Personal Finance

Back taxes - any limit to how far back the government can come for you?

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  • Dec 7th, 2006 2:51 pm
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Deal Addict
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Oct 25, 2001
2525 posts
63 upvotes
Oakville

Back taxes - any limit to how far back the government can come for you?

A friend received a letter from the government attesting to taxes owed. However, unlike any letter I've seen, this was not strictly income taxes but it was for Social Assistance/Benefits overpayment. (She believes that she may have received UI for some months and there was an overlap when she finally secured a job - thus, collecting UI while still working.)

There were no details as to how much, nor what year. When she called the number even they could not provide full details, although they did say it was for 1996-1997. Surprisingly, they also said they weren't going to ask for interest.

Maybe I'm too cynical, but is this for real or some sort of elaborate scam? How could it take the government 10 years to track this down, offer an excuse that they had a hard time tracking this person down (even though she filed taxes every year and in fact lived at that address for a continuous 7 years after) and not provide full details because "that's in another department"?
17 replies
Deal Addict
Aug 28, 2002
1680 posts
no limit. they can come after you at any time if they can prove you owe them money
Deal Addict
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Feb 22, 2005
2431 posts
4 upvotes
Sonic Temple
correct....and remember....they don't mind spending thousands of dollars trying to claw back hundreds because after all, it's not their money they are spending...it's yours.
Jr. Member
Dec 31, 2001
110 posts
Ottawa
Audiogenic wrote:
Dec 5th, 2006 6:53 pm
correct....and remember....they don't mind spending thousands of dollars trying to claw back hundreds because after all, it's not their money they are spending...it's yours.
LOL, yes so comforting. :evil: Too bad no one remembers this as they contemplate voting or not. Who's got my government credit card? :razz: :lol:
Deal Fanatic
Feb 1, 2006
9099 posts
215 upvotes
You're only required to keep tax records for 7 years, so how could they ask you to prove or defend anything beyond that period? I've never heard of it.

The CRA has to chase down even small indiscretions, to mainatin the integrity of the tax system, which is an honesty based one. If everyone knew they could get away with small cheating because they didn't bother with it, then everyone would do it.
Deal Addict
Sep 19, 2005
2834 posts
38 upvotes
7yrs is the magic number I have been told,, after that I don'[t think there going to get much out of you

challenge it
Deal Addict
Aug 28, 2002
1680 posts
anyone have a link to prove they can only get you for 7 years?

I learned it was for an unlimited duration of time.
Deal Fanatic
Feb 1, 2006
9099 posts
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eliteblaze wrote:
Dec 6th, 2006 12:50 pm
anyone have a link to prove they can only get you for 7 years?

I learned it was for an unlimited duration of time.
'How long should you keep your income tax records?
Generally, you should keep your supporting documents for six years. Have the receipts and documentation to support your claims ready in case you are selected for review'

http://www.cra-arc.gc.ca/tax/individual ... enu-e.html


'26. Under the Act, books, records, and their related accounts and source documents, other than those referred to in paragraphs 27 and 28 below, have to be kept for a minimum of six years from the end of the last tax year to which they relate'

http://www.cra-arc.gc.ca/E/pub/tp/ic78- ... #P86_12099
Deal Fanatic
Feb 1, 2006
9099 posts
215 upvotes
eliteblaze wrote:
Dec 6th, 2006 2:31 pm
that's how long you "should" keep them. Not how long they "can" get you for.

"There is no stated time limit on the tax audit process."
"Revenue Canada can audit your tax return without time limit if they think you've committed tax evasion or fraud. "

http://sbinfocanada.about.com/cs/taxinfo/f/audit.htm
I've been working in accounting for many years, including lots of dealings with the CRA, in practice, they never go back more than seven years.

You left out this quote from your own link;

'Realistically, though, one would assume that a tax audit would not go back further than six fiscal years, as the CRA requires that business records be kept for six years'

How can they go back further than that if they don't require you to keep records for that long? The 'unlimited' option is just to keep the door open should an exceptional case arise that they could use it.
Deal Addict
Sep 19, 2005
2834 posts
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Bullseye wrote:
Dec 6th, 2006 2:39 pm
I've been working in accounting for many years, including lots of dealings with the CRA, in practice, they never go back more than seven years.

You left out this quote from your own link;

'Realistically, though, one would assume that a tax audit would not go back further than six fiscal years, as the CRA requires that business records be kept for six years'

How can they go back further than that if they don't require you to keep records for that long? The 'unlimited' option is just to keep the door open should an exceptional case arise that they could use it.
exactly!!! what records will there be to audit when there are none?,,,, since your only required to keep them as stated above 6yrs,,,,
Deal Addict
Aug 28, 2002
1680 posts
Well I'd hope you weren't involve in fraud that would invoke CRA to go back 7 years. Trust me tax evasion investigator don't go like hmm... that filing drawers has files that are more tha 7 years old, nope can't look at those!

I take that as realistically you won't go as business for 7 years before getting caught but if it does then they can get you for all of it (and I know cases where they do, hmm you've been doing this since interception, you admit it's wrong, okay repay us for all twelve years). And the tax filing isn't in dispute so it doens't matter. You say filed forUI January, you filed w/another gov agency stating you were employed and paid employment taxes. You're lying to one of them. Clear fraud. There are no financial records in dispute. I say it'd be a prima facie looking case.

Otherwise there's ways to easily easily exploit the 7 year rule whe nyo uuse tax shelters and deferments.
Deal Expert
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Jun 14, 2003
23140 posts
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Bullseye wrote:
Dec 6th, 2006 2:39 pm
I've been working in accounting for many years, including lots of dealings with the CRA, in practice, they never go back more than seven years.

You left out this quote from your own link;

'Realistically, though, one would assume that a tax audit would not go back further than six fiscal years, as the CRA requires that business records be kept for six years'

How can they go back further than that if they don't require you to keep records for that long? The 'unlimited' option is just to keep the door open should an exceptional case arise that they could use it.
They can go back more than 7 years. Since you don't have the record anymore, they assume what you provided was right. They can still get you based on that. For example, you report your business to have $100K sales while in seperate report you file GST for the sales of $1K.
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