The Tax Thread | Page 6 | GTAMotorcycle.com

The Tax Thread

ReSTored said:
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.
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So here we go again with CRA.

MIL is 98, 99 in September. She moved to a retirement home in November 2022 and 2023 was the first full year of deductible retirement home expenses. She just received a CRA demand for all medical receipts to validate her medical expense deduction of $22,500 for 2023.
So, same issue as with my mom, above, and even more so. CRA, in the name of god, how many 98 year old people are still living, and if so, are living independently? I suspect that 95% + of people 98 years old not still living with family are either in a LTC home or in a retirement home, so why harass them with a request for validation for medical expenses.

As per my earlier post this seems to be a 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.
 
ReSTored said:
So here we go again with CRA.

MIL is 98, 99 in September. She moved to a retirement home in November 2022 and 2023 was the first full year of deductible retirement home expenses. She just received a CRA demand for all medical receipts to validate her medical expense deduction of $22,500 for 2023.
So, same issue as with my mom, above, and even more so. CRA, in the name of god, how many 98 year old people are still living, and if so, are living independently? I suspect that 95% + of people 98 years old not still living with family are either in a LTC home or in a retirement home, so why harass them with a request for validation for medical expenses.

As per my earlier post this seems to be a 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.
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My accountant is always concerned about having receipts for senior health care. Apparently there is enough fraud that CRA routinely asks him for reciepts, particularly for higher income seniors who have not qualified for the disability tax credit. I have been asked twice in the last 10 years to supply receipts for my dad’s taxes.

It’s no biggie, just copy the receipts and send them in an envelope. You don’t need to tally them, just be sure they add up to the amount of the claim - if not, you risk a bigger look into your tax filing.
 
crankcall said:
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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Several Central American countries have tax treaties with Canada that are exploited by clever individuals… but the risks are high. An old colleague used the Nic-Can tax treaty to avoid paying taxes and import duties in Nicaragua - till the Nicaraguans asked Canada did their periodic tax filing exchange.

Boom came down quick. House, hotel, bank accounts , all the family cars and business assets seized. He lost everything. Then Rev Can came after him in Canada for the amount the Nicaraguans claimed he evaded.

Night be a banana republic, but when it comes to taxes, they know their bananas.
 
ReSTored said:
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.
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CRA has different divisions for small, medium, and large fishes. More small fishes tend to be caught just due to volume, and those individuals taking a "YOLO" approach to their tax obligation, making them easier to catch.

There are different levels of verifications and audits as well. If issues are uncovered during one type of review (for ex. corporate tax) that points to other evidence of non-compliance, then you might be tied up in audits for years as each division will take their turn conducting their audits (T2, HST, payroll, T1, Trusts).

CRA does raise "lifestyle assessments" on individuals that clearly are living beyond their reported means.
 
I have never found the write off for a vehicle to be worth it. Seems to be better to just pay yourself mileage at least that's what I always did.

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Scuba Steve said:
I have never found the write off for a vehicle to be worth it. Seems to be better to just pay yourself mileage at least that's what I always did.

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A lot depends on how blurry you paint the lines. Having more than one vehicle in the family and some people argue that all miles on one of the vehicles are work related. That can add up to a large number. Other people choose to have company owned vehicle as it isn't hard to get invoices for parts that can be written off (and the parts may or may not fit the vehicle, a belt may fit for a snowmobile for instance). Detailing and paint correction are also easy to wash through.
 
GreyGhost said:
A lot depends on how blurry you paint the lines. Having more than one vehicle in the family and some people argue that all miles on one of the vehicles are work related. That can add up to a large number. Other people choose to have company owned vehicle as it isn't hard to get invoices for parts that can be written off (and the parts may or may not fit the vehicle, a belt may fit for a snowmobile for instance). Detailing and paint correction are also easy to wash through.
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Mileage was close to enough to buy a new vehicle every other year and tax free with much easier accounting.

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I need to figure out how better to blurr those lines...wife has a business and writes off a % of her expenses / mileage for the van.

However, the van just crossed 150k so that's why I considered just biting the bullet and buying her a newer van...or myself and just burn her Odyssey into the ground.

As @Hardwrkr13 mentioned I could potentially write off a new 'truck' for my own side hustle...but it can be done for either of us, and the car doesn't actually matter so long as it can be proven that it was used for the intended purpose.

Hell I can buy a used Ranger for 10k and write off the whole thing for the side hustle, just need to actually show some income. I haven't started a new thread in a while...tax evasion won't be it though.
 
mimico_polak said:
I need to figure out how better to blurr those lines...wife has a business and writes off a % of her expenses / mileage for the van.

However, the van just crossed 150k so that's why I considered just biting the bullet and buying her a newer van...or myself and just burn her Odyssey into the ground.

As @Hardwrkr13 mentioned I could potentially write off a new 'truck' for my own side hustle...but it can be done for either of us, and the car doesn't actually matter so long as it can be proven that it was used for the intended purpose.

Hell I can buy a used Ranger for 10k and write off the whole thing for the side hustle, just need to actually show some income. I haven't started a new thread in a while...tax evasion won't be it though.
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Look at mileage 60c a k tax free.

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Scuba Steve said:
Look at mileage 60c a k tax free.

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Do you keep track of your person KMs vs business kms?
Or just claim all the kms as business?
 
Scuba Steve said:
Look at mileage 60c a k tax free.

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70c/km for the first 5000, then 64c thereafter.
oioioi said:
Do you keep track of your person KMs vs business kms?
Or just claim all the kms as business?
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You need to keep a log. I use an app to do that.
 
I'm familiar with the whole log thing. It's a but of a PITA.

I was just asking for those that reimburse themselves per kms of personal vehicle use vs writing off the entire car lease/finance and not worry about a log. Of course another personal vehicle needs to be in the mix.
 
oioioi said:
I'm familiar with the whole log thing. It's a but of a PITA.

I was just asking for those that reimburse themselves per kms of personal vehicle use vs writing off the entire car lease/finance and not worry about a log. Of course another personal vehicle needs to be in the mix.
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I don't track personal, just business. Mileage, date, destination, reason for trip/person you meet with. Should be sufficient for per km reimbursement. If you want to write off a percentage of vehicle, you are supposed to write odo at start and end of trip. I can't remember if you have to log personal or if you can just subtract, I've never done the percentage game.
 
oioioi said:
I'm familiar with the whole log thing. It's a but of a PITA.

I was just asking for those that reimburse themselves per kms of personal vehicle use vs writing off the entire car lease/finance and not worry about a log. Of course another personal vehicle needs to be in the mix.
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That's great until they decide that it wasn't all business use a buddy of mine got nailed and it cost him more than if he hadn't claimed at all. I think the fine was 70k unless the vehicle stays at work that is a dangerous game.

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Scuba Steve said:
That's great until they decide that it wasn't all business use a buddy of mine got nailed and it cost him more than if he hadn't claimed at all. I think the fine was 70k unless the vehicle stays at work that is a dangerous game.

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What I meant was when there are 2 vehicles present.
1. being used for personal use
2. the other being used for a. strictly business (no log book) or b. personal and charging for business per kms. (log book required)
 
oioioi said:
What I meant was when there are 2 vehicles present.
1. being used for personal use
2. the other being used for a. strictly business (no log book) or b. personal and charging for business per kms. (log book required)
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As long as #2 doesn't leave the registered business address for any reason not business that is ok but not realistic.

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If you use a vehicle that you personally own for your business, and would like to be re-imbursed by your business for its use, then you need to log the business mileage (date, start/end points) to calculate the non-taxable per km allowance as per above.

If you have a vehicle paid/leased by your business, then you need to record the odometer at start/end of year, and either the personal or business use mileage (date, start/end points) for the year. From that, you can calculate the value that is to be added back into your income as a taxable benefit.

If business use > 10% = 100% personal use
If business use > 90% = 100% business use
And vice-versa.

If no log is maintained, CRA can/will assess mileage allowance paid as additional income, OR taxable benefit assessed to you at 100% personal use for corporate vehicle based on initial purchase/leasing cost of vehicle.
 
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