My husband got his T4 the other day and I stared at it in amazement. His “earned income” was way higher than I would have thought. That’s because we have to budget and live off of his “real income.” You know, the miniscule amount that comes home after taxes, EI, CPP, health savings account, charity, life insurance, social club fees, savings plan, disability insurance and all the other deductions are paid. We won’t be getting much if any of those taxes back, either, because we don’t cheat.
stupid honest are we? We actually report the 38 cents of interest we earn on our chequable savings account.
Like most Canadians, however, tax breaks, deductions, scams and cheating fascinate me. While I would never dare to try some of the stunts I’ve read about, I do find them entertaining.
Why Do People Expect Others to Condone Their Tax Cheating?
I’m also astonished at how many people seek validation for their misdemeanors publicly.
Here are some recent examples on RedFlagDeals.
One couple wants to delay admitting they’ve been living common law for years because (a) it might decrease the grant portion of student loans one of the couple could receive and (b) presumably it has resulted in them getting a HST refund that they are not eligible for if their income is combined. This led into a convoluted attempt at justification by asking whether the CRA would penalize two same-sex room-mates who accidentally had sex one time only in a drunken stupor by making them file a common law tax return. It’s fascinating, if a little frightening, to see how some people think.
Another person wants to know if it’s worth hiring an accountant who routinely mis-reports investment expenses and asks for a split from the customer for the resulting tax refund. Yikes!
Does anyone else wonder if the CRA cruises through forums like this looking for ideas for audits?
I caught a few minutes of a recent W5 episode about people who fell for a tax refund scam and then were denied their claims plus fined 50% of the tax they had dodged dubiously as a penalty. The one person I saw was crying on camera. She said her fine and back taxes owed were in the thousands of dollars and she didn’t have the money to pay and she hadn’t known she was doing anything wrong.
Really? You think there are deductions out there that will save you THOUSANDS on your tax bill legally? I wish! There are almost NO legal tax deductions in Canada for the average wage-slave.
Speaking of non-average-wage-slaves, Mr. C. Black is also apparently on the hook for a large tax penalty. I doubt we will ever fully understand tax evasion at those levels, though, as it involves batteries of tax lawyers and tax accountants. In a strange way it would be nice to have to worry about it, though!
Don’t Let a Tax Mistake Lead to You Paying Tax Fraud Penalties
Occasionally, people aren’t trying to evade taxes, they just make a mistake. The Blunt Bean Counter explained what you should do before you get caught in “The CRA’s Matching Program – Mismatch and you May be Assessed a 20% Penalty.” A typical cause of this is you don’t notice that you need to download and print a T-slip for a small amount of interest or capital gains income from a non-registered investment account or a work-related savings plan. As e-receipts become more common, I expect this type of error will also increase. Unfortunately, the CRA doesn’t care: it will penalize you anyway.
Please Help Others Meet Their Tax Obligations by Revising the CPP Death Benefit
While it has nothing to do with tax fraud, I would also like to remind readers that it would be great to lobby the government to implement a withholding tax on the CPP Death Benefit. Every year, people who took on the responsibility of paying the last costs of a friend or relative who died penniless discover that although they have already spend the CPP Death Benefit on funeral costs, they now must pay tax on the benefit, out of their own pocket. The only simple way I can see to reduce this injustice is to withhold some of the Death Benefit at the time it is issued so there is no tax owed. Please read my post about this topic and if you agree, send a letter or email to Ottawa.
Have you heard any “tax tips” that made you cringe as you thought of the fines and penalties awaiting anyone silly enough to try them? Please share your views with a comment.