February 10, 2010 by Dan White.

Harmonizing local business with tax

Susan Bussieres, senior resource officer from Canada Revenue Agency (CRA) recently held a meeting in Burns Lake in order to present information to local business owners about the proposed Harmonized Sales Tax (HST).

In B.C. the HST would be taxed at a rate of 12 per cent, and in Ontario it will be 13% consisting of seven and eight per cent federal taxes and five per cent provincial taxes.

The HST is planned to be implemented in B.C. and Ont. on July 1 2010.

According to the CRA, the HST once introduced, would apply to most transactions that become due, or are paid without having become due on or after July 1, 2010.

The HST would also apply to any memberships that become due or are paid on or after July 1, 2010, however CRA notes that HST would not apply to the transaction if more than 90 per cent of the membership period is before July 2010.

For example, selling year long memberships; On Jan. 2 2010 a yearly gym membership is sold which will expire on December 21, 2010. The HST will not apply to the sale of this membership because the membership fee becomes due before May 2010.

But continuous services such as cellular phone services, natural gas and cable television services will be subject to the proposed HST.

HST could also possibly apply to returns and exchanges purchased before the HST comes into effect but returned after the introduction of the HST.

Generally the HST will apply to the sale of goods when the goods are delivered and when ownership of the goods is transferred to the purchaser on or after July 1, 2010.

Zero rated taxable supplies [goods that do not attract HST] include prescription drugs, medical devices, basic groceries, some agriculture and fishing supplies and exports.

According to the CRA point of sale rebates for the provincial part of the HST (seven/eight per cent) would be introduced for children’s clothing and footwear, children’s car seats and booster seats, children’s diapers, books, including audio books, feminine hygiene products and motor fuel. [The retailer would automatically provide the purchaser with a point of sale rebate by only collecting only the five per cent federal component as they do now].

For further information about the HST go to www.cra.gc.ca/harmonization-

HST has a potential for a lot of tax problems, to ensure you stay on the right side of the line, learn about LazyBooks, audit ready bookkeeping system.

For more information on audit ready accounting go to http://taxauditsolutions.ca

Posted in HST Into, Tax Topics | Print | No Comments »

February 10, 2010 by Dan White.

This is a very interesting case of an ingenious tax fraud scheme, where the tax preparer and the taxpayers all got caught.

While the scheme is really quite intelligent, there was obviously one major flaw. The tax preparer did not do risk management.
Le’s look at what is wrong here.

There had to be at least ten taxpayers involved. All likely had spouses. All likely had friends that they bragged to.

The chance of not offending anyone who could become an informer, is quite low.

So the obvious answer is.

Taxes101. don’t do tax evasion.

For more information on CRA audit procedures, please go to http://taxauditsolutions.ca

Best Regards

Dan White

___

Tax preparer found guilty of tax evasion

LAVAL, QC, Feb. 10 /CNW Telbec/ - Martine Laprise, a Saint-Sauveur tax preparer, pleaded guilty yesterday to tax evasion charges at the Saint-Jérôme courthouse. She was fined $41,252, which represents 50 % of the federal tax she tried to evade.

The Canada Revenue Agency (CRA) investigation revealed that, for the 2002 to 2005 tax years, Ms. Laprise voluntarily contravened the Income Tax Act by providing third parties with a total of $518,197 in false child care receipts. This scheme enabled the third parties to fraudulently reduce their income taxes by $82,505. In addition to the fine imposed by the Court, the taxpayers involved will have to pay the full amount of taxes owing plus related interest and any penalties that apply.

The investigation also revealed that Ms. Laprise hired fictitious caregivers, who declared income equal to the amounts on the receipts issued in order to avoid raising suspicions from the tax authorities. Expenses were also claimed against this income, which allowed the parties to avoid paying income tax.

The taxpayer is responsible for the information on his or her income tax return, even if the return was prepared by someone else. Any fraudulent activity can be anonymously reported to the Enforcement Division of the tax services office nearest you.

Posted in Audits, Tax Topics | Print | No Comments »