Real Estate

Ian Young explains why the CRA is toothless against global-income cheats

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  • Sep 2nd, 2016 10:27 am
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Ian Young explains why the CRA is toothless against global-income cheats

As always, Ian brings in-depth analysis to the table for those in Vancouver. But his recent slew of articles have confirmed many gut feelings.

Canada’s tax agency is ‘out for blood’: not from global-income cheats, but from its leaking auditors

He confirms:

  1. There is no way to verify sources of income coming out of mainland China;
  2. There is no cooperation between CRA and Citizenship and Immigration Canada; and
  3. Trying to catch global income cheats via "lifestyle" audits is a losing business for the CRA.

In the July leak, the CRA claimed they redeployed 50 FTEs to income auditing. But it's pretty obvious if these were effective, the CRA would have done it a long time ago. I mentioned this before in other posts, but it is one of the reasons why many Chinese choose Vancouver vs. San Francisco or Los Angeles. Some new immigrant friends had implied the CRA was toothless, but this article basically has it coming from the CRA's mouth.
13 replies
Sr. Member
Nov 13, 2007
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Toronto
CRA should offer some kind of reward for people with tips. And advertise this to make it easy to report.

There are tons of people cheating. Either living with 'a husband' but claim to be single mom, accepting welfare and benefit. And tons of people working under the table, never pay income tax. And some who already left the country but still accepting universal child care benefit happily.

It's very annoying when they brag about it like they are the smartest person.
I pay the taxes. So they can cheat the system. Shouldn't these people be hiding while I stand proud and tall?
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Jul 10, 2007
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Unfortunately, when all the foreign money came pouring in to Vancouver and Toronto, politicians only saw the $$$$. No one stepped up to the plate to try and stem the tide. It's too late already.
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Dec 5, 2015
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Spinner wrote:
Aug 25th, 2016 8:37 pm
As always, Ian brings in-depth analysis to the table for those in Vancouver. But his recent slew of articles have confirmed many gut feelings.

Canada’s tax agency is ‘out for blood’: not from global-income cheats, but from its leaking auditors

He confirms:

  1. There is no way to verify sources of income coming out of mainland China;
  2. There is no cooperation between CRA and Citizenship and Immigration Canada; and
  3. Trying to catch global income cheats via "lifestyle" audits is a losing business for the CRA.

In the July leak, the CRA claimed they redeployed 50 FTEs to income auditing. But it's pretty obvious if these were effective, the CRA would have done it a long time ago. I mentioned this before in other posts, but it is one of the reasons why many Chinese choose Vancouver vs. San Francisco or Los Angeles. Some new immigrant friends had implied the CRA was toothless, but this article basically has it coming from the CRA's mouth.
Has nothing to do with China...and 20 years? Really? China money was flowing into Canada before they even developed? Lol

Crux of it is CRA can't go after the big tax cheats like ones with offshore accounts in Caribbean, Europe or contractors because they have no way to access it and life style audits are not worth it vs funds recovered

Enforcement action and audits is rightfully based on a Cost benefit analysis rationale and it's not economically justifiable to go after the big tax cheats when it's easier and much more efficient from tax recovery aspect to go after the low hanging fruit

"They said audits are seen primarily as a means of raising revenue, as opposed to enforcing the law, executing moral rightness or acting as a deterrent to future cheating. A lengthy-but-principled investigation into an obstructive foreign-earning cheat wasn’t something applauded by bosses – it was to be avoided by both managers and auditors. “Like the plague,” said the retired auditor.

The current auditor cited the recently exposed KPMG case (in which self-confessed cheating clients of the world accountancy giant were granted secret amnesty by the CRA if they handed over their back taxes and some interest) as demonstrating that the agency took the easiest path to revenue, regardless of the ethical implications."

"“CRA is given a set amount of money by Ottawa and they expect a return on their money,” the auditor said. “We’re the only department that makes money, and foreign-linked audits take a lot of time. "

Seems like CRA is only department that actually ours efficiency and uses a RoI model to deploy resources and thank God for that

It's a lot more efficient and easier to get money from people who make incorrect deductions, over contribute to tfsa and rrsp than do audits on the wealthy who have setup offshore accounts, numbered companies and foreign income be it from the US or UK or virgin island and etc.....
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its the same everywhere, tax agencies cannot check/go to other countries to catch people.......people always get away with it, advantage to 3rd world countries bcaz no cooperation.
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transitguy1 wrote:
Aug 28th, 2016 10:54 am
its the same everywhere, tax agencies cannot check/go to other countries to catch people.......people always get away with it, advantage to 3rd world countries bcaz no cooperation.
Wrong...it's not 3rd world countries ...lol you think 3rd world countries have the banking stability and presences of the big Euro and UK banks to facilitate weather sheltering offshore?

Cayman islands, uk , Iceland, Bahamas etc aren't third world countries...third world countries don't have the infrastructure and stability required for offshore wealth sheltering and developed financial institutions

you need big banking giants like HSBC, UBS and etc to facilitate it..and it's not in 3rd world countries that it happens...rich people won't put their money in third world countries

Rich people have predominantly If not exclusively with exception of past decade been from n.america/Europe...so of course they use banks from Western nations to shelter their wealth like back in the day in Swiss accounts with UBS until they cracks down and they shifted to the British and US virgin islands and Bahamas , Iceland etc more nowadays

Nobody not even people from places like China put their wealth in 3rd world countries due to instability, and lack of banking infrastructure
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golfcraze wrote:
Aug 26th, 2016 12:24 pm
Unfortunately, when all the foreign money came pouring in to Vancouver and Toronto, politicians only saw the $$$$. No one stepped up to the plate to try and stem the tide. It's too late already.
Bingo.
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transitguy1 wrote:
Aug 28th, 2016 10:54 am
its the same everywhere, tax agencies cannot check/go to other countries to catch people.......people always get away with it, advantage to 3rd world countries bcaz no cooperation.
No it isn't. The U.S. has federal law (FATCA) in place to require overseas reports for bank accounts over $50,000. In exchange, China gets reciprocal information from U.S. banks. The IRS of course, is at least an order of magnitude more powerful than the CRA.
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Aug 27, 2012
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superping wrote:
Aug 26th, 2016 8:17 am
CRA should offer some kind of reward for people with tips. And advertise this to make it easy to report.
You mean like this program that they already have: http://www.cra-arc.gc.ca/gncy/cmplnc/ot ... u-eng.html

"the award amount will be between 5% and 15%, of the federal tax collected related to the international tax non-compliance "
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golfcraze wrote:
Aug 26th, 2016 12:24 pm
Unfortunately, when all the foreign money came pouring in to Vancouver and Toronto, politicians only saw the $$$$. No one stepped up to the plate to try and stem the tide. It's too late already.
Indeed. People really under estimate just how long this problem will go on for. The affordability issues alone could reverberate for generations. That's to say nothing of how this will affect municipalities and local neighborhoods.

Back to the topic though, the fact that the CRA will chase you or I down for $1000 worth of medical deductions but allow this sort of rampant fraud to go on unchecked is absurd. Their mandate is supposedly revenue collection which is why they prefer collection to prison time for tax cheats. But they have been purposely ignoring this for years out of a fear of being called racist apparently. A government agency with a mandate and legislature backing it up. It makes you wonder at what level they are being influenced by outside parties.
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Redmask wrote:
Sep 1st, 2016 12:00 pm
golfcraze wrote:
Aug 26th, 2016 12:24 pm
Unfortunately, when all the foreign money came pouring in to Vancouver and Toronto, politicians only saw the $$$$. No one stepped up to the plate to try and stem the tide. It's too late already.
Indeed. People really under estimate just how long this problem will go on for. The affordability issues alone could reverberate for generations. That's to say nothing of how this will affect municipalities and local neighborhoods.

Back to the topic though, the fact that the CRA will chase you or I down for $1000 worth of medical deductions but allow this sort of rampant fraud to go on unchecked is absurd. Their mandate is supposedly revenue collection which is why they prefer collection to prison time for tax cheats. But they have been purposely ignoring this for years out of a fear of being called racist apparently. A government agency with a mandate and legislature backing it up. It makes you wonder at what level they are being influenced by outside parties.
Wrong wrong wrong...where's this racist thing you talk about? How can we be racist to UK/US/Europe which is where majority of tax evasion occurs?

And they haven't gone after the big fish simply due to return on investment...their mandate is revenue collection and most efficient means..it's cheaper and easier to get 1k from you than to track clients who use KPMG and HSBC to hide money in Swiss accounts or Caribbean
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GrandePike wrote:
Sep 1st, 2016 12:39 pm
Redmask wrote:
Sep 1st, 2016 12:00 pm
golfcraze wrote:
Aug 26th, 2016 12:24 pm
Unfortunately, when all the foreign money came pouring in to Vancouver and Toronto, politicians only saw the $$$$. No one stepped up to the plate to try and stem the tide. It's too late already.
Indeed. People really under estimate just how long this problem will go on for. The affordability issues alone could reverberate for generations. That's to say nothing of how this will affect municipalities and local neighborhoods.

Back to the topic though, the fact that the CRA will chase you or I down for $1000 worth of medical deductions but allow this sort of rampant fraud to go on unchecked is absurd. Their mandate is supposedly revenue collection which is why they prefer collection to prison time for tax cheats. But they have been purposely ignoring this for years out of a fear of being called racist apparently. A government agency with a mandate and legislature backing it up. It makes you wonder at what level they are being influenced by outside parties.
Wrong wrong wrong...where's this racist thing you talk about? How can we be racist to UK/US/Europe which is where majority of tax evasion occurs?
In the leaked CRA memos about Vancouver real estate which is what I'm addressing and the topic in the quote I responded to. I'm not addressing all offshore tax cheats, that's a larger subject. I also disagree with your second point, they have a lot of tools at their disposal to be more proactive about tax evasion from foreign speculators, particularly with regard to real estate.
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Apr 22, 2014
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GrandePike wrote:
Aug 27th, 2016 10:00 pm
Spinner wrote:
Aug 25th, 2016 8:37 pm
As always, Ian brings in-depth analysis to the table for those in Vancouver. But his recent slew of articles have confirmed many gut feelings.

Canada’s tax agency is ‘out for blood’: not from global-income cheats, but from its leaking auditors

He confirms:

  1. There is no way to verify sources of income coming out of mainland China;
  2. There is no cooperation between CRA and Citizenship and Immigration Canada; and
  3. Trying to catch global income cheats via "lifestyle" audits is a losing business for the CRA.

In the July leak, the CRA claimed they redeployed 50 FTEs to income auditing. But it's pretty obvious if these were effective, the CRA would have done it a long time ago. I mentioned this before in other posts, but it is one of the reasons why many Chinese choose Vancouver vs. San Francisco or Los Angeles. Some new immigrant friends had implied the CRA was toothless, but this article basically has it coming from the CRA's mouth.
Has nothing to do with China...and 20 years? Really? China money was flowing into Canada before they even developed? Lol

Crux of it is CRA can't go after the big tax cheats like ones with offshore accounts in Caribbean, Europe or contractors because they have no way to access it and life style audits are not worth it vs funds recovered

Enforcement action and audits is rightfully based on a Cost benefit analysis rationale and it's not economically justifiable to go after the big tax cheats when it's easier and much more efficient from tax recovery aspect to go after the low hanging fruit

"They said audits are seen primarily as a means of raising revenue, as opposed to enforcing the law, executing moral rightness or acting as a deterrent to future cheating. A lengthy-but-principled investigation into an obstructive foreign-earning cheat wasn’t something applauded by bosses – it was to be avoided by both managers and auditors. “Like the plague,” said the retired auditor.

The current auditor cited the recently exposed KPMG case (in which self-confessed cheating clients of the world accountancy giant were granted secret amnesty by the CRA if they handed over their back taxes and some interest) as demonstrating that the agency took the easiest path to revenue, regardless of the ethical implications."

"“CRA is given a set amount of money by Ottawa and they expect a return on their money,” the auditor said. “We’re the only department that makes money, and foreign-linked audits take a lot of time. "

Seems like CRA is only department that actually ours efficiency and uses a RoI model to deploy resources and thank God for that

It's a lot more efficient and easier to get money from people who make incorrect deductions, over contribute to tfsa and rrsp than do audits on the wealthy who have setup offshore accounts, numbered companies and foreign income be it from the US or UK or virgin island and etc.....
deflect and project.
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