The Tax Thread

[GreyGhost]

Was speaking with a retail store owner last week. He was boasting how he has pretty much no intention to ever pay taxes again. Once he found out there is nothing the government can legally do to go into your bank accounts and take money out for money owed. (Don't quote me on this) but his understanding was that they cannot. He is free to travel in and out of Canada without fear of jail time, no court can go after him to get his money, he essentially plans to let his tax bill add up forever.

He did really well during Covid and probably brought in a couple hundred grand in sales. Paid off some debts and himself after getting his business started a few years prior and not taking much of a salary. Then there was no money left to pay the government their share. Has let it build up for the last couple years as well.
I asked what about your HST remittance every quarter or bi yearly? Nope doesn't do that either. He sells big ticket items (8-15k) charging tax on them obviously. Couldn't believe it.
His partner worked some retail jobs as well, owed the government from her income, and he said "I told her to just add it to the tally"

Doesn't own a home, and doesn't plan to work for someone else ever again that his wages could be garnished...no child support in question now either as still with his partner. He has some pretty expensive vehicles (presumably on some sort of finance agreement) I guess as long as you can show the lender proof of funds and money in the account every month he should be ok.

I guess legally the only thing the government could take would be capital gains from a sale of a house if he ever left one to his kids but I don't think that'll happen either.

Collect too much HST without remitting and you get a visit from the police for theft. HST isn't yours, you are just administering the collection. Lawyer fees on criminal charges will add up quickly.

I know of a person who recently had CRA take all money in her bank to settle an outstanding debt. She was old and thought she had paid it but she had paid roughly half and just ignored all the notices about the other half as she thought it was correspondence about the half she paid. I assume they can do the same to a business but don't know for sure.

 

[Scuba Steve]

Was speaking with a retail store owner last week. He was boasting how he has pretty much no intention to ever pay taxes again. Once he found out there is nothing the government can legally do to go into your bank accounts and take money out for money owed. (Don't quote me on this) but his understanding was that they cannot. He is free to travel in and out of Canada without fear of jail time, no court can go after him to get his money, he essentially plans to let his tax bill add up forever.

He did really well during Covid and probably brought in a couple hundred grand in sales. Paid off some debts and himself after getting his business started a few years prior and not taking much of a salary. Then there was no money left to pay the government their share. Has let it build up for the last couple years as well.
I asked what about your HST remittance every quarter or bi yearly? Nope doesn't do that either. He sells big ticket items (8-15k) charging tax on them obviously. Couldn't believe it.
His partner worked some retail jobs as well, owed the government from her income, and he said "I told her to just add it to the tally"

Doesn't own a home, and doesn't plan to work for someone else ever again that his wages could be garnished...no child support in question now either as still with his partner. He has some pretty expensive vehicles (presumably on some sort of finance agreement) I guess as long as you can show the lender proof of funds and money in the account every month he should be ok.

I guess legally the only thing the government could take would be capital gains from a sale of a house if he ever left one to his kids but I don't think that'll happen either.

That's going to get ugly they can and will seize everything you own. He is sadly misinformed.

Sent from the future

 

[GreyGhost]

That's going to get ugly they can and will seize everything you own. He is sadly misinformed.

Sent from the future

While he appears to be misinformed, if he gets all money out of canada, has no assets here and doesn't plan on selling his store, he may be way ahead financially on this. The question is whether criminal charges happen and if he can get out of Canada to never return.

 

[nobbie48]

Was speaking with a retail store owner last week. He was boasting how he has pretty much no intention to ever pay taxes again. Once he found out there is nothing the government can legally do to go into your bank accounts and take money out for money owed. (Don't quote me on this) but his understanding was that they cannot. He is free to travel in and out of Canada without fear of jail time, no court can go after him to get his money, he essentially plans to let his tax bill add up forever.

He did really well during Covid and probably brought in a couple hundred grand in sales. Paid off some debts and himself after getting his business started a few years prior and not taking much of a salary. Then there was no money left to pay the government their share. Has let it build up for the last couple years as well.
I asked what about your HST remittance every quarter or bi yearly? Nope doesn't do that either. He sells big ticket items (8-15k) charging tax on them obviously. Couldn't believe it.
His partner worked some retail jobs as well, owed the government from her income, and he said "I told her to just add it to the tally"

Doesn't own a home, and doesn't plan to work for someone else ever again that his wages could be garnished...no child support in question now either as still with his partner. He has some pretty expensive vehicles (presumably on some sort of finance agreement) I guess as long as you can show the lender proof of funds and money in the account every month he should be ok.

I guess legally the only thing the government could take would be capital gains from a sale of a house if he ever left one to his kids but I don't think that'll happen either.

I call BS on the guy

This is part of what my B-I-L got from CRA:

The applicant accrued a considerable tax debt between 1990 and 1997 when he failed to pay his income tax debts as they became due. In a letter to CCRA dated October 18, 1999, the applicant requested that the Minister exercise his discretion to waive interest and penalties on his outstanding tax debt pursuant to the tax fairness provisions of the Act. At the time of his request, the applicant owed CCRA $5X,XXX.XX in tax arrears, penalties and interest. The basis of the applicant's request for fairness relief was an inability to pay and severe emotional and mental distress.

B-I-L tried a con, giving preference to credit card debt and was called out on it. Note that it took several years for the cra(P) to hit the fan.

Another person I know wasn't financially prepared for retirement so figured he'd try online gambling to make some extra coin. Hah. Visa successfully went after his CPP.

Also c/o Spergel debt consultants:

• Canada Revenue Agency (CRA) – the CRA can freeze your bank accounts without the need for a court order. If you owe tax debt and do not have a payment plan in place or another form of debt relief, they could freeze your bank account to force you to deal with your outstanding debts.

I don't know how freeze relates to seize but you don't get to move it anywhere.

FWIW I have always found that in the case of a misunderstanding the CRA isn't blood thirsty as long as there is a reasonable correction.

Occasionally an overzealous tax collector gets it wrong and makes someone's life hell.

 

[klr_guy]

FWIW I have always found that in the case of a misunderstanding the CRA isn't blood thirsty as long as there is a reasonable correction.

From personal experience, they are quite reasonable. From personal stupid experience, they do not appreciate being ignored...

 

[Mad Mike]

Was speaking with a retail store owner last week. He was boasting how he has pretty much no intention to ever pay taxes again. Once he found out there is nothing the government can legally do to go into your bank accounts and take money out for money owed. (Don't quote me on this) but his understanding was that they cannot. He is free to travel in and out of Canada without fear of jail time, no court can go after him to get his money, he essentially plans to let his tax bill add up forever.

He did really well during Covid and probably brought in a couple hundred grand in sales. Paid off some debts and himself after getting his business started a few years prior and not taking much of a salary. Then there was no money left to pay the government their share. Has let it build up for the last couple years as well.
I asked what about your HST remittance every quarter or bi yearly? Nope doesn't do that either. He sells big ticket items (8-15k) charging tax on them obviously. Couldn't believe it.
His partner worked some retail jobs as well, owed the government from her income, and he said "I told her to just add it to the tally"

Doesn't own a home, and doesn't plan to work for someone else ever again that his wages could be garnished...no child support in question now either as still with his partner. He has some pretty expensive vehicles (presumably on some sort of finance agreement) I guess as long as you can show the lender proof of funds and money in the account every month he should be ok.

I guess legally the only thing the government could take would be capital gains from a sale of a house if he ever left one to his kids but I don't think that'll happen either.

Your friend is dreaming. Rescan can freeze your biz and personalbank accounts without court orders, the do that without hesitation. Can they get the money? No, but neither can you. Once they get a court order — easily for them — the dough is theirs. Same for the personal assets - cars, boats, property.

If he doesn’t file taxes or pay GST, the penalties can equal the taxes.

 

[Mad Mike]

While he appears to be misinformed, if he gets all money out of canada, has no assets here and doesn't plan on selling his store, he may be way ahead financially on this. The question is whether criminal charges happen and if he can get out of Canada to never return.

Canada has tax treaties with a lot of countries, the have vey large reach outside the country. **** around to the point of criminal financial fraud will restrict international travel.

 

[mimico_polak]

Your friend is a fool @Mikedezo44 and the party lasts until it does...then the hangover starts and the CRA does not f#@k around like the justice system with slaps on the wrists for murder / car theft.

A point that I'm not sure about...I have a few friends that have gone on buying blitzes (cars / toys / etc) and are planning on selling their houses here...and then moving back to Poland. Now, I'll never ask them point blank but I wonder if they've considered what they'll do with their financial obligations for one, and secondly whether they know they have to do a final tax return and pay an 'exit tax'...although I'm not sure how that even functions.

Technically...I can buy up cars / toys / boats tomorrow, put them in a container, and ship them out of the country with no issues? If I'm not here...can any of the banks / financial institutions actually chase me down, or would they even bother?

Just for clarification...I'm not going to Poland, although it is tempting sometimes seeing what the eff is going on in this country. But I'd be a lost soul there as I've never worked in that country.

 

[nobbie48]

Your friend is dreaming. Rescan can freeze your biz and personalbank accounts without court orders, the do that without hesitation. Can they get the money? No, but neither can you. Once they get a court order — easily for them — the dough is theirs. Same for the personal assets - cars, boats, property.

If he doesn’t file taxes or pay GST, the penalties can equal the taxes.

Catch 22. Without access to their bank account they can't bid on their stuff that the CRA is auctioning off.

 

[nobbie48]

Canada has tax treaties with a lot of countries, the have vey large reach outside the country. **** around to the point of criminal financial fraud will restrict international travel.

Honour among thieves. The thieves being CRA, IRS, Whatever the UK calls them etc.

Like the mafia, they don't care who you rob but if you rob them they will team up and take out your financial kneecaps.

 

[backmarkerducati]

I did pretty good playing the tax changes...



Canadian market sell off before the CG change. I bought in on June 24th... 2:1 ETF.

 

[Mikedezo44]

Your friend is dreaming. Rescan can freeze your biz and personalbank accounts without court orders, the do that without hesitation. Can they get the money? No, but neither can you. Once they get a court order — easily for them — the dough is theirs. Same for the personal assets - cars, boats, property.

If he doesn’t file taxes or pay GST, the penalties can equal the taxes.

Good to know. Will update thread if I hear about it all come crashing down.

 

[GreyGhost]

Good to know. Will update thread if I hear about it all come crashing down.

Tell your buddy to look at what is happening in Saskatchewan. CRA is attempting to take money from provincial bank accounts to recover money owed. So far the province has fended them off in court. The province has a lot more money for lawyers than your buddy.

EDIT:
In that case, it's a fight over carbon tax. As I understand it, SK collected it but refuses to remit to feds for ideological reasons.

 

[crankcall]

All you need is one really motivated CRA auditor to take an interest in you and life gets ugly fast . They have a lot of options at hand and selling your stuff, freezing accounts and making it impossible to get credit or a mortgage ( or renew a mortgage) when there are CRA judgments pending is pretty ugly way to live .


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[ReSTored]

IMO CRA spends too much time on routine documents check vs. going after the real tax cheats and tax evaders. It's easy for them to do and racks up good stats for them, but lets the crooks steal from us in the sense they are not remitting the tax they should.

My mom lived in a condo, then moved into a retirement home and she received a statement for tax purposes. Taxes e filed, and due to the significantly increased medical expense got a request in August of that year for all medical receipts. Fair enough, first year thing. Next year, same request from CRA?? My mom was 75. Statistically, how many women in Canada live in a retirement home for 1 year and in the second year, if not deceased, are not still living in a retirement home or in long term care?

This went on for a few years and then she moved to LTC at about age 79 where she had a private room at about $2,300 a month. Again, big increase in deductable medical expense vs. the retirement home and, sure enough, a request from CRA for receipts. She was there about 3 years until she passed on and CRA continued to ask for receipts..............

LTC medical expense deductions + other medical expenses add up quick to a large sum, say $30,000. But practically speaking, and again, once you're in LTC and the receipts have been validated the first year why is CRA asking for proof year after year? Waste of time and effort, but probably looks good for them on paper. Is there any evidence that there is significant tax fraud on retirement and LTC medical expense deductions? If so, I haven't heard about it.

In the mean time we have a significant number of people not fully reporting their Canadian income and / or their world income. Guy lives in a $2.5M home with no mortgage, leases a MB and a BMW, travels extensively, credit cards are held offshore or Canadian ones are paid off monthly from offshore accounts, yet has a declared annual income of $125,000.

CRA has extensive stats on postal codes and individual and family income by address. If your neighbour's family income is $300,000 and yours is $125,000 something is out of sync and should be validated through a means test. If you have $16,000 going out the door a month in real or calculated expenses and net of taxes you have $9,000 coming is something is wrong, there is a source of funds outside of what you are declaring. People who pay their taxes as they should are getting screwed over by this.

 

[mimico_polak]

I agree with @ReSTored here. CRA focuses on the easy ‘wins’ to be able to pump up their stats / KPI.

They don’t have the will / manpower / smarts to go after the big fish because why bother? They’re busy as is chasing mom and pop for a few grand instead of the big cheats for thousands / millions.

It’s a dumb system, and is rigged by those that can utilize it.

If I have an investment property in Poland…how’s CRA gonna know if I don't bother declaring?

 

[ReSTored]

If I have an investment property in Poland…how’s CRA gonna know if I don't bother declaring?

This is what a means test is for. If you're spending more than you're making something is wrong.

However, if you have income outside of Canada and you amass it there, or spend it outside of Canada, then CRA may be none the wiser. You vacation outside of Canada, travel, all bills are paid by your Polish investment income, you might own a few homes offshore etc..... Then, at some point down the road, you retire to Europe or some tax haven and CRA remains in the dark.

I'd be careful about puttng too many assets in Poland though, they have nasty neighbours close by, and maybe getting closer in the future

 

[mimico_polak]

This is what a means test is for. If you're spending more than you're making something is wrong.

However, if you have income outside of Canada and you amass it there, or spend it outside of Canada, then CRA may be none the wiser. You vacation outside of Canada, travel, all bills are paid by your Polish investment income, you might own a few homes offshore etc..... Then, at some point down the road, you retire to Europe or some tax haven and CRA remains in the dark.

I'd be careful about puttng too many assets in Poland though, they have nasty neighbours close by, and maybe getting closer in the future

I have no assets in Poland.

Parents do. And they’re considering just signing me on the title so there’s none of the same cap gain issues as here.

Although in Poland you can gift secondary, and primary, properties to children with practically zero tax paid. Maybe a fraction on the dollar…but it’s nothing compared to here.

Back on topic. Looks like parents decided to keep the cottage for now as they can’t commit to selling it.

So the original capital gain issue isn’t an issue as there’s nothing to disperse right now.

 

[crankcall]

The trend has always been , those that ‘should ‘ pay the most taxes pay less . Because they have enough money to move it around . Friend has two boutique hotels side by side in Nicaragua. Paid for with Canadian money , but all bills and profits now stay in Nicaragua. He has a nice car there , 5 months over winter , has bought into a bar there ,and since he runs three small web based business that can operate anywhere, also ‘ works ‘ in Canada and pays tax here . But his wealth is global . There are still holes to put money , but you need lots .


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[AllistonGT]

The trend has always been , those that ‘should ‘ pay the most taxes pay less . Because they have enough money to move it around . Friend has two boutique hotels side by side in Nicaragua. Paid for with Canadian money , but all bills and profits now stay in Nicaragua. He has a nice car there , 5 months over winter , has bought into a bar there ,and since he runs three small web based business that can operate anywhere, also ‘ works ‘ in Canada and pays tax here . But his wealth is global . There are still holes to put money , but you need lots .


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Money has no postal code. Not my quote.