It may not be the best of ideas to lie to the tax man. If you get caught, don't expect a gentle rap on the knuckles. It'll be more like a straight-up punch in the teeth.
Lying to your mom is one thing. Lying to the Canada Revenue Agency is totally different. If you are the kind of person who doctors up their income tax returns in order to scam a few extra bucks, just remember that the consequences could be far more serious than being grounded for the weekend or having to do the dishes.
Canada Revenue Agency and Revenu Québec are no chumps when it comes to sniffing out our most commonly used tricks. Yet, when questioned about their favourite underhanded ploys of taxpayers, their answers were vague and boring: bureaucratic rhetoric. Luckily, financial litigation lawyer Chanel Alepin of the firm Alepin Gauthier is all too familiar with the temptations people succumb to when filing their tax returns.
The tax authorities care if you are single or not, and not because they want to know whether to send you a ''cheer-up'' card on Valentine's Day. Your marital status has a large influence on the amount of tax credits you are eligible for. So despite your deep-rooted love for your sweetheart, it may be tempting to, let's say, pretend he or she doesn't exist.
Bad idea. Tax auditors can easily detect what is going on, even behind closed doors. ''Never underestimate how much information they have on you,'' warns Ms. Alepin. ''And if there are any doubts, they don't leave any stones unturned. They can even question people who know you.''
Anyone who has kids knows that the government offers generous tax credits for your daycare expenses. Obviously, if the kids are being taken care of by Grandma for free, you are not eligible for these enticing credits. ''As a parent, you are responsible for saving all the invoices, bills and proofs of payment,'' professes Ms. Alepin. Without these supporting documents, don't bank on the auditors letting things slide just because you've included some cute pictures of your kids dressed up as pumpkins on Halloween.
Self-employed? The government allows you to deduct a portion of your business-related expenses. Restaurant meals... ARE included. Jackpot? Not exactly. For the expense to be eligible, you have to be accompanied by a client AND pay for their meal. Most importantly: save all your receipts. The government has the right to force you to produce all supporting documents so that they can go through them with a fine-tooth comb. ''If you are randomly selected to be audited, be ready to produce the bill and an explanation for that Sunday morning business brunch.''
It is never a smart long-term strategy to play hide-and-seek with the tax authorities. If you are audited and deemed to have purposefully over-exaggerated your expenses or concealed your revenues, they will consider you as fraudulent. Next, you'll be issued a new notice of assessment with an amount due. Plus interest. Plus an extra penalty for 50% of the amount you initially received which can be directly attributed to the fraudulent information. Ouch, sounds harsher than being grounded for the weekend.
''For those breaking out into cold sweats while reading this article, it would be wise to contact the tax authorities and admit to their non-conformity,'' recommends Chanel Alepin. You won't get out of the revised notice of assessment nor the reimbursement of interest, but at least you won't have to pay the extra penalty. As the saying goes: A fault confessed is half redressed.
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