SP and Income Tax Fraud

[peter putter]

I don't think the level income tax fraud is higher in the sp population than in the general population. The so-called black economy is so huge in Canada even the CRA by their own admission
cannot get to the bottom of it. Why single out Sps ?

Each year( or what ever way the political wind blows) CRA picks an "industry" and goes to town on it. Construction is a good example, they will check out ads for say fencing contractors and then will have a look at the industrial average for revenue expenses , etc. They will then have a look at the owners of said companies in the ads-or what ever source they choose - if you don't conform to the norm, bingo you are audited. This happened to a friend who though he could fly under the radar and it happened to me when I didn't file for the first two years I was in business. Lucky for me they owed me but unlucky for my friend who was hit with about $50,000 in back taxes and penalties.

My advise start a small business, claim income, pay taxes.

As far as being out of the business, CRA don't believe a word of someone that that has been evading taxes and will deem that you made X dollars regardless of the truth of the matter. It is a losing fight to take on CRA alone, get a good tax lawyer and negotiate a settlement and heed Punt's comments

 

[Peyton Anders]

http://s1.ibtimes.com/sites/www.ibt...e/public/2013/12/05/unicorn-craigslist-ad.png

Peyton,

Finally, the search is over.

I will take 2 unicorns please plus a small basket of .. oh say maybe a half dozen unicorn eggs.

Cash on delivery.

Thanks,
Chest

Tsk unicorns are mammals. And not like those platypus mammals. They have wee unicorn babies, not eggs.

Science'd

 

[Peyton Anders]

My bad. All the money I spent on a science degree and this clearly was not covered. Looking into remedial courses right now.

Hand in your BSc immediately, you're going to deVry.

 

[newatit]

to get back to the subject at hand, I was afraid my bank accounts might have been audited because of the connection to this tax situation with this SP. I since found out she is being questioned about every entry in her bank account and every payment. She paid a guy to use his pad for her business. $1000 per month which he got in cash and never claimed. So likely he is into it too. And she did doubles with some of the gals here in town, and might have to squeal on that. So you all, do like the guys on this board who know, pay your taxes. This cheater had worked the Vancouver scene for about 7 years. Tax investigations will go back that far. Think about your history over the last seven years. If you owe, get to an accountant, get under the amnesty program and clue in.
so far this gal has been told she owes over $20,000, and that is only the early years. My accountant tells me a good lawyer will cost her $60,000 which she doesn't have.
A real mess.

 

[Fin]

so far this gal has been told she owes over $20,000, and that is only the early years. My accountant tells me a good lawyer will cost her $60,000 which she doesn't have.
A real mess.

What an awful situation to be in I really hope that things work out for her .Although from what you said already looks like things will more than likely esculate with the amount she owes :fear:

 

[newatit]

Yes, and for those of you concerned, here is a web link http://www.cra-arc.gc.ca/voluntarydisclosures/..

A few moments of honesty can save a few years of agony. If this gal gets the book thrown at her, she will almost never recover. She doesn't earn that much and never will.

 

[PuntMeister]

Tsk unicorns are mammals. And not like those platypus mammals. They have wee unicorn babies, not eggs.

Science'd

Is this about that Innie and Outie thing? Like some creatures such as chickens have outie hard shelled eggs, and horsie-worsies have innie eggs that develop into babies before they are expelled into the now-now, so they don't need the hard shell egg thingy?

At almost a cool Million per unicorn, I think I will just duct tape a horn to an old sow, or cultivate a well-centred bunion on the nose of a fine fillie. Clearly, I am in the wrong business!

 

[NMR]

I have very limited sympathy for tax cheats. Ladies, like millions of others, you are operating a small business. Declare your income, claim legitimate expenses and pay tax on the balance. We all have to share the load........
I think the CRA is justified in going hard after anyone not contributing their fair share.
One of my pet peeves....

 

[badbadboy]

Suggestion for any SP is to have a bank account with a regular modest amount in it and rent a safety deposit box for the bulk of your savings. If you use credit cards don't run up huge amounts on them or purchase Visa prepaid cards. What i am getting at is not to have a lot of cash in your accounts that CRA will ask you questions about later. Try to have it in safe places rather than under your mattress.

I believe safety deposit boxes can be audited. I wouldn't recommend.

You are correct.

The suggestions made were to maintain a relatively low profile banking wise. Keep a steady inflow and outflow of money into the account such that it appears you have a job with regular reasonable expenses. Use your excess cash to purchase prepaid credit cards so one could purchase things that is not tied to your bank account. The remainder of the cash can rest in a safety deposit box or some other secure facility.

CRA in the end can get authorization to get into whatever place one may have hidden the excess cash. I was suggesting things that would not trigger CRA to take a closer look at ones activities in the first place. Such as regularly Depositing $10K amounts, Spending like a rockstar on your bank's credit cards, buying that R8 you always wanted and living in a Penthouse without the sort of employment that would enable that sort of lifestyle.

 

[LuckyDucky69]

Is there such thing as a cock whisperer? ;-D

 

[newatit]

I know a few whisperers. Not sure how much longer one of them will be whispering lol.

It is pretty hard to lead any sort of an expensive life these days without putting out your name or other information for something. Like you can't book airfare or holiday destinations without it, or buy cars or etc. So your lifestyle can only be hidden to a limited amount. And hen you have to consider if it is worth it. My guess is that some gals here do very well, and a few bucks in taxes is just part of the cost of doing business. Others are not doing so well but want to live as though they were, and have to cheat somewhere.

If you read the income tax web site for prosecutions, it is indicated that well over 90% of the prosecutions are successful. Once the tax man is after you with good cause, it is probably far better to just cave in and start telling the truth. Continued lying will only go against you.

It doesn't take much to trigger an investigation. Like buy a stock, get any kind of an honest moderate job where you earn money and a T4 goes in to the Feds. And they start asking who you are? Almost anything can trigger it. In this case, I think this gal will be triggering some investigations against those she did business with.

 

[Jethro Bodine]

As someone who had been through a CRA audit 3 times in my life, all 3 coming out in my favor, I thought I'd chime in with my perspective and personal experience.
I feel there has been some statements which are likely conjecture and not really how CRA does things.

My first audit was triggered because I was a silent partner in a vending machine business with a stupid ex-brother-in-law whose ex-GF turned him in for undeclared income and thus they came at me as well. I on the other hand declared my end so I was fine. During this I actually found out he was skimming cash from the profits and stealing from me as well. The second was basically a follow up to the first 3 years later to make sure I was keeping my nose clean. The third was more recently and triggered because a side business I own was not running a profit margin consistent with industry norms. It was a side business I basically kept running to keep a couple of old friends employed but it wasn't overly successful and I was too busy with my real career to give it much oversight. As long as it didn't lose money I was okay with that but CRA gets suspicious when the declared earnings are well below industry norms.
While everyone is afraid of CRA they do have to play by the laws of the land. My CA started his career with CRA and when he left headed up their Special Investigation Branch for this region. CRA cannot get your bank records or any other financial information without a court order and certainly no bank or other institution is going to give it to them without the proper authorization.
The normal course of these things is they send you or your accountant a letter stating that they have revised your return(s) and request you file receipts or documents to support your returns. They will then either send you a letter saying they accept your return, request more proof/documents or flat out deny your claims and stick with their revision. If your return is seriously flawed, at this point they will usually inform you that your return has been submitted for an audit. They then go on to say that filing a false or fraudulent return is a violation of the federal tax laws and punishable under the Criminal Code and they are providing for a period during which you can review and re-file the returns in question. Basically giving you the chance to "correct" your errors without them having to put the effort into an audit. At this point you go to an accountant who will in turn send to his friend the tax lawyer and they'll let you know where you stand. If your guilty they'll likely advise you to paly ball with CRA. All good CA's and tax lawyers know the main players at CRA and can usually set up a meeting to deal with things. If your not guilty then that also gets dealt with usually through meetings and negotiation during which CRA soon realize you've got your ducks in a row and drop it. CRA's people are not stupid and now that they are an "agency" which has to be self sufficient they don't waste a lot of time chasing people without really good cause.
I can't comment on the OP's friend or her situation but something doesn't make sense that CRA would launch this huge behind the scene's investigation and then suddenly seize her assets. We're not talking about Al Capone or the Columbian cartels here. We're talking about an SP with likely a few hundred G's of undeclared income. The OP says she so far owes them $20 K. Even at the lowest tax rate that is the tax on $130 K and usually the fine equals the amount owing plus interest so if the $20K represents that then we're talking maybe $50K of undeclared income. Not much by today's standards. If they are going after her this hard she must owe them well over $250K or be into something a heck of a lot more criminal than being an SP, which isn't even against the law.

I closing all I want to say is: 1) Declare your income. Prostitution is not illegal in Canada so as long as your not living off the avails of others your income is legit. 2) Pay your taxes. Nobody like to pay taxes but it is your civic duty. You want all the services and health care, then pay for it like every one else. 3) CRA is sot some special "Black Ops" organization that can do 1/2 the crap people think they can. They can't tap your phone, break into your house when you're not home. They cannot go to the bank and rummage through your safety depost box. They will ask you to provide them with financial information and do something called a "net worth audit". If necessary they can get a court order to dig deeper but they just can't waltz into your bank and start going through your accounts. CRA loves to let people think they can because it keeps us all afraid and honest.

Cheers

 

[overdone]

A few moments of honesty can save a few years of agony. If this gal gets the book thrown at her, she will almost never recover. She doesn't earn that much and never will.

and that's why there's this thing called bankruptcy

 

[badbadboy]

BBB you mean my friend in JTF2 isn't out there doing secret work for the CRA? Damn, I had it wrong all this time.

Way too cryptic Mel besides I've had a couple of IPA's and wouldn't get it even if I thought about tangentally for a couple of minutes :doh:

 

[newatit]

In the long run, it will be interesting to see where this goes. It does cost money to prosecute some one, and the gains have to be evaluated. This gal probably can't pay this tax back very fast, she has a child to raise, she has gotten out of the trade, and she is making a positive contribution to society. Her taxes will be deducted at source, and she has very little she could cheat on in the future. Her threat is minimal.

A stiff slap on the wrist is maybe not enough, but destroying her life means a bad deal for her kid. Lets not decided on the small picture of getting even with her, but the larger picture of her having straightened her life out. Make her pay her debts to the tax man and move on.

Does bankruptcy mean you don't have to pay the tax man what you owe?

 

[luvsdaty]

Is there such thing as a cock whisperer? ;-D

Didn't Sandy Lane from victoria use that line in her ads?

 

[badbadboy]

http://en.m.wikipedia.org/wiki/Joint_Task_Force_2

Canadian special forces, basically.

Oh I know exactly who you were referencing. I was unable to connect any of your dots.

 

[badbadboy]

This is what I was referencing

Not my quotable quote. Maybe you should quote the right person?

 

[badbadboy]

Please pass the beer. I clearly need it.

Nothing to see here! Carry on!

Whoa I thought my IPA was strong tonight too ound:

Beer Goggles

 

[google_123]

In the long run, it will be interesting to see where this goes. It does cost money to prosecute some one, and the gains have to be evaluated. This gal probably can't pay this tax back very fast, she has a child to raise, she has gotten out of the trade, and she is making a positive contribution to society. Her taxes will be deducted at source, and she has very little she could cheat on in the future. Her threat is minimal.

A stiff slap on the wrist is maybe not enough, but destroying her life means a bad deal for her kid. Lets not decided on the small picture of getting even with her, but the larger picture of her having straightened her life out. Make her pay her debts to the tax man and move on.

Does bankruptcy mean you don't have to pay the tax man what you owe?

Eh, it doesn't cost much to fine her, say "25,000". If she didn't do any taxes, she likely owed 10,000 x how ever many years. So 15k to 25k fine wouldn't be out of reach.
Poor judgement call by her in applying for the Child Benefit.

On top of that, she'd be further scrutinized in the next couple of years, not to the initial extent but asking for verifications on receipts, and so on.