SP and Income Tax Fraud

[stamina]

but calling her greedy is no more fair than calling all those guys who want to boycott girls over $200/hr greedy.

Wow, you're quite diplomatic. At least you didn't call those guys "cheap".

 

[LuckyDucky69]

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?

Yes - CRA income tax, penalties and interest can be declared on your bankruptcy. The only thing you cannot default on are student loans and personal guarantees. However, in bankruptcy, a portion of your income less allowable take home amounts must be paid to your creditors for a period of time until you are discharged from bankruptcy. For more information, contact your local bankruptcy trustee or visit the Office of the Superintendent of Bankruptcy Canada at www.osb.ic.gc.ca.

 

[newatit]

good to know, I do hope this gal gets help and gets it figured out. Hard lesson to learn. You must obey the laws! tough eh?

 

[Peyton Anders]

 

[google_123]

A random thought came to me, what if someone never files a tax return. And would they still be eligible for old age pension? & C.P.P

Because if these are benefits for those aged 65, and will eventually have to be reported on their tax returns (the CPP and OAS Benefits), then CRA will realize they haven't filed a tax return in years. And possibly further investigate?

Either way, I agree, file your taxes, be honest or suffer the consequences.

 

[nickcan]

A random thought came to me, what if someone never files a tax return. And would they still be eligible for old age pension? & C.P.P

Because if these are benefits for those aged 65, and will eventually have to be reported on their tax returns (the CPP and OAS Benefits), then CRA will realize they haven't filed a tax return in years. And possibly further investigate?

Either way, I agree, file your taxes, be honest or suffer the consequences.

I think they will still qualify for old age pension but not C.P.P. because you need to contribute to receive benefits.
Plus you have to live at least 6 months of the year in Canada.

 

[newatit]

just a little naming thing. Old Age Security is the term, OAS for short. Everyone entitled to it. Canada Pension Plan CPP is contribution related. So if you never made any money or at least never reported any, not likely you will get any CPP. And OAS is clawed back if you make too much money.

Yes, pay your share of the tax load.

 

[google_123]

Yeah, I understand those points, but if they get OAS, they would likely need to do a tax return to report it. Since CRA actually has records of it. Or they simply don't do their taxes?

I'm sure they are eligible for CPP, they likely had a iffy job when they were in High school like most of us. McDonalds or a car wash or a movie theatre,

 

[Stunes]

I worked 3 years for the dreaded CRA. Most of what everyone here is saying is true about CRA. The do target certain industries, they can ask for bank statements, but that gets very tricky becuase of the hurdles required, they'd rather you just producei it. CRA doesn't care if your means of income is illegal or not, they will tax it. If they look at one file, they will expand and see if related parties are also reporting. There's lots of tools at their disposal. When I was an auditor, I went after income tax, if that wasn't there, I looked at GST, or taxable benefits, or checked if the people you paid for rent or your subcontractors were reporting. We also targeted certain individuals based on a net worth audit. There's also the tip line that we looked at, or like mentioned earlier, looking at industry norms against what you files. They also combed through the classifies and looked for curbers.

What is the biggest signal for CRA is greed. They actually had seminars within CRA telling how people got caught.

 

[google_123]

I worked 3 years for the dreaded CRA. Most of what everyone here is saying is true about CRA. The do target certain industries, they can ask for bank statements, but that gets very tricky becuase of the hurdles required, they'd rather you just producei it. CRA doesn't care if your means of income is illegal or not, they will tax it. If they look at one file, they will expand and see if related parties are also reporting. There's lots of tools at their disposal. When I was an auditor, I went after income tax, if that wasn't there, I looked at GST, or taxable benefits, or checked if the people you paid for rent or your subcontractors were reporting. We also targeted certain individuals based on a net worth audit. There's also the tip line that we looked at, or like mentioned earlier, looking at industry norms against what you files. They also combed through the classifies and looked for curbers.

What is the biggest signal for CRA is greed. They actually had seminars within CRA telling how people got caught.

is #1 tips still from jealous friends/neighbours? via anon tip line.

 

[HankQuinlan]

As a devil's advocate here, I see an alternate argument for independent SPs -- since the government has no business in anyone's bedroom or who they have sex with, I don't see why that shouldn't apply whether or not they accept payment for having sex. I think there is a distinct argument that it is no one else's concern, including the CRA.

Of course, I find it harder to apply that to those involved in the "business" -- brothel owners, etc. Or for "employees" of those businesses....

Nor does it provide an answer to working within the current system to receive benefits or other advantages to having a record of filing tax returns.

But absolutely, for those who are part-time, have other jobs for which they are supplementing their income through sex work, or are working independently and are looking after their own retirement funds -- it is nobody's business what they are doing with their bodies. The comparison to other independent professionals doesn't necessarily apply because of the nature of the work.

 

[BIGOZZIE]

ALL Income must be declared, CRA doesn't care if it came from your bedroom , BUT all expenses can be deducted too , Just get one of us accountants to help

 

[google_123]

As a devil's advocate here, I see an alternate argument for independent SPs -- since the government has no business in anyone's bedroom or who they have sex with, I don't see why that shouldn't apply whether or not they accept payment for having sex. I think there is a distinct argument that it is no one else's concern, including the CRA.

Of course, I find it harder to apply that to those involved in the "business" -- brothel owners, etc. Or for "employees" of those businesses....

Nor does it provide an answer to working within the current system to receive benefits or other advantages to having a record of filing tax returns.

But absolutely, for those who are part-time, have other jobs for which they are supplementing their income through sex work, or are working independently and are looking after their own retirement funds -- it is nobody's business what they are doing with their bodies. The comparison to other independent professionals doesn't necessarily apply because of the nature of the work.

That's a bad devils advocate.

They are providing a service, and should be paying the necessary taxes and GST. Melody is 100% right.
Heck, taxes is critical. Has no one ever heard of the Al Capone story? He was only convicted and sent to jail because of tax evasion. So don't eff with the tax-man? I could see parallels with the drug or sex industry. Not fully legalized, but convictions can be made (not so much with sex industry), but avoid taxes, and you can be sent to jail and fined severely. CRA doesn't take lightly to not getting their keep.

 

[Doctor Desire]

That's a bad devils advocate.

They are providing a service, and should be paying the necessary taxes and GST. Melody is 100% right.
Heck, taxes is critical. Has no one ever heard of the Al Capone story? He was only convicted and sent to jail because of tax evasion. So don't eff with the tax-man? I could see parallels with the drug or sex industry. Not fully legalized, but convictions can be made (not so much with sex industry), but avoid taxes, and you can be sent to jail and fined severely. CRA doesn't take lightly to not getting their keep.

They're also comparatively much less competent than the IRS, people have to be pretty sloppy and/or unsophisticated-or really unlucky-to get caught in this country and that goes double for securities fraud. Things have tightened up a little under Harper though I must say.

 

[overdone]

but avoid taxes, and you can be sent to jail and fined severely. CRA doesn't take lightly to not getting their keep.

the chances of you going to jail in Canada over tax related offences is so small and unlikely it isn't even worth mentioning, almost no one gets sentenced to time in prison

this isn't the US

you have to commit a very obvious, systemic, serious fraud and still even then, your chances to be sent to prison in Canada aren't likely

the stats are so small it's almost non-existent

 

[Stunes]

is #1 tips still from jealous friends/neighbours? via anon tip line.

I was at CRA over a decade ago, I only took on 1 file from phone in tips. it was a business that offered no tax if paid by cash. it was a type of business that's impossible to catch. i don't remember where their tips came from, but i wouldn't be surprised if friends and neighbours was up there.
The best story i got was from my supervisor, she said they targeted sp's back in the 80s, after going after a dry cleaner whose business was mainly the sex industry, they assessed sp's based on how many tricks before they changed the sheets. The surprising thing was when it came time to pay, the pimp walked up to the cashier on pender and pulled out a number of assessments and paid all by cash.

 

[InTheBum]

It goes unsaid that many sp's feel immune to the income tax scene, and indeed many get away with it for a long time until one fine day they are caught up with. Such is the scenerio with an SP who used to work in the Vancouver area and made reasonable money from a very few clients. I was a participant in her activity, and realized she was very private and with drawn about her personal affairs, and not aware of her total activity, so had no idea how much she made. Discussing income tax wasnt' the reason we got together. Our relationship lasted six years over which we got to know each other a lot better, and became friends of a sort. I became aware she had not filed her taxes for several years, but now needed to so that she could get a certain government benefit. She cooked up those unpaid years with several false returns and signed and filed them. I was not unaware of the extent of her false claims, but was aware that there were copious bank records, car purchases, expenditures on credit card and so on that denied the truth of her filed claims. Considering that the CCRA can without any notification or search warrant get into your bank accounts, and other records, there was no reason to believe she would not be found out if an investigation ensued. An investigation did ensue, and the only clue she had was that her benefit claim was delayed, once, then again, and finally after close to a year she received a call from the CCRS telling her the car was about to be taken and her bank accounts were frozen. True. She was also told that her activity was criminal and that she could get jail time, and a charge was being prepared. All this over the last month. At the present time, she is beside herself, not aware what to do next and really believing she may go to jail. She might! If convicted she becomes a criminal.
I had at one point advised her not to file false returns, but rather there was an amnesty window under the Income Tax provisions, and that she should use it. Being young, smart and knowing more than those more wise in these ways, she went on a full charge into crime.

Just a word to you SP's out there, got a bank account, got a credit card, got any financial records of substance that give away your income. Collect it all up and claim your income properly. A criminal record can be averted by owning up under the amnesty program, and straightening things out.

The sad part about this Sp in the story, she wanted out of the trade, got herself through school with the help of a few of us, got a certificate, got a good job, and was set to make a new life for herself. Within weeks of this job, she is being dealt with. I hope that in her dealings with the law, that some judge takes a kind look at those facts and sees she had rehabed herself into a life that some of us financed, and probably would not have the chance to cheat further anyway.

Likely many of you will read this and move on, doing nothing. Might be a bad move.

I don't feel sorry for her in the slightest!
Actually, I am glad she got caught! Why should honest, hard-working ppl have to pay more to make up for crooks like this SP!???
They know the score...

 

[Violet]

I've been reading this thread and have been trying to bite my tongue but I just can't resist putting in my 2 cents.

I think this thread contains a lot of conjecture and rumours. It is not like those SPs who do not pay taxes on their income are thinking, "Muwahaha! I make tons of money but I'm not going to pay taxes because I am above the law and want to keep more money for myself while other people who have less of a choice are forced to pay their's!", despite certain posters in this thread appearing to think that is what's going on

C'mon, SPs are not Mr Burns

In my experience (as I have known many SPs) most of the time SPs who don't pay income tax simply do not know how to do that and/or are afraid that it could cause more problems for them (some of the fears are legitimate and some are based on ignorance - not all SPs even know the details of the laws surrounding their work, for example). They also tend not to be the SPs who make a high income. There are really not a lot of resources for SPs to help make it easier for them to file an accurate tax return and proving one's income when you have an unregulated cash business can be very difficult. I knew one SP who was audited only after she began declaring her SP income on her taxes. The justification was supposedly that the CRA felt she was probably declaring less than she actually made since they had some idea about what they thought the "average" income should be for a full-time escort. They had not been investigating her before she told them she was an escort. I'm not going to go into more detail about that since it wasn't me and I think there are already enough second-hand and third-hand stories in this thread, but my point is that she felt like she was punished for being honest and this is an example of a fear some SPs might have. Another is that it can be very unclear what information from one's tax return can be shared and with whom; when we live in a society so judgmental about sex work, not to mention being so heavily affected by the US where it is illegal, it's no wonder privacy is a huge concern for many. A lot of SPs who do report their income in full feel they must do so under the guise of another more socially-accepted business.

So I think people should try to have some sympathy/understanding and not make such negative assumptions. If you really want to encourage people to file tax returns and declare all their income, fear-mongering and insults are not an effective way to go about it. Maybe do something more helpful such as post some links to resources and info for those SPs who do want to file tax returns and find that prospect daunting and scary. (I myself will post some as I find them).

One last thing I want to mention is that to me it seems like ridiculous fear-mongering to imply that clients of an SP who gets investigated for potential unpaid taxes or audited are likely to be investigated. I find that highly unlikely for numerous reasons (I can list them if you want).

 

[google_123]

I agree that jail-time is pretty much non-existent for any individuals that are dishonest on their taxes.

And Violet, great reply but I don't think ignorance can be used as an excuse. And depending on the individual, various things in life can be daunting, but do you ignore them? No.
Like finding a career/job, eventually you will need to tackle the issue. Or the knocking noise in your car, this will have to be addressed. And exactly with regards to tax-free income by providing a service.

Any SP can google, or ask friends or do research themselves.

I really don't care if people try to not pay taxes, it's their problem not mine. Heck, good for them if they can keep on doing it without getting caught. There is a huge blackmarket for tax-free services. It will never change. But to say you didn't file taxes because of ignorance, that's not an excuse. I'm sure not paying taxes is a huge part of the issue. Taxes on 55k income would be near 10k not factoring in C.P.P and E.I. 10k is a nice chunk of change anyone would love to keep.

Anyways, I digress. I believe any SP who hasn't filed a tax, do research or ask their accountants. Or if they plan on keep avoiding filing taxes, to be smart about living within "their means" - otherwise, face some bad consequences.

If I was an SP, having all that cash would be quite scary. I mean, you could put it in a security box in your apartment/house, but what if it get's robbed?
If an SP is your #1 career, how can you buy a house? You would need a trustworthy friend/family member to buy it (and they would have the means to) and give them the cash. But their name is on the deed, so what if things turn sour? There's so much issues surrounding under the table money and could backfire if you aren't diligent about it.

Hmm who knows, maybe I would just consistently buy gold/silver bullion and keep those?

 

[badbadboy]

I agree that jail-time is pretty much non-existent for any individuals that are dishonest on their taxes.

And Violet, great reply but I don't think ignorance can be used as an excuse. And depending on the individual, various things in life can be daunting, but do you ignore them? No.
Like finding a career/job, eventually you will need to tackle the issue. Or the knocking noise in your car, this will have to be addressed. And exactly with regards to tax-free income by providing a service.

Any SP can google, or ask friends or do research themselves.

I really don't care if people try to not pay taxes, it's their problem not mine. Heck, good for them if they can keep on doing it without getting caught. There is a huge blackmarket for tax-free services. It will never change. But to say you didn't file taxes because of ignorance, that's not an excuse. I'm sure not paying taxes is a huge part of the issue. Taxes on 55k income would be near 10k not factoring in C.P.P and E.I. 10k is a nice chunk of change anyone would love to keep.

Anyways, I digress. I believe any SP who hasn't filed a tax, do research or ask their accountants. Or if they plan on keep avoiding filing taxes, to be smart about living within "their means" - otherwise, face some bad consequences.

If I was an SP, having all that cash would be quite scary. I mean, you could put it in a security box in your apartment/house, but what if it get's robbed?
If an SP is your #1 career, how can you buy a house? You would need a trustworthy friend/family member to buy it (and they would have the means to) and give them the cash. But their name is on the deed, so what if things turn sour? There's so much issues surrounding under the table money and could backfire if you aren't diligent about it.

Hmm who knows, maybe I would just consistently buy gold/silver bullion and keep those?

Just an FYI.

I too fell behind on my taxes. I ignored calls from my book keeper and accountant. When I was out chasing more revenue, I let the admin part of my job slip and I paid for it. CRA wasn't after me since I was only a few years behind. My accountant assured me I was still good since he has clients that have not filed in over 10 years. All he did for me was issue my T4's for me "pending further info" and CRA was happy. Obviously, these huge expenditures crimped my pooning style but I am getting back to normal again (thankfully!!).

I know the helplessly you are falling behind feeling quite well. In the end it did take its toll on me. I spent tens of thousands getting caught up with my book keeper and accountant, tens of thousands in back taxes plus penalties and it was a huge weight off my shoulders. They (CRA) are still on my file and I haven't heard a peep from them in a while. My accountant has assured me that the file is being reviewed and is in touch with them about any questions.

The message I am trying to communicate is you can get far behind, you can get caught up and as long as your books are accurate with revenue in and reasonable expenses there is light at the end of the tunnel.