519-646-2222TAX DEBT AND INSOLVENCY PROCEEDINGS
The government announced an increase of $444,000,000.00 to the CRA budget to collect taxes – how will that impact you?
It is clear from past performances and the Federal Government’s own budget (2016) that the CRA is more likely to pursue low hanging fruit (small business) than wealthy tax dodgers.
In fact the budget reads:
“Budget 2016 proposes to invest $444.4 million over five years for the CRA to enhance its efforts to crack down on tax evasion and combat tax avoidance by: hiring additional auditors and specialists; developing robust business intelligence infrastructure; increasing verification activities; and improving the quality of investigative work that targets criminal tax evaders.As the CRA has a proven track record of meeting expectations from targeted compliance interventions, Budget 2016 accounts for the expected revenue impact of $2.6 billion over five years from these measures.”
To help put that in perspective in 2013 it was estimated that wealthy Canadians had evaded billions of dollars (some media reports ranged between $2-4 billion) in tax payments. But that was when the CRA signed a deal with Lichtenstein not to pursue charges. More recently it has been revealed that offshore scams were set up by KPMG and again the CRA agreed not to pursue collection or charges. This week the Panama papers were released indicating that hundreds of wealthy Canadians have engaged in offshore schemes.
Evidently then since the estimated returns are a mere $2.6 billion over five years, or less than half a billion each year, the expectation is that will come from less fortunate tax payers.
So where does that leave Bob the Plumber or Bill the Bricklayer?
Well sorry lads but you don’t have any economic or political clout so you will be hounded into oblivion, well at least hounded into a trustee’s office to contemplate your options. Either a bankruptcy or a proposal may be helpful to resolve outstanding tax problems – yes government debts can be included.
However, that does nothing to solve the longer term issue of irregular cash flow, economic downturns or simply ineffective or inefficient bookkeeping and money mangement. Nonetheless, our office will support you by providing good information to assist you with better money management as well as solid referrals to helping professionals who can assist you in the future fiscal management of your business.