Tuesday, September 24, 2013

Tax preparers fined $73,906 for tax evasion

Brampton, Ontario, September 24, 2013… The Canada Revenue Agency (CRA) announced today that on September 18, 2013, Manjula Makkar and Varun Makkar, of Brampton, Ontario, pleaded guilty in the Ontario Court of Justice in Brampton to one count each of income tax evasion under the Income Tax Act. Manjula Makkar was fined $65,104 while Varun Makkar was fined $8,802, representing 50% of the total income taxes evaded.

The Court heard that the Makkars, who are related, provided tax preparation services through a partnership named Makkar and Makkar Tax Services (MMTS), operating in Brampton, Ontario. The CRA determined that the Makkars earned income from the partnership which was not reported on their personal income tax returns for the 2008, 2009 and 2010 tax years. The Court also heard that Manjula Makkar failed to report additional income earned outside the MMTS partnership through her delivery of tax preparation, bookkeeping and accounting services during the same three year period. In total, Manjula Makkar failed to report $531,457 in income, thereby evading $130,208 in taxes, while Varun Makkar failed to report $120,600 in income, thereby evading $17,606 in income taxes.

The Court levied the minimum 50% fine after learning that the Makkars cooperated fully with the CRA throughout the investigation. As well, the Makkars have already paid approximately 100% of the amounts they would have owed if they had properly filed their returns.

The preceding information was obtained from the court records.

“Tax evasion costs all of us,” said Vince Pranjivan, acting Assistant Commissioner of the Canada Revenue Agency, Ontario Region. “The job of our investigators and auditors is to make sure that all Canadians pay the tax they owe.”

When taxpayers are convicted of income tax and GST evasion, they still must repay the full amount of taxes owing, plus interest and any civil penalties that may be assessed by the CRA. On summary conviction, the court may fine an individual 50% to 200% of the tax evaded, and sentence them to a jail term of up to two years. In cases of gross negligence, the Income Tax Act also allows the CRA to assess a penalty of up to 50% of the unpaid tax or the improperly claimed benefit.

Taxpayers who have not filed returns for previous years, or who have not reported all of their income, can still voluntarily correct their tax affairs. They may not be penalized or prosecuted if they make a valid disclosure before they become aware of any compliance action being initiated by the CRA against them. These taxpayers may only have to pay the taxes owing, plus interest. More information on the Voluntary Disclosures Program (VDP) can be found on the CRA's website at www.cra.gc.ca/voluntarydisclosures.

Further information on convictions can also be found in the Media Room on the CRA website at
www.cra.gc.ca/convictions.

Canada Revenue Agency

This a a reproduction copy of an official work that is published by the Government of Canada and that the reproduction has not been produced in affiliation with, or with the endorsement of the Government of Canada.

Monday, September 23, 2013

Interest rates for the fourth calendar quarter

Ottawa, Ontario, September 23, 2013... The Canada Revenue Agency (CRA) today announced the prescribed annual interest rates that will apply to any amounts owed to the CRA and to any amounts the CRA owes to individuals and corporations. These rates are calculated quarterly in accordance with applicable legislation and will be in effect from October 1, 2013 to December 31, 2013. All interest rates have increased by 1% since last quarter, except for the rate for corporate taxpayers pertaining to interest on loans and indebtedness.

Income tax
  • The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance premiums will be 6%.
  • The interest rate to be paid on corporate taxpayers overpayments will be 2%.
  • The interest rate to be paid on non-corporate taxpayers overpayments will be 4%.
  • The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 2%.
  • The interest rate used to calculate corporate taxpayers loans or indebtedness will be 5.02%.
Other taxes, duties, or charges
The interest rates on overdue and overpaid remittances are as follows:
Tax, duty, or other chargesOverdue remittancesOverpaid remittances – Corporate taxpayersOverpaid remittances – Non corporate taxpayers
Goods and Services Tax (GST) 6% 2% 4%
Harmonized Sales Tax (HST) 6% 2% 4%
Air Travellers Security Charge 6% 2% 4%
Excise Tax (non GST/HST) 6% 2% 4%
Excise Duty except Brewer Licensees (amounts payable after June 30, 2003)
6% 2% 4%
Excise Duty except Brewer Licensees (amounts payable before July 1, 2003)
4% N/A N/A
Excise Duty (Brewer Licensees) 4% N/A N/A
Softwood Lumber Products Export Charge 6% 2% 4%

For information on the prescribed interest rates of other calendar quarters, visit www.cra.gc.ca/interestrates.

Canada Revenue Agency

This a a reproduction copy of an official work that is published by the Government of Canada and that the reproduction has not been produced in affiliation with, or with the endorsement of the Government of Canada. 

Friday, September 20, 2013

The Canada Revenue Agency revokes the registration of the ISNA Development Foundation as a charity

Ottawa, Ontario, September 20, 2013. . . The Canada Revenue Agency (CRA) will revoke the registration of the ISNA Development Foundation, a Mississauga-based charity. The notice of revocation will be published in the Canada Gazette with an effective date of September 21, 2013.

On August 20, 2013, and in accordance with subsection 168(1) of the Income Tax Act, the CRA issued a notice of intention to revoke the registration of the ISNA Development Foundation as a charity. The letter stated, in part, that:

“On the basis of our audit, we have concluded that the Organization has: ceased to comply with the requirements of the Act for its continued registration; failed to comply with or contravened any of sections 230 to 231.5 of the Act; issued a receipt for a gift or donation otherwise than in accordance with the Act and its Regulations; and failed to file an information return as required under the Act.

Our analysis of the information obtained during the course of the audit has led the CRA to believe that the Organization had entered into a funding arrangement with the Kashmiri Canadian Council/Kashmiri Relief Fund of Canada (KCC/KRFC), non-qualified donees under the Act, with the ultimate goal of sending the raised funds to a Pakistan-based non-governmental organization named the Relief Organization for Kashmiri Muslims (ROKM) without maintaining direction and control. Under the arrangement, KCC/KRFC raised funds for “relief work” in Kashmir, and the Organization supplied official donation receipts to the donors and disbursed over $281,696 to ROKM, either directly, or via KCC/KRFC.

Our research indicates that ROKM is the charitable arm of Jamaat-e-Islami, a political organization that actively contests the legitimacy of India’s governance over the state of Jammu and Kashmir, including reportedly through the activities of its armed wing Hizbul Mujahideen. Hizbul Mujahideen is listed as a terrorist entity by the Council of the European Union and is declared a banned terrorist organization by the Government of India, Ministry of Home Affairs, under the Unlawful Activities (Prevention) Act of 1967.

Given the commonalities in directorship between ROKM and Jamaat-e-Islami, concerns exist that the Organization’s resources may have been used to support the political efforts of Jamaat-e-Islami and/or its armed wing, Hizbul Mujahideen.”

The Government of Canada has made it clear that it will not tolerate the abuse of the registration system for charities to provide any means of support to terrorism. Canada’s public policy recognizes that the tax advantages of charitable registration should not be extended to organizations whose resources may have been made available, knowingly or unknowingly, to a terrorist entity, whether such financing is direct or indirect through organizations that claim to have nominally “charitable,” social, or cultural aims.

A copy of the notice of intention to revoke and other letters relating to the grounds for revocation are available to the public on request, in the language they were originally written, by calling 1‑800‑267‑2384.

An organization that has had its registration as a charity revoked can no longer issue donation receipts for income tax purposes and is no longer a qualified donee under the Income Tax Act. The organization is no longer exempt from income tax, unless it qualifies as a non-profit organization, and it may be subject to a tax equal to the full value of its remaining assets.

Registered charities perform valuable work in our communities, and Canadians support this work in many ways. The CRA regulates these organizations through the Income Tax Act and is committed to ensuring that they operate in compliance with the law. When a registered charity is found not to comply with its legal obligations, the CRA may revoke its registration under the Income Tax Act.

For more information about the registration of Canadian charities, go to the CRA’s Charities and Giving Web page at www.cra.gc.ca/charities.

Canada Revenue Agency

This a a reproduction copy of an official work that is published by the Government of Canada and that the reproduction has not been produced in affiliation with, or with the endorsement of the Government of Canada. 

Trio fined for obtaining fraudulent tax refunds

Burlington, Ontario, September 20, 2013 … The Canada Revenue Agency (CRA) announced today that Jonathan Sherwood, Joan Callon and Jeffrey Phinney, formerly of Burlington, Ontario, were sentenced on September 17, 2013, in the Ontario Court of Justice in Burlington, Ontario to a total fine of $43,432. Mr. Sherwood, Ms. Callon and Mr. Phinney pleaded guilty on November 30, 2012 to one count each under the Income Tax Act of willfully obtaining a refund to which the person is not entitled or obtaining or claiming a refund or credit under this Act in an amount that is greater than the amount to which the person or other person is entitled.

Ms. Callon was sentenced to a fine of $15,386, or 150% of the total refund she received from filing the false return. As well, Mr. Sherwood was fined $14,802, or 130% of his unwarranted refund, while Mr. Phinney was fined $13,244, or 100% of his unwarranted refund. The fines are in addition to any taxes owing from the reassessed returns. They have 18 months to pay the fines.

A CRA investigation revealed that Ms. Callon, Mr. Sherwood and Mr. Phinney each knowingly filed their 2006 income tax return which included fraudulent T4 information. The fraudulent information created a refund balance on each return. Mr. Sherwood responded to initial inquiries from the CRA about his return by providing a false T4 slip to support the amounts reported on his 2006 return. He initially told the CRA investigator that the employment earnings on the fraudulent T4 return was from consulting work. He then claimed that he obtained the fraudulent T4 slip as a kickback in compensation for renovation work he had completed. The unwarranted refund was deposited in a bank account which he shared with Ms. Callon, who also filed her 2006 return with fraudulent T4 information, creating a refund balance. Mr. Phinney allowed a third party to file his 2006 T1 return with false information, also obtained from a fraudulent T4 slip. He deposited the resulting refund into his bank account.

Taxpayers who claim false expenses, credits or rebates from the government are subject to serious consequences. They are liable not only for corrections to their tax returns and payment of the full amount of tax owing, but also to penalties and interest. In addition, if convicted of tax evasion, the court may fine them up to 200% of the tax evaded and sentence them for up to a five-year jail term.

Taxpayers who have not filed returns for previous years, or who have not reported all of their income, can still voluntarily correct their tax affairs. They may not be penalized or prosecuted if they make a valid disclosure before they become aware of any compliance action being initiated by the CRA against them. These taxpayers may only have to pay the taxes owing, plus interest. More information on the Voluntary Disclosures Program (VDP) can be found on the CRA's website at www.cra.gc.ca/voluntarydisclosures.

Further information on convictions can also be found in the Media Room on the CRA website at www.cra.gc.ca/convictions

Canada Revenue Agency

This a a reproduction copy of an official work that is published by the Government of Canada and that the reproduction has not been produced in affiliation with, or with the endorsement of the Government of Canada.

Tuesday, September 17, 2013

Deal with your tax affairs – online!

Did you know?

If you need to do business with the Canada Revenue Agency (CRA), why not do it when it’s convenient for you?

Need to file your return? Make a payment? Change your address? You can do all this and more from the comfort of your home, thanks to the CRA’s secure and easy-to-use electronic services.

Need to manage your business’ tax affairs? No problem: you can do that online too.
Canadians are catching on to the advantages of managing their taxes and benefits online – it just makes sense.

Using the CRA’s NETFILE service allows Canadians to file an individual income tax return over the Internet quickly and easily, at their convenience, from wherever they may be in the world. When combined with direct deposit, tax filers can receive their income tax refund in as little as eight days.

Taxpayers and businesses can use their financial institution’s online or telephone banking services to make payments to the CRA. As well, the CRA’s My Payment service, through participating financial institutions, allows for one or more payments to be made in one simple online transaction.

The CRA realizes that some Canadians will not be able to take full advantage of online services. That’s why the CRA will continue to maintain a variety of options to allow Canadians to file and pay their taxes, receive their benefits, and take advantage of tax credits. CRA telephone enquiries agents are available to assist you.

Canada Revenue Agency

This a a reproduction copy of an official work that is published by the Government of Canada and that the reproduction has not been produced in affiliation with, or with the endorsement of the Government of Canada.

Wednesday, September 11, 2013

Harper Government cracks down on businesses using electronic sales suppression software to hide sales

Edmonton, Alberta, September 11, 2013 The Honourable Kerry-Lynne D. Findlay, Minister of National Revenue, P.C., Q.C., M.P., was joined by the Honourable Laurie Hawn, Member of Parliament for Edmonton Centre, and Garth Whyte of the Canadian Restaurant and Foodservices Association (CRFA) today to announce new measures to combat the underground economy and the use of electronic suppression of sales (ESS) software.

“Our Government is committed to cracking down those who attempt to cheat the system and ensuring a level playing field for honest businesses,” said Minister Findlay. “All Canadians must meet their tax obligations. Businesses that use ESS software to underreport their revenues and avoid paying taxes are on notice. We will continue to support Canadians who work hard, play by the rules, and pay their taxes.”

Taxpayers are required to maintain adequate books and records as well as all of their electronic data files. ESS software (commonly known as “zapper” software) selectively deletes or modifies sales transactions in point-of-sale systems (for example, electronic cash registers) and business accounting systems, leaving no record of the original transaction. The use of ESS software undermines the competitiveness of businesses that abide by the rules, as it offers an unfair advantage to those who fail to comply with Canada’s tax laws.

“When some businesses cheat, we all lose. These new measures are an important piece of our Government’s plan to help Canada continue on its path to economic growth,” added M.P. Hawn.

Economic Action Plan 2013 proposed new administrative monetary penalties and criminal offences under both the Excise Tax Act and Income Tax Act to specifically address software that can suppress sales records. These measures will strengthen existing penalties and offences for making false statements or omissions under each of the Excise Tax Act and the Income Tax Act, as well as existing sanctions under the Criminal Code.
Under the new proposals, businesses that use, possess, or acquire ESS software will face monetary penalties of $5,000 on a first infraction, and $50,000 on any subsequent infraction. Anyone who manufactures, develops, sells, possesses for sale, offers for sale or otherwise makes available ESS software will face monetary penalties of $10,000 on a first infraction, and $100,000 on any subsequent infraction.

Businesses or others found guilty of a criminal offence of using, possessing, acquiring, manufacturing, developing, selling, offering for sale, or otherwise making available ESS software will face:
  • on summary conviction, a fine of not less than $10,000 and not more than $500,000, or imprisonment for a term of not more than two years, or both; or
  • on conviction by indictment, a fine of not less than $50,000 and not more than $1 million or imprisonment for a term of not more than five years, or both.
“The Canadian Restaurant and Foodservices Association welcomes this step, which penalizes the underground economy, not the above-ground economy,” said Garth Whyte, CRFA president and CEO. “These measures appropriately target the producers, installers, and users of sales-distorting software, while supporting the competitiveness of Canada’s hard-working small business community, among them 81,000 restaurants, the vast majority of which pay their taxes and operate in full transparency.”

Canada Revenue Agency

This a a reproduction copy of an official work that is published by the Government of Canada and that the reproduction has not been produced in affiliation with, or with the endorsement of the Government of Canada.

Tuesday, September 10, 2013

Harper Government encourages Canadians to support their communities and take full advantage of tax benefits

Saskatoon, Saskatchewan, September 10, 2013....The Honourable Kerry-Lynne D. Findlay, P.C., Q.C., M.P., Minister of National Revenue, accompanied by Kelly Block, Member of Parliament for Saskatoon—Rosetown—Biggar, today encouraged Canadians to support their local communities and take advantage of the Harper Government’s tax relief measures, including the Volunteer Firefighters’ Tax Credit, and the newly introduced First-time Donor’s Super Credit.

"Our Government wants to foster and promote Canada’s culture of giving and we hope that these tax relief measures will encourage Canadians, especially youth, to get involved in giving to great charities in Canada,” said Minister Findlay. “These tax credits show our Government’s commitment to supporting hard-working Canadians, helping them save money wherever they can.”

Volunteer firefighters play an essential role in their communities, ensuring the health and safety of their fellow citizens. In 2011, the Harper Government introduced the Volunteer Firefighters’ Tax Credit to recognize their dedication and service to Canadian communities.

The Volunteer Firefighters’ Tax Credit is a non-refundable tax credit available to certain volunteer firefighters who serve at least 200 hours per year at one or more fire departments beginning on January 1, 2011. Services that make up those 200 hours include responding to and being on call for firefighting and other emergencies, attending meetings at the fire department, and taking courses in preventing and putting out fires. When eligible firefighters claim the credit, they can reduce the amount of income tax they have to pay by as much as $450.

In response to the Tax Incentives for Charitable Giving in Canada, a report of the Standing Committee on Finance, the First-time Donor’s Super Credit was introduced as part of Economic Action Plan 2013 to encourage new donors to give to charity. This new credit makes donating to a charity more attractive for Canadians who are making donations for the first time.

“I am pleased that our Government has introduced these tax relief measures, which will support those who are volunteer firefighters and make giving to charities in our community more attractive to those who have been considering a donation,” said M.P. Block. “We will continue to find ways to support generous individuals who take the time and make the effort to support their communities.”

Donations made by first-time donors after March 20, 2013, now qualify for the First-time Donor’s Super Credit. Individuals qualify as first-time donors if neither they nor their spouse or common-law partner has claimed the charitable donation tax credit since 2007. The First-time Donor’s Super Credit provides an extra 25% credit in addition to the Charitable Donation Tax Credit. This means that donors can get a 40% federal credit for monetary donations of $200 or less, and a 54% federal credit for the portion of donations that are over $200, up to $1,000. This is in addition to the provincial credit.

The Volunteer Firefighters’ Tax Credit and the First-time Donor’s Super Credit are part of the Harper Government’s strong record of providing tax relief to Canadians. Thanks to these efforts the average family of four now receives more than $3,200 annually in extra tax savings. The federal tax burden for all Canadians is now the lowest it’s been in half a century.

For more information about the Volunteer Firefighters’ Tax Credit, go to www.cra.gc.ca/firefighter

More information about the First-time Donor’s Super Credit is available on the Canada Revenue Agency (CRA) Web site or the Government of Canada’s Economic Action Plan Web site.

Donate wisely by researching registered Canadian charities using the CRA’s Charities Listings before you donate. For more information about donating to charities, go to www.cra.gc.ca/donors.

Canada Revenue Agency

This a a reproduction copy of an official work that is published by the Government of Canada and that the reproduction has not been produced in affiliation with, or with the endorsement of the Government of Canada.

Monday, September 9, 2013

The Harper Government’s Low-Tax Plan is Benefitting Canadian Families

Winnipeg, Manitoba, September 9, 2013 The Honourable Kerry‑Lynne D. Findlay, P.C., Q.C., M.P., Minister of National Revenue, and M.P. Joyce Bateman (Winnipeg South Centre) today highlighted the benefits of the family tax measures introduced by the Harper Government, including the Children’s Arts and Fitness Tax Credits, the First-Time Home Buyers’ Tax Credit, the Family Caregiver Tax Credit, and the Tax-Free Savings Account.

“Our Government is committed to supporting Canadian families by keeping taxes low,” said Minister Findlay. “These tax relief measures continue to help Canadian families keep more of their hard-earned money.”

The Harper Government’s strong record of providing tax relief to Canadians is delivering real results. The average family of four now saves more than $3,200 annually in taxes, including an average of $1,000 from reducing the Goods and Services Tax (GST) rate by two percentage points. 

These tax relief measures include:
  • The Children's Fitness Tax Credit allows eligible Canadian families to claim a 15 per cent non-refundable tax credit on an amount up to $500 for the cost of registering a child in eligible physical activity programs, such as soccer or hockey teams. For the 2011 tax year, over 1.5 million families took advantage of the Children's Fitness Tax Credit.
  • The Children's Arts Tax Credit allows eligible Canadian families to claim a 15 per cent non-refundable tax credit on an amount up to $500 for the cost of registering a child in eligible artistic, cultural, or other programs, such as music lessons or tutoring. Over 460,000 families claimed the Children's Arts Tax Credit in the 2011 tax year.
  • The Family Caregiver Tax Credit is a 15 per cent non-refundable tax credit on an amount of $2,000 that provides tax relief to caregivers of infirm dependent relatives. This includes, for the first time, infirm spouses, common-law partners, and minor children. Canadians were able to claim this new, non-refundable tax credit for the first time when filing their 2012 taxes.
  • The First-Time Home Buyers’ Tax Credit - Assists first-time home buyers with the costs associated with the purchase of a home, such as legal fees and other costs. Canadians can claim $5,000 for the purchase of a qualifying home.
  • The Tax Free Savings Account (TFSA) – Allows all Canadians to earn tax-free income through a range of investment products. TFSAs have become increasingly popular, with more than 9 million Canadians having opened an account and roughly 2.5 million Canadians contributing the maximum in 2011. Canadians can contribute $5,500 to their TFSAs annually.
“I’m happy that so many families across the country and right here in Winnipeg are benefitting from the tax savings provided by these family credits,” said MP Bateman. “I am convinced that more families will take advantage of these important programs in 2013. Our Government will continue to support hard-working Canadians.”

To find out if your child’s program is eligible for the Children’s Fitness Tax Credit, go to www.cra.gc.ca/fitness. For the Children’s Arts Tax Credit, go to www.cra.gc.ca/artscredit.

To find out if you are eligible for the First-Time Home Buyers’ Tax Credit, go to www.cra.gc.ca/hbtc.

For more information on the Family Caregiver Tax Credit, go to www.cra.gc.ca/familycaregiver.

To find out how to open a Tax-Free Savings Account, go to www.cra.gc.ca/tfsa.

The Canada Revenue Agency encourages Canadians to sign up for direct deposit, since the Government of Canada will phase out cheques by April 2016. Sign up now at www.cra.gc.ca/directdeposit.

Canada Revenue Agency

This a a reproduction copy of an official work that is published by the Government of Canada and that the reproduction has not been produced in affiliation with, or with the endorsement of the Government of Canada.

Friday, September 6, 2013

Harper Government announces new measure to reduce red tape for small businesses

Whitehorse, Yukon, September 6, 2013… The Honourable Kerry-Lynne D. Findlay, P.C., Q.C., M.P., Minister of National Revenue, and Ryan Leef, Member of Parliament for Whitehorse, today announced a new online mail service for Canadian small businesses that will help streamline their interactions with the Canada Revenue Agency (CRA). The new mail service uses the CRA’s secure online service, My Business Account, and is just one of many CRA initiatives to reduce red tape for Canada’s job creators.

“Our Government continues to cut red tape for businesses so they can focus on what they do best: creating jobs and generating wealth in communities across Canada,” said Minister Findlay. “This initiative will allow businesses to eliminate unnecessary paperwork and introduces time-saving measures for managing CRA correspondence. This is one more step toward faster, more efficient, and less costly paperless transactions with the CRA.”

The CRA’s new online mail service is faster and easier than managing paper correspondence from the CRA. By signing up, Canadian businesses can receive their notices of assessment and reassessment, and some letters online for the accounts they select such as, the corporation income tax and goods and services tax/harmonized sales tax accounts. Since the service saves time and reduces the volume of paper, it is a cost-effective way to do business.

“Cutting red tape and making the regulatory process as simple as possible are important steps our Government is taking to help Canadian businesses thrive, particularly during global economic uncertainty,” said Mr. Leef. “We will continue to stand up for small and medium sized businesses and will remain focused on jobs, economic growth and long-term prosperity.”

The CRA uses the same high level of security financial institutions use to protect your banking information. Signing up for online services can ease the paperwork burden of doing business, and help you do more in less time.

To find out more about services for businesses, go to the CRA’s one-stop shop for businesses: www.cra.gc.ca/businessonline.

To learn more about the CRA’s commitment to red tape reduction, go to www.cra.gc.ca/redtapereduction.

Canada Revenue Agency

This a a reproduction copy of an official work that is published by the Government of Canada and that the reproduction has not been produced in affiliation with, or with the endorsement of the Government of Canada.