The Canada Revenue Agency (CRA) has in recent months launched a series of cross-country CRA audit pilot projects that have been targeting middle-income earners such as couriers , individuals selling used vehicles for cash through classified advertisement websites (e.g. Craigslists, Kijiji, Autotrader), and restaurant servers. The CRA audit group will generally put together audit projects to target activities or groups that they believe are non-compliant with the tax law and, therefore, problematic. Such CRA audits will change from year to year and can impose tremendous strain on those individuals or groups involved.
This recent blitz stands in contrast to the CRA’s other audit projects that have generally targeted high net worth individuals (net worth greater than $50 million) and offshore tax evasion.
Individuals often underestimate the seriousness of non-compliance with the Income Tax Act. In the most extreme case, failure to file a tax return as required by the Act can lead to prosecution pursuant to section 238. Those who are then convicted can potentially be fined $25,000 and imprisoned for up to a year.
It is highly advisable that you seek professional legal advice if contacted by the CRA as the personal and financial repercussions of these investigations can be significant.
TaxChambers LLP is collaborating with Andersen Global® in Canada.