.gc.ca/en/1998/1998tcc971234/1998tcc971234.html



Joe the plumber will probably not risk his journeyman's status by doing work without getting permits, so a quick trip to whoever issues the permits in your province/municipality will provide some interesting information. Failing that, CRA can simply compare Joe's "net worth" with his reported income. If Joe says he makes $50k a year (gross) and has a $3000/month mortgage, $800 truck payment, $700 for the wife's car, $500 for his boat, maxes his RRSP, TFSA & RESP's for 3 kids, etc etc, something is not adding up.


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## Gypsa1 (Sep 5, 2010)

*Hugh the Mechanic*

Thanks for the pointless lecture and educated reply but not the answers I was looking for so let's look at Hugh.

Ok, so say Hugh the mechanic, pays enough taxes to the blood sucking government (at least the Conservatives suck less hehe), but on the side, for fixing his friends' cars, he gets paid cash. Hugh doesn't live a lavish lifestyle.

To store his cash, he puts money in a joint account. If the government audits the account, will he be in trouble?


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## ghostryder (Apr 5, 2009)

Gypsa1 said:


> Thanks for the pointless lecture


What lecture?




Gypsa1 said:


> Hugh doesn't live a lavish lifestyle.


He doesn't have to live lavish. Just live beyond his reported income. If it costs Hugh $20k a year just to live (food, rent/mortgage, utilities, car payment etc) and he only reports $12K (and has no other sources of income) something doesn't add up.




Gypsa1 said:


> To store his cash, he puts money in a joint account. If the government audits the account, will he be in trouble?



They don't audit the account. They audit him. And in the absence of any other verifiable source of funds, the deposits to the account will be presumed to be taxable income. In tax court it will be up to Hugh to show otherwise.


Judges aren't stupid. If you end up in court and the Judge asks "what is the source of the $50,000 in deposits (in excess of your reported revenue/income) to a bank account you have signing authority over?" and you say "I dunno", the judge is going to rule in favor of the CRA.


http://decision.tcc-cci.gc.ca/tcc-e...379.html&_query=+unidentified++bank++deposits

_The evidence presented by counsel for the Respondent indicated that the Minister determined the unreported amounts by carrying out a bank deposit analysis of deposits made to the Appellant’s bank accounts. In carrying out the bank deposit analysis, the Minister determined that there was a discrepancy between the Appellant’s reported income and a number of unidentified deposits made to the Appellant’s bank accounts.

The law is clear that when the Minister issues Reassessments against a taxpayer, the taxpayer has the onus of proving that the unidentified bank deposits that were included as income did not represent unreported income.
_



(no great significance to this case, it just happened to be the first one that I found when I did a search on the TCC site for "unidentified bank deposit". )


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## MoneyGal (Apr 24, 2009)

Gypsa1: I'm not totally sure why you would expect helpful pointers on how to carry out tax fraud. On us, your fellow Canadians. 

What GhostRyder wrote is absolutely correct. There is no magic about joint accounts which makes the source of deposits immune from audit. All your proposed scheme does is bring the audit down on BOTH account-holders. 

And all it takes is ONE disgruntled family member, client, neighbour or acquaintance to make ONE quick call to the CRA snitch line.


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## Gypsa1 (Sep 5, 2010)

Thanks for the info.

You weren't lecturing me Ghostryder.


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