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When an auditor from Canada Revenue Agency comes to call, it doesn’t pay to be too chummy.
Instant friendliness, the over-the-top kind that no one actually feels for the tax man or woman, is a “red flag” that suggests you have dirty tax secrets, according to internal documents for the agency.
So are other actions that may seem harmless on the surface, such as understanding the tax rules, and telling people your business is above board.
It’s all a matter of how you go about it, and some crooks give themselves away without realizing it.
Let’s have a look, courtesy of training documents the CRA uses to tell its people (and independent accountants) what to watch for.
“Hey, Ms. Auditor, it’s great to see ya!”
Do not say this. Training documents, released under access to information, deal with this succinctly: “Taxpayer very friendly and co-operative” is a suspicious sign, in the same list as the taxpayer who tries to frustrate the auditor.
Being a little too vocally honest is a bad idea, too: There’s a red flag entry called “Taxpayer is quick to volunteer that funds are clean or not being laundered.”
Uh-huh.
And what’s wrong with understanding the law? Sometimes, nothing. Other times … here’s another warning sign:
“Taxpayer has unusual knowledge of the law in relation to suspicious transaction reporting. Taxpayer seems very conversant with money laundering or terrorist activity financing issues.”
A lot of the warning signs will be familiar to parents who can’t get a straight story after the teenager arrives home at three in the morning, minus the car. Like this one:
“Taxpayer presents confusing details about the transaction.”
If you can’t keep your story straight, it hints that your business transactions have, in fact, “no economic purpose.” The person has trouble explaining why that “unusual and/or large government cheque” came in, and scrambles for an explanation.
Another tip: “Taxpayer has a history of changing bookkeepers or accountants yearly” — so no one will become too familiar with the real dealings.
One bad idea is to have your home and business phone numbers disconnected when the tax man calls. So is using a post office box for mail when your neighbours all get mail delivered to their homes. So is being secretive and telling CRA you don’t want to meet in person. No, an email just won’t do.
And this one, which sounds obvious but it’s added to the list because people really do this: “Taxpayer uses alias(es) and/or a series of similar but different addresses.”
Some of the red flags are so basic, they make you wonder how dumb criminals are. It’s a red flag, for instance, if someone gives the CRA fake or counterfeit identification, or refuses to produce any ID at all. Or if he or she gives only photocopies of identification. Or when people can only offer something other than proper ID — business cards, letters showing their names, ID from a foreign country, and so on. This doesn’t work for teenagers at the bar, and doesn’t work in tax evasion, either.
Even dumber: Asking your friendly bank to handle a big transaction and skip the paperwork.
The biggest red flags are, of course, financial. The documents have a lot of tips for auditors that show when a business or individual is hiding something.
It’s odd, for instance, when a business uses too many banks in the same neighbourhood when one would do — often an indication that money is being transferred from bank to bank to pretend there is business activity and get a GST rebate.
Sometimes, there’s dirty money. No, we really mean dirty, or musty: “This is usually a result of storing unreported income in a basement or storage facility.” Bills in packages with funny wrapping are a tip-off as well.
Going to your safe deposit box and depositing a lot of cash into an account right afterwards will catch the auditor’s eye, indicating you have been using the box to store unreported income. So will making deposits directly to your credit card in an attempt to bypass the regular bank account.
It’s a tipoff if you frequently change small bills for large ones. Bigger bills fit more easily into a safe deposit box. As well, if your business deals in small transactions but you often deposit large bills, or vice versa, an auditor will be curious.
And finally, it’s a good idea to know where your business records are. “I can’t find my records” ranks up there with “The dog ate my homework.”
There’s a bewildering array of ways to hide income. A simple one is to put some receipts through your business account and others into a personal account at another bank. It’s easy to catch.
A more complicated plan took the CRA years to investigate, tracing millions in Canadian money from the Turks and Caicos through 10 other countries, while the company tried to swamp the auditors with volume after volume of useless information. It ended when a foreign country refused to supply information and the Justice Department called a halt to it for lack of evidence. (The documents don’t give names or dates for this investigation.)
CRA won’t be fooled if you have an unusual number of accounts in the Channel Islands, Liechtenstein and other countries with strict secrecy surrounding their banks. The only remaining question is: How much can they prove?
tspears@postmedia.com
twitter.com/TomSpears1
查看原文...
Instant friendliness, the over-the-top kind that no one actually feels for the tax man or woman, is a “red flag” that suggests you have dirty tax secrets, according to internal documents for the agency.
So are other actions that may seem harmless on the surface, such as understanding the tax rules, and telling people your business is above board.
It’s all a matter of how you go about it, and some crooks give themselves away without realizing it.
Let’s have a look, courtesy of training documents the CRA uses to tell its people (and independent accountants) what to watch for.
“Hey, Ms. Auditor, it’s great to see ya!”
Do not say this. Training documents, released under access to information, deal with this succinctly: “Taxpayer very friendly and co-operative” is a suspicious sign, in the same list as the taxpayer who tries to frustrate the auditor.
Being a little too vocally honest is a bad idea, too: There’s a red flag entry called “Taxpayer is quick to volunteer that funds are clean or not being laundered.”
Uh-huh.
And what’s wrong with understanding the law? Sometimes, nothing. Other times … here’s another warning sign:
“Taxpayer has unusual knowledge of the law in relation to suspicious transaction reporting. Taxpayer seems very conversant with money laundering or terrorist activity financing issues.”
A lot of the warning signs will be familiar to parents who can’t get a straight story after the teenager arrives home at three in the morning, minus the car. Like this one:
“Taxpayer presents confusing details about the transaction.”
If you can’t keep your story straight, it hints that your business transactions have, in fact, “no economic purpose.” The person has trouble explaining why that “unusual and/or large government cheque” came in, and scrambles for an explanation.
Another tip: “Taxpayer has a history of changing bookkeepers or accountants yearly” — so no one will become too familiar with the real dealings.
One bad idea is to have your home and business phone numbers disconnected when the tax man calls. So is using a post office box for mail when your neighbours all get mail delivered to their homes. So is being secretive and telling CRA you don’t want to meet in person. No, an email just won’t do.
And this one, which sounds obvious but it’s added to the list because people really do this: “Taxpayer uses alias(es) and/or a series of similar but different addresses.”
Some of the red flags are so basic, they make you wonder how dumb criminals are. It’s a red flag, for instance, if someone gives the CRA fake or counterfeit identification, or refuses to produce any ID at all. Or if he or she gives only photocopies of identification. Or when people can only offer something other than proper ID — business cards, letters showing their names, ID from a foreign country, and so on. This doesn’t work for teenagers at the bar, and doesn’t work in tax evasion, either.
Even dumber: Asking your friendly bank to handle a big transaction and skip the paperwork.
The biggest red flags are, of course, financial. The documents have a lot of tips for auditors that show when a business or individual is hiding something.
It’s odd, for instance, when a business uses too many banks in the same neighbourhood when one would do — often an indication that money is being transferred from bank to bank to pretend there is business activity and get a GST rebate.
Sometimes, there’s dirty money. No, we really mean dirty, or musty: “This is usually a result of storing unreported income in a basement or storage facility.” Bills in packages with funny wrapping are a tip-off as well.
Going to your safe deposit box and depositing a lot of cash into an account right afterwards will catch the auditor’s eye, indicating you have been using the box to store unreported income. So will making deposits directly to your credit card in an attempt to bypass the regular bank account.
It’s a tipoff if you frequently change small bills for large ones. Bigger bills fit more easily into a safe deposit box. As well, if your business deals in small transactions but you often deposit large bills, or vice versa, an auditor will be curious.
And finally, it’s a good idea to know where your business records are. “I can’t find my records” ranks up there with “The dog ate my homework.”
There’s a bewildering array of ways to hide income. A simple one is to put some receipts through your business account and others into a personal account at another bank. It’s easy to catch.
A more complicated plan took the CRA years to investigate, tracing millions in Canadian money from the Turks and Caicos through 10 other countries, while the company tried to swamp the auditors with volume after volume of useless information. It ended when a foreign country refused to supply information and the Justice Department called a halt to it for lack of evidence. (The documents don’t give names or dates for this investigation.)
CRA won’t be fooled if you have an unusual number of accounts in the Channel Islands, Liechtenstein and other countries with strict secrecy surrounding their banks. The only remaining question is: How much can they prove?
tspears@postmedia.com
twitter.com/TomSpears1
查看原文...
