Considering probably 98% of clients pay cash, I highly doubt SP's claim much if any income. Should the govt start targeting SP's as income tax avoiders...wouldnt be very hard to track them down and make an estimate on their earnings. For example, lets say an SP charges 250 hr and sees 3 clients a day, 450 cash per day x 5 = $117,000 tax free...right up there with your avg Dr. making around 200k a yr, but they pay a ton of taxes...
Do SP's pay taxes?
- Thread starter InTheBum
- Start date
The government actually does go after them, when they know about it and when they think they have a good chance of recoving taxes owed.
CCRA has a Special Enforcement Program for the purpose of chasing down tax evasion (which is where this falls under). But since everything is done with cash, and there are usually few if any records kept, SEP tends to go after big fish first.
CCRA has a Special Enforcement Program for the purpose of chasing down tax evasion (which is where this falls under). But since everything is done with cash, and there are usually few if any records kept, SEP tends to go after big fish first.
There's a war going on right now in government against those making cash incomes. Banks are now legislated to report movements of cash greater than $5000 to the central Bank and the CRA. Part of this was because of the war on terror, to which Canadian authorities began complying with American requests for tracking financial movements.
Also, interest on bank accounts that are above a certain level now have to be reported. This means that those SPs who have created large bank accounts are now subject to inspection by the CRA. The tax debt they're accruing will be hell to pay if they ever got found out. Smart SPs would have travelled offshore and opened a bank account there and deposited their monies there.
Also, interest on bank accounts that are above a certain level now have to be reported. This means that those SPs who have created large bank accounts are now subject to inspection by the CRA. The tax debt they're accruing will be hell to pay if they ever got found out. Smart SPs would have travelled offshore and opened a bank account there and deposited their monies there.
A pal of mine here in Calgary works for CCRA or whatever the hell they are called now. We were a couple of single guys ranting about prices in Calgary when this topic came up. He smiled and said they are starting to view escort websites as a way of determining likely annual incomes and then using "means" to find out their actual identities to make sure all lines up come tax time. He said they have had this sort of program in place for all sorts of other cash industries but in the past few years are starting to look at things on the periphery like escorts. I suspect they will be looking back a few years in each case too. Stay tuned, could be interesting.InTheBum said:
Of course we pay taxes! Otherwise, all the train, taxi or plane rides that you guys buy us, we wouldn't be able to deduct! And all those shoes you gents buy us, our make-up, hoisery, salon visits. Seriously, other then our own personal life, which OK I am staying at home with my kids watching Dora reruns for free. Atleast 60% of what I make I have found ways to deduct. GST on any of the products is returned to me. And yep I use my PST number when buying things.
So no biggy paying the tax, paying both halves of CPP annoys me, but one always wants to max that out. But for building your own credit as a sole propreitor you want to claim as much as you can, and deduct most of it to!
Would you like a reciept?
So no biggy paying the tax, paying both halves of CPP annoys me, but one always wants to max that out. But for building your own credit as a sole propreitor you want to claim as much as you can, and deduct most of it to!
Would you like a reciept?
In order to deduct a gift, such as a plane ticket from a client, you must also report it as income.elaine said:
elaine said:
Errr...how could you deduct presents to you? That doesn't make sense at all. As for using your PST number, that use is only intended for re-sell. If you're buying shoes to re-sell, then you do not have to pay PST. PST is only chargable to the end user. Do you offer receipts to your clients? Do you charge them both GST and pst on top of your rate? For tax purposes, do you keep a record of your customers and what they have paid?
agreed, and he says it is going to get worse. he is a good guy but he hates anyone knowing where he works. There is apparently a big push to find anyone not declaring income anywhere and I suspect the hate on for them will only get greater in this next year.TheRater said:
It is my strong belief that any woman who is able to plan long-term will report most (if not all) of her income.
You want to build investments, credit, be able to qualify for mortgage, etc. You want to have the certainty that the only risk your savings face is market risk - not the chance of CRA auditing you and emptying all of your money in fines. How can you do it without reporting income?
As SPs, you deal with different types of risk and you have to learn to estimate it. Getting in trouble with CRA is not a risk I am willing to take.
Especially since self-employed status and large movements of cash increase one's chance of audit.
I may pay for my groceries in cash, but everything else gets reported.
You want to build investments, credit, be able to qualify for mortgage, etc. You want to have the certainty that the only risk your savings face is market risk - not the chance of CRA auditing you and emptying all of your money in fines. How can you do it without reporting income?
As SPs, you deal with different types of risk and you have to learn to estimate it. Getting in trouble with CRA is not a risk I am willing to take.
Especially since self-employed status and large movements of cash increase one's chance of audit.
I may pay for my groceries in cash, but everything else gets reported.
My in depth analysis reveals that some do and some don't. However, NONE of them declare all their earnings. If I were in their shoes I wouldn't either.InTheBum said:
I figure if Al Capone got caught for tax evasion it can happen to anyone. The government does not care where the money comes from, they just want it, and they get it, damn fuckers, I mean diligent public workers.Rod Steel said:
Oh yeah Rod, I think you'd look just as good as Capone would in our shoes...
That's a joke eh.
But that would just be stupid. You need to justify your existence, after all...LittleAsianGuy said:
Most Don't Report It...
Doesnt matter if someone works as an SP, sells drugs, or works as a waiter...
The TRUTH is these people report none, to a very small % of their income...
Don't give me this Bullshit, that the govt is cracking down...the gov't is full of morons that work 4 yrs and get a pension for life or work as a silly servant.
I worked at a major hotel and Bell Hops, to room service waiters, to the guy working in the bar, report a couple thousand a year tops in tips or nothing. They use that cash to buy food, clothes, spending money, gas, etc...There is no paper trail...so Revenue Canada cant do shit... Ya, if they want the can crack down on a few to scare the rest, but really, they dont have the manpower to do it to everyone...only a few % at best... The odds are on your side to not report it, and you will never get caught.
Doesnt matter if someone works as an SP, sells drugs, or works as a waiter...
The TRUTH is these people report none, to a very small % of their income...
Don't give me this Bullshit, that the govt is cracking down...the gov't is full of morons that work 4 yrs and get a pension for life or work as a silly servant.
I worked at a major hotel and Bell Hops, to room service waiters, to the guy working in the bar, report a couple thousand a year tops in tips or nothing. They use that cash to buy food, clothes, spending money, gas, etc...There is no paper trail...so Revenue Canada cant do shit... Ya, if they want the can crack down on a few to scare the rest, but really, they dont have the manpower to do it to everyone...only a few % at best... The odds are on your side to not report it, and you will never get caught.
at the very least report a living wage, you know, something like $30-35K, just to minimize scrutiny. taxes on that amount are miniscule, as you get to keep at least 80% of what you report, depending on what deductions you are eligible for
wage fluctuations aren't that big a deal. i've seen guys make $500K one year come all the way down to $100K the following year
Plan ahead and tear a page out of Todd Bertuzzi's book: the year before you need a new mortgage, report all your income and bring it to your mortgage specialist
wage fluctuations aren't that big a deal. i've seen guys make $500K one year come all the way down to $100K the following year
Plan ahead and tear a page out of Todd Bertuzzi's book: the year before you need a new mortgage, report all your income and bring it to your mortgage specialist
Whew, Ms.Belair- ya had me worried there for a minute, I thought you were comming after me!ms.belair said:
