April 15, 2010 by Dan White.

 Here is a funny CRA case. It reminds me of a case where CRA refused to issue a refund due to “Missing Information.” They could not tell me what information was missing, and could not issue the refund due to the file to memo that stated that there was information missing.

After me convincing them that they had no choice, I finally got my cheque.

Sometimes bureaucracy can be hilarious, frustrating, and perplexing.

To learn more about CRA behavior and what to do about it to solve your tax problems,

go to  CRA Tax Audits    http://taxauditsolutions.ca/cms/index.php/cra-tax-audits/

Dan White

Revenue Canada Strikes Again! By Scooter Clark

This situation would be rather funny if I hadn’t just spent four hours trying to document and resolve it.

I was speaking to the Canada Revenue Agency earlier today, and they told me that they owed me $362.91 because I had paid them too much a few months ago. I was quite pleased to hear that, of course. However, the guy on the phone then went on to say, “but we aren’t able to give it back to you unless you’re able to explain why you gave it to us in the first place.”

WTF?? I thought he was joking at first. He wasn’t. Actually, once I talked to him some more, it made sense - it was the “current source deductions” department, which handles money that employers have to contribute into the EI and CPP programs, and since the funds are held in trust they can’t just arbitrarily issue a refund cheque without detailed corroborating evidence.

So anyway, the long and short of the story is that I’ve spent the past four hours trying to properly document my answer, which essentially COULD have been reduced to this short paragraph:

“You sent me a notice on October 26th saying that I owed you $362.91 (with no accompanying explanation), and I was stupid enough to think that you might have been correct, so I paid it. That’s why you’ve been overpaid by $362.91.”

The only hard part was trying to say that diplomatically. Luckily, I managed to write a fourteen hundred word letter to explain the situation in excruciating detail, along with five pages of spreadsheets and printouts, so hopefully it will take them just as long to sort out as it took me to put everything together.

posted by Jonathan (Scooter) Clark @ 4/14/2010 06:19:00 PM

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April 15, 2010 by Dan White.

HST is mostly good for business.

I continue to like the HST, and I do believe that in general businesses will be much better off. If business is better off, then by default so too are employees. Sure it is going to hurt in some ways. But… Not needing to deal with the PST Tax Department is a huge bonus. Getting back the PST component of the taxes as an Input Tax Credit is great. Not needing to file PST Tax Returns is a time and work saver.

My stern warning is: CRA is resisting any Input Tax Refunds that do not match your tax returns and what they think is right, they will audit to make sure, prior to issuing any cheques.

What this means is that more than ever audit ready bookkeeping is going to become a necessary practive if the businesses of this land hope to get their ITC’s.

We have changed the name LazyBooks to ARBooks…. pronounced R Books. There was a re-engineering required and we are now past the point we were when things got off track. We are looking at this summer for the Beta Versions of AR Books to be available. Audit Ready Bookkeeping that runs in any web browser, is going to change how accounting in Canada is going to be done.

Doing audit ready books will keep the stress out of audits and solve a lot of potential tax problems. ARBooks is cearly the tax solution needed for protection against the taxman.

Be sure to go to AUDIT READY BOOKKEEPING AT   http://taxauditsolutions.ca/cms/index.php/audit-ready-bookkeeping/

Dan White

Refundable tax will make HST work

By Michael Hamer, Times Colonist April 15, 2010

Re: “If the HST will help you, please tell us about it,” letter, April 13.

As a business person, I’m assuming that you are registered with the Canada Revenue Agency to collect the GST. And that you are aware of the refundable nature of GST input tax credits (GST paid on various expenditures for your business).

Now look at all your current expenses and highlight the PST on those bills, including B.C. Hydro, telephone, vehicle repairs, office and material supplies, asset purchases, etc.

All of this PST has been non-refundable and factors into your “narrow profit margins.” Starting July 1, when the GST and PST are rolled into the HST, all those PST amounts become refundable input tax credits.

Furthermore, for any expenses that currently only have GST on them (for example, your external accountant’s bill, your Times Colonist subscription) the HST increase will also be refundable and not a tax that needs to be absorbed.

In fact, I believe you will find that your expenses will drop, due to the refunding of the equivalent PST, and that your profit margin will rise. You could win more customers by passing along these savings to the consumer through lower prices.

Of course, all bets are off if you are one of the minority of businesses that can’t charge GST on their sales or services (doctor’s offices, residential rental companies, for example). In this case, you will see an increase in your costs as the HST becomes applied to currently exempt PST items. In which case I wish you good luck.

Michael Hamer

Courtenay
© Copyright (c) The Victoria Times Colonist

Read more: http://www.timescolonist.com/news/Refundable+will+make+work/2909363/story.html#ixzz0lBIarSjN

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April 15, 2010 by Dan White.

CRA Horror Story.
This is a classic example of just how the system can be used against a taxpayer. There is no quarter, no care and no fairness when CRA gets dirty. They don’t care that Gary Hennessey was an innocent victim, they don’t care that they bankrupt him. A guiding principle of CRA is fairness.  I never realized that the word “fairness” in itself is an oxymoron.

Perhaps the definition of the word “oxymoron” means stupid as an ox. (ox moron?)

There is just one solution to dealing with CRA. Get yourself a dam good TaxRepresentative and make sure your books and records are all audit ready. Make sure you do Risk Management, and most inportantly, don’t think that just because you think you have nothing to hide, does not mean you won’t end up as road kill, “Mac Truck vs Small Furry Creature.”

In order to not be a victim of the system, you need to be like a roadside bomb when CRA comes calling. If you don’t blow up at their first transgression, you have just signed up for what could be your economic death.

To learn more about CRA, go to www.taxauditsolutions.ca

To learn more about what  can go wrong, go wrong, go wrong…. read on….

Dan White

Forty boxes of evidence
Defence looking for Crown to turn over documents in tax case

DAVE BARTLETT
The Telegram

Gary Hennessey (right) speaks with his lawyer Robert Anstey outside provincial court Wednesday morning. - Photo by Dave Bartlett/The Telegram
Gary Hennessey (right) speaks with his lawyer Robert Anstey outside provincial court Wednesday morning. - Photo by Dave Bartlett/The Telegram

A St. John’s man caught in a dispute between the Canada Revenue Agency (CRA) and Eastern Health made his first court appearance Wednesday to face four tax-related charges.

Last month Gary Hennessey told his story to The Telegram.

He was forced to close his payroll business in August 2007, he said, and later declared bankruptcy because of the dispute, which eventually led to the charges.

Hennessey was formally charged in provincial court Wednesday with tax evasion, fraud over $5,000 and two counts of making false statements on his tax returns.

In court, Hennessey’s lawyer, Robert Anstey, asked Crown prosecutor Neil Smith to return 40 banker’s boxes of records the CRA seized from Hennessey about 18 months ago.

Anstey is also looking for records from CRA and from Eastern Health.

Smith said a full package of evidence is being prepared for Anstey.

Considering the amount of material Anstey has to review to mount a defence, he asked Judge Lois Skanes to put the matter off until September.

But Skanes suggested a court date be set for June 15, to update the court on Anstey’s progress.

She said that would give the Crown time to turn over the documents Anstey has requested and for him to figure out how much more time he will need to go through all of the paperwork.

Anstey was also hoping the court would ask Eastern Health to turn over relevant documents and had subpoenaed two of the health authority’s employees to be in court.

But Skanes said that will also have to wait until June, and Anstey would have to file a formal application with the courts to get those documents.

Afterwards Anstey spoke to The Telegram. He said if CRA - with all its staff and legal resources - has had the 40 boxes of evidence for about 18 months and still took 14 months to lay charges, he’s going to need an adequate amount of time to prepare Hennessey’s defence.

“We’re hoping that these documents that are going to be produced … will show that my client is caught up in the middle of this,” said Anstey. “The charges are against him, but he’s, I’ll call it, the proverbial scapegoat.”

Anstey said Eastern Health will provide him with the documents, but only after the court directs it to release the information.

“It’s unfortunate for Mr. Hennessey,” Anstey said.

“What it’s done to him and his family over the years is basically cruel and unusual punishment. He’s lost everything and now he’s fighting to clear his name.”

Anstey hopes the documents will help do that.

The original Telegram stories outlined how Hennessey used to do the payroll for hundreds of home care workers on behalf of their clients, and how Eastern Health had failed to tell him that some of those clients had outstanding balances owing to CRA before he was hired to cut their cheques. As a result, CRA is holding him accountable for the arrears.

Eastern Health and CRA tried to settle the matter in 2006, but when talks failed, the CRA set its sights back on Hennessey, saying he owed CRA hundreds of thousands of dollars in unpaid remittances, interest and penalties.

CRA laid the charges in January of this year. Before that, Hennessey launched a complaint with the province’s office of the citizens’ representative to see if it could help him resolve the issue.

Barry Fleming’s report backed up much of Hennessey’s story, but also laid some of the blame on him. Fleming wrote Hennessey “lacked business acumen” and his record-keeping was deficient.

But Fleming’s report also states Hennessey tried to co-operate with both agencies and there’s no evidence he misappropriated any funds.

“The actions of the CRA with respect to its dealings with Mr. Hennessey border on the unconscionable,” Fleming stated, adding Hennessey was an “easy target” for the CRA.

dbartlett@thetelegram.com

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