• Apr

    Four Words to Freeze The Blood Of Any Canadian: “The Income Tax Audit”


    I wasn’t going to write another income tax article so soon, but a post I received today caught my attention, about Canadians who have been audited by The Canada Revenue Agency and now they have to fight for every cent they have.

    This will be documented in a show by W5, a show that’s done much over the years to expose the corruption and total disregard for the rights of Canadians by the Canada Revenue Agency.

    In general, the media likes to portray tax skirmishes with the CRA as an isolated incident but it happens all the time. What most Canadians don’t realize is that the media rarely publishes what’s really going on in this country. Part of the reason is that they’re terrified on an audit, as are most Canadians. An audit has the power to completely destroy your financial life.

    The other major issue is the amount of harassment that Revenue Canada can bring into your life. In some cases it has driven people to suicide.

    Want proof?

    Check out the case of Deborah and Tony Stephan, a case which began in 1993. Deborah, unable to bear the harassment of the CRA any longer, committed suicide and directed her insurance company to pay the taxman.

    What many people don’t know is that if an audit turns into an investigation you could lose everything. The Canada Revenue Agency has off the shelf forms they can use to freeze all your assets at the drop of a hat. One day you could be doing well, financially, the next day, you could be penniless, due to the actions of the CRA.

    And as for fighting back, it could cost you $50K to get it into court, but all your assets have been tied up, so where will you get the money?

    And if you think I’m talking about a nightmare scenario, I am, and it happens all too often in Canada. Fortunately, some Canadians have taken it upon themselves to expose the seedy underbelly of the taxing authority. One such man is Alex Doulis.

    His book: Tackling the Taxman: How to Keep the CRA from Controlling Your Investments and Your Life, A Tax Empowerment Guide is an absolute must-read if you want to protect yourself from auditors.

    Here are some things I gleaned from reading the book: If you have all your assets tied up in Canada you’re easy pickings for Revenue Canada. The number one thing to do to protect your assets is to make sure you don’t bank in Canada except for essential bills, like utilities. And as for your bank account, make sure it’s in a tax haven, if possible.

    And if an auditor comes calling, either by phone or in person:

    1. Demand proof of identity. Never give out confidential information over the phone, nor in person. The person on the other end could be a fraud artist.

    2. Never let an auditor come into your residence from the street. Make sure they address the next points.

    3. Whatever the auditor wants, tell that person to put it in writing and only answer those questions. Don’t allow them to access any more of your records than what they want to see. Never give an auditor anything by mouth.

    4. Never answer any questions about a third party. The audit is about you only. Questions about a third party are a violation of the Income Tax Act.

    Other points to be aware of:

    • The auditor can only review the filing from the current year and three years previous

    • There is no information the auditor cannot obtain

    There’s a great deal more I could write, but I can only do so much in blog post. For an in-depth reading I highly recommend that you get yourself a copy of Tackling the Taxman: How to Keep the CRA from Controlling Your Investments and Your Life. The grief it could save you later is the cheapest insurance you’ll ever buy.

    © Nathan Segal

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