# 7 Myths about the Taxman



## AltaRed (Jun 8, 2009)

Not exactly worthy of its own thread, but given it is tax season, these 7 myths about the taxman courtesy of MoneySense may be worth noting.

Myth 2 "evidence of fraud or misrepresentation of income" may be just a choice of words of the author, but there could be quite a murky differentiation between "misrepresentation" and "misinterpretation".


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## kcowan (Jul 1, 2010)

Another one:


> 2. If the CRA hasn’t questioned your return for four years, you got away with it.
> 
> FACT: If there is evidence of fraud or misrepresentation of income, the CRA can come after you at any time for any tax year.


Some people continue to believe that 7 years is all you have to keep. Even accountants spout this BS.


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## AltaRed (Jun 8, 2009)

I believe, the 7 year clock is with respect to re-assessments only. Audit can go back to when you were in your mother's womb if they suspect fraud, etc.


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## My Own Advisor (Sep 24, 2012)

AltaRed said:


> Not exactly worthy of its own thread, but given it is tax season, these 7 myths about the taxman courtesy of MoneySense may be worth noting.
> 
> Myth 2 "evidence of fraud or misrepresentation of income" may be just a choice of words of the author, but there could be quite a murky differentiation between "misrepresentation" and "misinterpretation".


Agreed.

_Big difference _between false and you know vs. false and didn't know.


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## sags (May 15, 2010)

And there is the "reverse onus" burden in a tax court situation, for the taxpayer to prove the "interpretation" by the CRA is wrong.


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## AltaRed (Jun 8, 2009)

My Own Advisor said:


> _Big difference _between false and you know vs. false and didn't know.


Think it ultimately depends on the complexity of the situation and how egregious the infraction that determines the weight of the hammer.


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## kcowan (Jul 1, 2010)

sags said:


> And there is the "reverse onus" burden in a tax court situation, for the taxpayer to prove the "interpretation" by the CRA is wrong.


ergo keep your records. I hope the hell WD USBs never go obsolete!


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## NorthKC (Apr 1, 2013)

That the CRA wants to throw you into jail (assuming no criminal intentions). They actually don't because it means that they still won't get their money for a long while. They would rather settle than to go to tax court which wastes time and money.

Source: I was about to go to tax court for one of our clients when the CRA called 2 hours before court agreeing to settle.


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## Eclectic12 (Oct 20, 2010)

sags said:


> And there is the "reverse onus" burden in a tax court situation, for the taxpayer to prove the "interpretation" by the CRA is wrong.


The article I read said that the "innocent until proven guilty" from a regular court is reversed in tax court. The tax payer is guilty until the defendant can prove they are innocent.

That's why I like to keep a lot of electronic documentation to show what I was thinking for what I did.


Cheers


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## Eclectic12 (Oct 20, 2010)

AltaRed said:


> I believe, the 7 year clock is with respect to re-assessments only. Audit can go back to when you were in your mother's womb if they suspect fraud, etc.


I'll have to find it again but there was an article saying that where one owed money, each notice from CRA looking to collect reset the clock for how long they could go after one, proof of fraud or no proof of fraud.


Cheers


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## Nerd Investor (Nov 3, 2015)

Eclectic12 said:


> The article I read said that the "innocent until proven guilty" from a regular court is reversed in tax court. The tax payer is guilty until the defendant can prove they are innocent.
> 
> That's why I like to keep a lot of electronic documentation to show what I was thinking for what I did.
> 
> ...


This is the case specifically for Tax Court? I didn't realize that. But I know for CRA to reopen a statute barred year, the onus is on _them_ to prove fraud or misrepresentation.


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## sags (May 15, 2010)

I talked to a CIBC small business representative and she said she gets calls every week from frantic small business owners who have had all their bank accounts seized by the CRA without a court judgement. Nothing in or out of the accounts until the debt is paid in full.

Never underestimate the powers the CRA have been granted by the government to collect their money for them.


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## gardner (Feb 13, 2014)

AltaRed said:


> I believe, the 7 year clock is with respect to re-assessments only.


In Dec 2016 they arbitrarily re-assessed my 2006 taxes, as well as a bunch of intervening years -- that is 9 years back. They can basically do what they want and there is no enforceable statute of limitations.


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## gibor365 (Apr 1, 2011)

gardner said:


> They can basically do what they want and there is no enforceable statute of limitations.


 That's true ... it's government within government... 
I checked CRA convictions(http://www.cra-arc.gc.ca/nwsrm/cnvctns/menu-eng.html) and found that majority people who went to jail/paid big fines are tax protesters from Paradigm Education Group. Just don't understand, did they really were hoping to win over CRA in CRA court with "natural person" excuse?!


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## ian (Jun 18, 2016)

CRA do not need a court injunction to empty your bank account. It is a simple as one of their collections officers sending a demand to you bank. A CRA auditor has the power to go into your bank branch and obtain your bank records...with or without your consent.

Although this is not supposed to happen and the banks will never admit it, on receipt of a demand like this most banks will check to see if the person has any demand loans outstanding. IF there are outstanding demand loans, the bank will call the loan and empty the account. CRA gets what is left...if anything.


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## AltaRed (Jun 8, 2009)

ian said:


> Although this is not supposed to happen and the banks will never admit it, on receipt of a demand like this most banks will check to see if the person has any demand loans outstanding. IF there are outstanding demand loans, the bank will call the loan and empty the account. CRA gets what is left...if anything.


Are you sure? CRA has first dibs on any estate assets to settle taxes due (after paying funeral expenses and estate administration costs I think). Demand loans are further down the list and unsecured loans are definitely down the list.


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## ian (Jun 18, 2016)

Yes. It has nothing to do with order of preference. It is more simple than that.

-CRA collections officer generates a demand notice to the taxpayer's bank (s). The bank is obliged to empty the taxpayers account to satisfy the demand notice.

-typically, when the bank receives the demand notice they check on the taxpayers O/S demand loans. Althought they are not supposed to (because they got the CRA demand notice first), they will call any bank demand loans to secure their position and to do their client a 'favour'. The concern is that if their client is a deadbeat taxpayer chances are the bank's demand loan may be in jeopardy. Any money left in the account is then used to satisfy all or part of the CRA demand. Though, in practice there is nothing left. People who don't or can't pay their taxes often treat their financial institutions in the same cavalier manner.


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