Tax evasion is a serious criminal offence and can result in imprisonment. Yet, many taxpayers continue to underreport income or claim erroneous tax deductions. If you’re worried that you may be in this situation, there are options available that thankfully don’t involve prison. As a Chartered Accountant in Toronto, I will share these options with you.
I’m just cheating a little
Firstly, there’s no such thing as just a “little cheating.”
For example, business owners will often expense trips made abroad, usually to somewhere warm, by claiming that the purpose of the trip was business related. The Canada Revenue Agency can’t be easily fooled and likely won’t buy your reasoning. The expense has to demonstrate a clear business purpose.
Therefore, even a little cheating can result in significant fines, interest and penalties.
Coming Clean – “Chartered Accountant Toronto Says This Is Best Option”
If you’re worried about the consequences of getting caught upon a tax audit for over-claiming expenses or under reporting income, it’s better to come clean. The reason is simple: If you get caught upon a tax audit, the CRA won’t be very forgiving and can impose significant penalties and interest charges. They can even seize your bank accounts and business assets.
Voluntary Disclosure Program
So how do you come clean without getting yourself into trouble with the CRA? The answer is to file under the voluntary disclosure program (VDP). Under the VDP, a taxpayer can come forth (even anonymously) to the CRA with the amount of income that has been underreported. By doing so, the CRA will waive any penalties and provide interest relief on tax balances owing.
As a Chartered Accountant in Toronto, I have helped many clients come clean under the VDP.
Another option is to amend the tax returns with the correct information. This option is less desirable than the VDP, because it does not necessarily provide for interest relief nor will penalties be always be waived. However, some auditors may be forgiving and will cancel any penalties that would otherwise apply.
For additional information, please contact Allan Madan at 905-268-0150. For more tax tips, please see http://madanca.com/services/10-best-tax-tips
