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Woodstock subcontractor fined for failing to file tax returns

Woodstock, Ontario, January 23, 2013 … The Canada Revenue Agency (CRA) announced today that on January 17, 2013, Steven C. Wilson, of Woodstock, pleaded guilty at the Ontario Court of Justice in Woodstock, Ontario, to seven counts of failing to file personal income tax returns. Wilson was fined a total of $7,000. He has 18 months to pay the fine. All outstanding returns have been filed.

Mr. Wilson is employed as a framing subcontractor in the construction industry operating under the trade name Mat‑Con Construction. He failed to file his 2004 to 2010 personal income tax returns. The CRA made several requests for the missing returns before serving Mr. Wilson with notices demanding that the returns be filed. Failure to comply with these notices resulted in charges being laid.

The preceding information was obtained from the court records.

In addition to the fines imposed by the courts, individuals or corporations convicted of failing to file tax returns are still obligated to file the tax returns and pay the full amount of taxes owing, plus interest, as well as any civil penalties that may be assessed by the CRA.

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 Web site 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.

How to Filter QuickBooks Reports for the Data You Want

It’s a great feeling (in a nerdy kind of way) when you run a report in QuickBooks and you get exactly the information you are looking for.

Sometimes the key to that is using the right filter.

Filters in QuickBooks simply restrict the data that appears on your report. This enables you to fine-tune your reporting results, getting to the crux of what you are looking for much faster.

To add or change a filter in a report, you run the report, then click the Customize Report button. Select the Filters tab. Here is the filter control for Transaction List by Customer:

You will see the report’s current filters in the right pane of the dialog box. You can change or delete those if you wish.

If you want to add a new filter, pick the field you want to filter in the drop-down filter list on the left. Commonly used filters are date (a specific date, or a range), name, account, transaction type, class, job, and paid status, but there are many more filterable fields you can pick from.

Once you pick the filter field you want, QuickBooks is pretty smart about how you specify your choice of information from there. For example, if you specify Transaction Type, it will offer you a drop-down list of all the transaction types. You can specify one Transaction type, or you can click “Multiple Transaction Types” and click away on the types you want to see in the report.

If at any point you want to go back to the report’s default filters, just click the Revert button.

When you are ready to apply your filter to the report, click the OK button. QuickBooks will apply your filter to the report results and refresh the screen.

Using filters is great for finding a needle in a haystack…when you know just one or two bits of information about what you are looking for, and don’t want to wade through pages and pages of detail to find it.

Filters are also great to find anomalies in your data…transactions with amounts, dates, or numbers that are outside the normal ranges.

Source: QuickBooks and Your Business Blog 2012

What Are Internal Accounting Controls?

Internal accounting controls govern your financial system. “Management is responsible for developing and maintaining effective internal control,” reports the U.S. Whitehouse Office of Management and Budget, or OMB. Internal controls provide quality assurance and keep an eye on weaknesses in your operation. This allows you to stop problems before they start and keep your business operations running smoothly. The analysis, implementation and design go side by side with a system of control. Accounting controls provide feedback for the system, making sure that everything is working correctly. Without methods of monitoring your procedures, you cannot determine the system’s effectiveness.

Definition

Accounting controls are the methods and procedures a company uses to ensure the accuracy and validity of their financial statements. They do not ensure law and regulatory compliance, but they are designed to help your company comply. The internal controls protect you from abuse and fraud, and make sure all information is received in an accurate and timely manner.

Controls

“The control environment,” according to the OMB, “is the organizational structure and culture created by management and employees to sustain organizational support for effective internal control.” The most effective input for environmental control comes from the human resources department. When management is pushing for a high sales goal at all costs, employees will do the same and internal controls will be ignored, which often leads to financial difficulties.

Risk

“Risk assessment…involves identification and analysis of the risks of material financial misstatement,” states Thomas Ratcliffe in the "Journal of Accountancy". In a small business, risk assessment is often efficient since the management or owner has in-depth knowledge of the company’s workings and therefore knows where the risks are greatest. The main focus is on operations and compliance risks, but risk assessment also considers human error, including improperly entered transactions, lost transactions and transactions on the books that simply didn’t occur.

Systems

According to Ratcliffe, “Information systems identify, capture, process and distribute information supporting the achievement of financial reporting objectives.” Small businesses tend to use small stand-alone information technology--IT--applications to facilitate communication or simply frequent meetings and day-to-day activities where management communicates directly with employees. In larger companies, more formal integrated systems are used because it is impractical for upper level management to speak with all employees.

Monitoring

All internal control systems need to be monitored to assess quality in the system’s performance. This is usually managed through a combination of evaluations and ongoing monitoring activities. In a small business, the executives have first-hand knowledge of expected activities and close involvement with employees and operations allows them to easily identify variances and potential inaccuracies in the reported information or methods.

Procedures

Control procedures are all the methods for implementing environmental controls, risk assessment, monitoring and information communication. Control procedures help to train your personnel so that everyone works the same way. Ratcliffe reports, “Control activities are the policies and procedures that help ensure management directives are carries out.”

Source: Dana Griffin, Demand Media

The Canada Revenue Agency Revokes the Registration of Trinity Divine Outreach Ministries as a Charity

CRA Revokes Trinity Divine Outreach Ministries as a Charity

Ottawa, Ontario, January 11, 2013... The Canada Revenue Agency (CRA) will revoke the registration of Trinity Divine Outreach Ministries, a Scarborough-based charity. The notice of revocation will be published in the Canada Gazette with an effective date of January 12, 2013.

On November 30, 2012, and in accordance with subsection 168(1) of the Income Tax Act, the CRA issued a notice of intention to revoke the registration of Trinity Divine Outreach Ministries as a charity. The letter stated, in part, that:

The Canada Revenue Agency’s (CRA) audit has revealed that the Organization has not complied with the requirements of the Income Tax Act through its participation in a donation arrangement promoted by Innovative Gifting Inc. As a direct result, the Organization issued 40 donation receipts for a total exceeding $1.1 million for shares purportedly traded on the Frankfurt Stock Exchange. It is the view of the CRA that the shares for which the tax receipts were issued did not legally qualify as gifts; that the Organization failed to demonstrate that it had actually received the tax-receipted shares; and that the Organization failed to report the fair market value of the shares purportedly gifted.

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 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.

The CRA is reviewing all tax shelter-related donation arrangements (for example, schemes that typically promise donors a tax receipt worth more than the actual amount of the donation), and it plans to audit every participating charity, promoter, and investor. For more information about tax shelters, go to the CRA’s Tax alert Web page at http://www.cra-arc.gc.ca/alert.

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

Source: Canada Revenue Agency, January 2013

A new breed of Accountants in Canada

January 4, 2013...We are pleased to announce that Chartered Professional Accountants of Canada (CPA Canada) has been established under the Canada Not-for-profit Corporations Act, effective January 1, 2013. As Canada’s newest national accounting body, CPA Canada will support provincial accounting bodies that have unified, and all those that will unify, under the banner of Chartered Professional Accountant.

The 16-member Board of Directors for the new organization has been established under co-chairs Shelley Brown, FCA and Cassandra Dorrington, FCMA. The membership of the board reflects a cross section of perspectives based on regional representation, representation of the legacy designations participating in unification and public input. The Board of Directors will hold its first meeting on January 15, 2013.

One of the first priorities for CPA Canada is the development of the new CPA certification program that will be in place for delivery in parts of Canada by fall 2013, with the first CPA exams offered in the fall of 2015. Another top priority is the integration of CICA and CMA Canada’s operations and employees into CPA Canada.

While CICA and CMA Canada are the two initial members of CPA Canada, they will be joined by provincial bodies (and their members) as they complete their process to become a CPA body and submit applications to join CPA Canada.

Currently, accounting bodies representing over 80% of Canada’s professional accountants are committed to unification of the profession or have already merged under the CPA. Unification has been complete in Quebec for some time and in November 2012, all CAs in Ontario were also issued the CPA designation. As a result, an estimated two of every five professional accountants in Canada are now CPAs.

CPA Canada will work to serve its members by establishing the CPA designation as the pre-eminent, internationally recognized Canadian accounting designation and business credential that best protects and serves the public interest.

The Society of Management Accountants of Canada

Harper Government Provides Continued Tax Relief in 2013

Ottawa, Ontario, January 2, 2013... The Honourable Gail Shea, Minister of National Revenue, today highlighted the tax relief measures that the Harper Government has made available to Canadians through Canada's Economic Action Plan. As Canadians prepare to file their 2012 taxes, they will be able to claim the Family Caregiver Tax Credit for the first time. This new tax relief measure is only one of many introduced since 2006 to keep taxes low for Canadian families and businesses.

"Our Government is committed to supporting hardworking Canadians and their families," said Minister Shea. "We will continue to provide tax relief so that Canadians can keep more of their hard-earned dollars and invest in the economy."

Claiming these credits by filing online and using direct deposit will, in most cases, help individuals receive a refund in as little as eight days, compared to four to six weeks for a paper return.

The Harper Government has introduced or improved a number of tax relief measures for Canadians, including:

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 dependant relatives. This includes, for the first time, infirm spouses, common-law partners, and minor children. Canadians can claim this new, non-refundable tax credit for the first time when filing their 2012 taxes.
The Medical Expense Tax Credit – In order to fully recognize the medical and disability-related costs incurred by caregivers, the Harper Government has removed the $10,000 limit on the amount of eligible expenses a caregiver can claim in respect of financially dependent relatives.
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. More than 550,000 Canadians have taken advantage of the First-Time Home Buyers' Tax Credit.
The Children's Fitness Tax Credit – Canadian families can 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 Hiring Credit for Small Business – Small businesses that meet certain criteria and paid more in Employment Insurance premiums in 2012 over 2011 are eligible for the credit, which puts up to $1,000 back into the accounts of job creators. As of September 30, 2012, over $200 million has been credited to over 500,000 eligible employers.
The Children's Arts Tax Credit – Canadian families can 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 Apprenticeship Job Creation Tax Credit – Provides employers with a tax credit of up to 10 per cent of the eligible wages payable to eligible apprentices. The maximum credit an employer can claim is $2,000 per year for each eligible apprentice. For the 2011 tax year, more than 10,000 employers across Canada used the Apprenticeship Job Creation Tax Credit.
The Tradesperson's Tool Deduction – Allows tradespeople to deduct from their income part of the cost of tools purchased throughout the year.
The Textbook Tax Credit – In order to better recognize the cost of textbooks, this credit provides increased tax relief to students in addition to the Tuition and Education Tax Credits. Students must first claim their credit on their own returns, but may be able to transfer unused amounts to a parent, grandparent, spouse or common-law partner.
The Universal Child Care Benefit (UCCB) – Gives families with young children more choice in child care by providing $100 per month for each child under age six. Canadians received almost $2.7 billion in UCCB payments in 2011.
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 approximately 8.2 million Canadians having opened an account and roughly 2.5 million Canadians contributing the maximum in 2011. Starting on January 1, 2013, Canadians will be able to contribute $5,500 to their TFSAs annually.
The Registered Disability Savings Plan – A long-term savings plan to help Canadians with disabilities and their families save for the future. Since being introduced by the Harper Government in 2008, over 60,000 plans have been opened.
The Canada Employment Credit (CEC) – A 15 per cent non-refundable tax credit on an amount of $1,095 in employment income, the CEC was introduced by the Harper Government to recognize employees' work expenses for items such as home computers, uniforms and supplies.
The Public Transit Tax Credit – Allows Canadians to claim the full amount they spend on eligible transit passes for the year. In 2011, more than 1.6 million Canadians claimed this credit.
The Volunteer Firefighters' Tax Credit – Available to any volunteer firefighter who serves at least 200 hours per year at one or more fire departments in their community. In 2011, more than 37,000 Canadian volunteer firefighters took advantage of this new tax credit.

"Our Government is proud of the tax relief we have put in place over the last number of years to reduce the tax burden on Canadians families and businesses," said Minister Shea. "We encourage all Canadians to claim the credits to which they are entitled when they file their 2012 taxes."

As a direct result of the Harper Government's strong record of providing tax relief to Canadians, the average family of four now receives more than $3,100 in extra tax savings. The federal tax burden for all Canadians is now the lowest it has been in half a century.

For more information on the various tax measures supporting working Canadians and their families, go to http://www.cra-arc.gc.ca/taxsavings/.

The Canada Revenue Agency encourages Canadians to take advantage of its fast, easy, and secure online services to file their tax and benefit returns.

Source: Canada Revenue Agency, January 2013

What will 2013 bring to your business?

What will you do in 2013? When you put "I will" in front of your commitments and goals you are making a promise and declaration and you are more likely to follow through...Here are a few of mine I thought I would share…What are yours?

I will be grateful

I will listen… focus on being present

I will do my best everyday

I will share

I will collaborate

I will compliment people

I will live without regret

I will respect myself at all times

I will forgive and accept myself when I make a mistake

I will read something new every day

I will write in my journals

I will read 40 books this year

I will launch my new book … “G3”

I will speak to over 25,000 people this year

I will listen to self-help audio books in my car … your car is just a University on wheels

I will make those around me feel loved

I will forever pursue happiness regardless of what occurs

I will take responsibility for my actions

I will surround myself with people who inspire me

I will laugh at myself

I will hug my wife and children often

I will help those in need

I will use kind words in difficult situations

I will live with an attitude of gratitude

I will respect others points of view

I will pick myself up when I fall

I will work out every day

I will drink lots of water (and wine)

I will say sorry when I make a mistake and mean it

I will take a break when I need it

I will live every day as if it is the first and the last

I will not be driven by fear

I will find extraordinary in every day

I will enjoy my food

I will be patient

I will get up early

I will teach leaders and learn from leaders through my work

I will read this list every morning

I will not take myself too seriously

I will cry when my emotions tell me to

I will listen to my inner voice

I will focus on the attitude of giving

I will play hockey, golf, tennis, swim and ski regularly in season and stay very active

"Whether you think you can or can't, you are right"-Henry Ford

I read my list every day when I wake up and it jump starts my day … positive affirmations & repetition creates excellent habits and a life of abundance and success.

Make it Straight A's Week & Year!

Seasons Greeting and all the best for 2013!

Tim Cork

President, Straight A’s Inc.

An Insight Marketing Company

416-882-9650

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Are you getting Straight A's in life?

Find out at www.timcork.com

Mississauga auto shop owner fined for failing to file tax returns

Brampton, Ontario, December 27, 2012 … The Canada Revenue Agency (CRA) announced today that on December 21, 2012, Pargat Singh Sandhu, of Mississauga, was fined a total of $3,000 in the Ontario Court of Justice in Brampton, Ontario. He pleaded guilty to three counts of failing to file corporate income tax returns. He has one year to pay the fine. All outstanding returns have been filed.

Mr. Sandhu, as the director for P & P Used Auto Sales Inc., failed to file the 2010 and 2011 corporate income tax returns. As the director for Sunny Auto Tech Inc., he also failed to file the 2011 corporate income tax return.

The preceding information was obtained from the court records.

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

How to Get Ready for a QuickBooks Upgrade

Getting ready to install a newer version of QuickBooks? Take a few minutes to prepare and you might save yourself some grief.

* Pick a good time. The installation will take a little bit of time, as well the data conversion when you first open your company file under the new version. Don’t do this right before your employees will be expecting their payroll to be run, etc. Pick a “down time” so that if there are any complications, it won’t result in an immediate crisis.

* If you are “downgrading as you upgrade” (moving from Enterprise 10 to Premier 2012, for example), coordinate the file conversion in advance to minimize or eliminate downtime.

Set a Restore Point in Windows. It’s just good practice to do this before installing or uninstalling software. If for some reason you need to revert your Windows settings to their pre-install condition, you’ll have that option.

* Check your disk space, and defrag your hard drive. Computers have monstrously big hard drives on them these days, but even so, you can fill them up after a while. If your computer is a bit old, make sure you have several GBs of free space on your computer before installing a new version of QuickBooks. Simply click Start / My Computer, and then right click on your C: local drive to see the properties of your drive. If it has been a long time since you defragmented your hard drive, you can click the Tools tab and see an option to defragment your drive. That can speed everything up, including your install time.

* Test your company data. Successfully upgrading your QuickBooks company file to a higher version will require that the file’s data integrity is good. Upgrading sometimes brings data integrity problems to the surface — problems that are not evident in your day to day use of QuickBooks. The upgrade process will probably verify your company, but you don’t want surprises. So verify and rebuild your company in QuickBooks before upgrading to make sure that the data is in ready condition. If there are problems, your file can be repaired and converted for you.

* Backup your company data. QuickBooks will force you to do this when you first try to open your company under the new version, but it’s important that you do it correctly.

You can back up your data to your local drive or to an online resource like IDrive or Global DataVault where your files are not subject to localized problems on your system or office.

It can be helpful to name your backup something like “pre-upgrade backup” with today’s date as part of the backup name. If something goes awry with the upgrade data process, it’s much better to have a pre-converted backup available than otherwise. It’s also great in those circumstances to know exactly which backup is the last pre-converted one. This backup should be kept around for awhile, even after a successful upgrade.

* Have your install codes ready. Hopefully you will not have any issues registering your product, but if you do, have your software install codes at your fingertips so your time on the phone with support will be as short and painless as possible.

Source: QuickBooks and your Business blog

Temiskaming man and business fined $116,000 for tax evasion

Haileybury, Ontario, December 13, 2012 … The Canada Revenue Agency (CRA) announced today that on December 12, 2012, John S. Wilson and Liskeard Lumber Limited, both of Temiskaming Shores, Ontario, pleaded guilty in the Ontario Court of Justice in Haileybury to three counts of tax evasion. The total fine amounted to $116,349 which represents 75% of the taxes evaded. In addition to the fine, Wilson and Liskeard Lumber Limited also had to pay taxes owing, including interest and civil penalties, totalling $817,609.

The CRA conducted an investigation into the financial affairs of John S. Wilson and Liskeard Lumber Limited for the 2005 and 2006 tax years. During the years under investigation, Wilson, who is also the director and president of Liskeard Lumber Limited, was in the process of building himself a personal residence. Although most of the construction costs associated with the building of his new home were paid by Wilson, in 2006, $275,964 in costs were paid by Liskeard Lumber Limited and later deducted by the lumber company as corporate expenses, resulting in the company evading $57,051 in corporate income taxes for the 2006 taxation year. In addition, Liskeard Lumber Limited also submitted claims of $18,053 for GST Input Tax Credits to which the corporation was not entitled. Wilson, who failed to report the $275,964 worth of expenses paid by the corporation as income on his 2006 income tax return, evaded $80,028 in income taxes.

The preceding information was obtained from the court records.

“Canadian taxpayers must have confidence in the fairness of the tax system,” said Vince Pranjivan, Deputy Assistant Commissioner of the Ontario Region of the Canada Revenue Agency. “To maintain that confidence, the Canada Revenue Agency is determined to hold tax evaders accountable for their actions.”

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

Computer consultant fined for tax evasion

Newmarket, Ontario, December 4, 2012...The Canada Revenue Agency (CRA) announced today that Yusuff Gafur of Richmond Hill pleaded guilty on November 30, 2012, in the Ontario Court of Justice in Newmarket, to one count of fraud over $5,000. He was fined $62,500.

A CRA investigation revealed that Yusuff Gafur, a computer consultant, provided information technology services to a third party during 2007. A review of Mr. Gafur’s personal 2007 income tax return discovered that he failed to declare $253,760 in net income earned from these consulting fees. As a result he evaded $69,629 in federal taxes.

The preceding information was obtained from the court records.

“The Canada Revenue Agency pursues tax evaders to maintain public confidence in the integrity of the tax system,” said Darrell Mahoney, Assistant Commissioner, Ontario Region, of the Canada Revenue Agency. “Canadians have to trust that our self-assessment system is working and that it is fair.”

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.

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

Baden contractor jailed and fined for failing to file tax returns

Kitchener, Ontario, November 30, 2012 … The Canada Revenue Agency (CRA) announced today that on November 28, 2012, Stephen Joseph Glofcheskie, of Baden, pleaded guilty in Ontario Court of Justice in Kitchener to a total of 6 counts of failing to file income tax and GST returns. He was fined $1,000 per count, for a total of $6,000. He also received a 15-day jail sentence. Mr. Glofcheskie has 18 months to pay the fine, and must file the outstanding returns by February 25, 2013.

Mr. Glofcheskie failed to file his 2007 to 2009 personal income tax returns and the 2007 to 2009 GST returns for his business. The CRA made several requests for the missing returns before serving him with notices demanding that the returns be filed. Failure to comply with these notices resulted in charges being laid.

The preceding information was obtained from the court records.

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

CRA Warns Canadians About Tax Protester Schemes

OTTAWA, ONTARIO--(Marketwire - Nov 27, 2012) - The Canada Revenue Agency (CRA) is increasing its efforts to audit and prosecute promoters of tax evasion schemes. The CRA cautions all Canadians to be aware of individuals who try to convince them to not pay their taxes. These individuals, often known as tax protesters, not only fail to report their own earnings, but they also conspire, counsel, and promote these tax schemes to other Canadians. Protect yourself. Know the facts.

Fact: You are not two people for tax purposes.

One of the most common false arguments tax protester promoters use is the natural vs. legal person argument, in which someone defines themselves as two separate people for income tax purposes. They define the natural person as the individual that performs the labour required to earn income, and the legal person as the legal entity that the federal government creates by issuing a social insurance number (SIN). Tax protesters allege that only the legal person has to file an income tax return, and that your earned income belongs to the natural person and is therefore not subject to Canadian income tax.

Taxpayers should be aware that tax protestors who promote intentional tax evasion are seeking a personal financial benefit at the expense of the taxpayer and of all Canadians. Those who avoid paying taxes are taking money that is needed for important investments in schools, hospitals and other vital government services. For more information, see Tax Protesters - Questions and Answers.

Fact: All tax protester arguments have been rejected by the Canadian courts.

Federal and provincial courts have repeatedly and consistently rejected all arguments made in these tax protester schemes. The CRA is committed to administer Canadian tax laws in a fair and equitable manner and has had a 100% success rate in its efforts to bring tax protesters to justice. For more information, go to www.cra.gc.ca/myths.

Fact: Participating in these schemes will have serious financial and legal consequences for you.

Canada has one of the highest rates of compliance in the world. However, individuals who try to evade or avoid taxes by participating in tax evasion schemes will be detected and addressed accordingly. That means you will lose the high fees you paid up front for the bad advice you''ve received from the promoter, and once your tax return is proccessed, the CRA will reassess income tax and interest, and charge penalties. In some cases, you could be prosecuted for tax evasion.

For promoters of these schemes, consequences include all of the above, plus significant fines and possible jail time for counselling others. For more information on convictions, go to www.cra.gc.ca/convictions.

Fact : It''s not too late to correct your mistakes.

If you have participated in a tax evasion scheme, you may be able to make things right. Under the Voluntary Disclosures Program, you may be able to avoid being penalized or prosecuted if you make a full disclosure before any audit or criminal investigation is started. You may only have to pay the taxes owing plus interest, but not the penalties. Taxpayers can correct previous errors and omissions in their tax affairs through that program. For more information, go to www.cra.gc.ca/voluntarydisclosures.

Fact: When it comes to your tax affairs, get independent advice from a reputable professional.

If you have doubts about certain tax arrangements, you should get advice from an independent tax professional, someone who is not connected to the scheme or promoter. If it sounds too good to be true, it probably is.

Stay connected (www.cra.gc.ca/socialmedia)

To receive updates when information is added to our Web site, you can:

- Follow the CRA on Twitter @CanRevAgency.

- Subscribe to a CRA electronic mailing list.

- Add our RSS feeds to your feed reader.

- Visit our YouTube Channel for tax-related videos.

Brampton man fined for failing to file tax returns

Brampton, Ontario, November 22, 2012 … The Canada Revenue Agency (CRA) announced today that on November 21, 2012, Sanjeev Singh, of Brampton, was fined a total of $4,000 in the Ontario Court of Justice in Brampton, Ontario. He pleaded guilty to two counts of failing to file corporate income tax returns and two counts of failing to file personal income tax returns. The fine has since been paid in full. All outstanding returns have been filed.

Mr. Singh, as the director for Alliance Moving, failed to file the 2007 and 2008 corporate income tax returns. He also failed to file his 2008 and 2009 personal income tax returns.

The preceding information was obtained from the court records.

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

Couple jailed and fined almost $1 million for tax evasion and counseling others in scheme

Ottawa, Ontario, November 22, 2012… The Canada Revenue Agency (CRA) announced today that Tania Kovaluk and Lee Williams pleaded guilty in the Superior Court of Justice in Ottawa on November 20, 2012, to multiple counts related to income tax and GST evasion, and counseling others to commit an offence. Kovaluk was sentenced to two years and five months in jail and was fined a total of $887,328 which represents 100% of the total taxes evaded. Her husband, Lee Williams, was sentenced to five years in jail and a fine of $56,756, representing 100% of the taxes evaded. All fines are to be paid in full by June 30, 2014.

A CRA investigation found that from 2003 to 2008, Kovaluk and Williams actively promoted and participated in a scheme in Canada that counseled participants to commit income tax evasion. Williams was an educator of the scheme promoted by Russ Porisky through the Paradigm Education Group. Kovaluk and Williams promoted this scheme through seminars held in Ottawa and Toronto, where they sold educational materials and counseled others to join the Paradigm program, including nine employees working at Kovaluk’s dental practice. The total federal tax evaded through Williams’ teachings was $4.5 million.

Kovaluk implemented the tax evasion scheme in her own tax affairs and knowingly failed to report $2,578,987 in income she earned from 2003 to 2007 while practicing dentistry in Ontario, thereby evading $721,617 in federal taxes. Kovulak reported income earned through her practice as sub-contract expenses and did not report it as personal income.

Additionally, Williams used his wife’s Canadian bank accounts from 2003 to 2008 to deposit cheques made out to him for the business he conducted as an educator of the Paradigm Educational Group. Williams did not report the income he earned, or remit the proper amount of GST in relation to his business venture as an educator of the scheme. In doing so, Williams evaded paying $39,643 in personal income tax and $17,113 in GST. In addition to spending large amounts of money on personal luxury items such as art, jewelry, vacations and personal home furnishings, Kovaluk and Williams, built two villas in Costa Rica for a total cost of $621,585 USD, purchased gold through off-shore accounts and Canadian banks of at least $578,195, purchased gold in Canada with cash totalling $201,143 and built a home in Ottawa that cost at least $974,250.

The preceding information was obtained from the court records.

The Canada Revenue Agency warns all Canadians to beware of individuals that try to convince you that Canadians do not have to pay tax on the income they earn. These individuals, also known as tax protesters, not only fail to report their own earnings, but they also conspire, counsel, and promote these tax schemes. Canadian courts have repeatedly and consistently rejected all arguments made in these tax protester schemes. For those involved in tax protester schemes, the CRA will reassess income tax, and charge interest and penalties. In some cases, these individuals will be prosecuted for tax evasion. If convicted, they could face significant fines and possibly jail time. More information on tax protester schemes is available at www.cra.gc.ca/alert.

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

Toronto man fined $15,000 for failing to file GST/HST returns

Toronto, Ontario, October 24, 2012 … The Canada Revenue Agency (CRA) announced today that on October 19, 2012, Alexander Lau of Toronto, Ontario, was fined $15,000 in the Ontario Court of Justice in Toronto, after pleading guilty to 15 counts of failing to file GST/HST returns. He was fined $1,000 for each year he failed to file, totaling $15,000. He has 24 months to pay the fine.

Mr. Lau failed to file GST/HST returns for quarterly periods beginning January 1, 1995, to March 31, 2009. All outstanding returns have since been filed.

The preceding information was obtained from the court records.

In addition to any fines imposed by the courts, individuals or corporations convicted of failing to file tax returns are still obligated to file the tax returns and pay the full amount of taxes owing, plus interest, as well as any civil penalties that may be assessed by the CRA.

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

The underground economy hurts small businesses

The underground economy (UE) makes it hard for law-abiding Canadian businesses to compete because it gives an unfair, illegal advantage to those who cheat the tax system.

The Canada Revenue Agency (CRA) is taking action to combat the UE to ensure a fair tax system for all.

What is the Underground Economy?

The UE is any legal business activity that is unreported or under-reported for tax purposes. This can include failing to file returns or omitting an entire business activity, also referred to as “moonlighting” or working “off the books.” The UE also includes under-reporting income received, such as “skimming” a portion of business income, bartering, or failing to report a portion of employment income such as tips and gratuities. There are many other names used to describe the UE, including the shadow economy, the cash economy and the unobserved economy.

Why is the UE harmful to businesses?

The UE has a negative impact on businesses, consumers, and the Canadian tax base because it undermines the competitiveness of businesses that follow the law. Businesses that offer lower prices because of their failure to comply with Canada’s tax laws gain an unfair advantage. Tax-cheating employers also gain an unfair competitive advantage by paying wages in cash, under the table, in order to avoid paying the employer portion of employment insurance premiums and Canada Pension Plan contributions. Their employees are also deprived of benefits from these important social programs.

Why is the UE harmful to consumers?

Those who avoid paying taxes are taking money that is needed for important investments in schools, hospitals, and other vital government services.

Doing cash transactions with no written contract or receipt to support a claim makes it difficult for consumers to seek recourse and offers no protection to the consumer. Those who take part in the UE are doing so at the expense of the public. The UE also undermines the public’s perception of the fairness of tax laws. Tax cheating places an unfair burden on law-abiding businesses and individual taxpayers and it jeopardizes the integrity of Canada’s tax base.

What are the consequences of participating in UE activities as a business?

The CRA is committed to administering Canadian tax laws in a fair and equitable manner. When taxpayers do not comply with tax laws, the CRA takes action.

Paying taxes is the law. Evading taxes is illegal and can result in criminal convictions leading to fines and jail time in addition to any taxes, interest, and penalties owing under the Income Tax Act and the Excise Tax Act. For more information about criminal convictions, go to http://www.cra-arc.gc.ca/nwsrm/cnvctns/menu-eng.html.

What is the CRA doing to address the underground economy?

The CRA has a variety of tools to detect those who do not report all of their income, including on-site visits by officers, information obtained from third-party reporting, leads from other audit files, informants, and indications that taxpayers are living beyond the level of income they report.

Identifying and addressing industry sectors where the UE has become widespread, such as construction, home renovation, retail trade, and accommodation and food services will continue to be a priority for the CRA.

The CRA uses a mix of outreach, education, communications, and compliance actions, including audits and criminal investigations, to combat the UE. In doing so, the CRA collaborates with other federal departments, provincial and territorial governments, professional organizations, and key industry groups.

It’s not too late to correct your mistakes.

If you haven’t declared all of your sales and income in the past, you may be able to correct your information using the CRA’s Voluntary Disclosures Program (VDP). If you make a full disclosure before any audit or criminal investigation is started, you may only have to pay the taxes owing plus interest, but not the penalties. The CRA wants Canadians to have the information and tools they need to meet their tax obligations voluntarily. For more information about the VDP, go to www.cra.gc.ca/voluntarydisclosures.

Canada continues to have one of the highest rates of compliance in the world. The CRA is committed to combatting the UE to ensure a fair tax system. For more information on the UE, go to www.cra.gc.ca/undergroundeconomy.

Brampton tax preparer guilty of tax fraud scheme

Brampton, Ontario, October 18, 2012...The Canada Revenue Agency (CRA) announced today that Samuel Yeboah Tanoh of Brampton pleaded guilty on October 12, 2012, in the Ontario Court of Justice in Brampton, to one count of fraud over $5,000. He was fined $6,789.

A CRA investigation revealed that Samuel Yeboah Tanoh, operating as director of Trans Xpress Cash Inc., managed a tax preparation business in the Toronto area. Mr. Tanoh included false charitable donation claims in the amount of $13,579 on his clients’ 2005 and 2006 personal income tax returns. On occasion, he provided his clients with false donation receipts to substantiate false claims.

The information in this news release was obtained from the court records.

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

Bookkeeping Systems - 5 Essential Components

Bookkeeping Systems: 5 Essential Components

The Proper Foundation

Five components are essential in designing the proper accounting system for your home based business. These components form the foundation upon which you will make informed business decisions. They are your:

Filing System: so you can lay your hands on documents when you need them
Transactional Recording System: some examples include QuickBooks or Excel
Chart of Accounts: which shows what the numbers do
Processes and Procedures: who does what and how they do it
Reporting Package: structure used to run your business

Your Bookkeeping System Should Serve You

It’s important to understand that your accounting system will change as your business grows.

Your size, your business structure, your industry, your internal control requirements means your system needs to be considered carefully. It needs to be designed so it is easy to use and in such a way that you can understand it even if you don’t have bookkeeping training. In other words, your accounting system needs to serve you just as well as your bookkeeper.

To serve you well, it needs to:

Help you make sound business decisions by answering questions like: "Are you charging enough to cover your expenses? What is your profit margin? Are you spending too much?"
Track criteria agreed upon in bank lending arrangements
Aid in the efficient and accurate preparation of all your compliance tax returns (sales, payroll, worker compensation and income taxes)
Ensure you can pass a tax audit with flying colours by tracking what is required by law and having a system to retain your support documentation

Source: Bookkeeping Essentials Blog

House arrest and $10,000 fine for not filing tax returns

North Bay, Ontario, October 9, 2012 … A Mattawa, Ontario woman was fined $10 000 after pleading guilty to 10 counts of failing to file personal, corporate and GST returns. The fine is in addition to an earlier sentence of eight months of house arrest.

On February 1, 2012, Michelle Lahay-Doucette was sentenced in the Ontario Court of Justice in North Bay to eight months of house arrest in relation to her having pleaded guilty in May and November of 2011, to three counts of failing to file personal income tax returns for 2007 to 2009. As the Director of 1594665 Ontario Ltd, Lahay-Doucette also pleaded guilty to not filing the 2007 to 2010 corporate returns as well as three counts related to not filing GST returns. The CRA subsequently appealed the February 1, 2012 sentencing, and on September 27, 2012, she was fined $10,000 in addition to the eight months of house arrest.

The preceding information was obtained from the court records.

When taxpayers or corporations are convicted of failing to file tax returns, in addition to any fines imposed by the courts, they are still obligated to file the tax return and pay the full amount of taxes owing, plus interest, as well as any civil penalties that may be assessed by the CRA.

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

Etobicoke man fined for failing to file tax returns

Brampton, Ontario, September 25, 2012 … The Canada Revenue Agency (CRA) announced today that on September 20, 2012, Dariusz Parafiniuk, of Etobicoke, was fined a total of $3,000 in the Ontario Court of Justice in Brampton, Ontario. He pleaded guilty to one count of failing to file a personal income tax return and two counts of failing to file corporate income tax returns. He has one year to pay the fine. All outstanding returns have been filed.

Mr. Parafiniuk as the director for 1333656 Ontario Inc., failed to file the 2008 and 2009 corporate income tax returns. He also failed to file his 2009 personal income tax return.

The preceding information was obtained from the court records.

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

What is the QuickBooks Audit Trail For?

Do you ever wonder if a transaction got changed? When it was actually entered? What its history is? Who made an entry or a change? The Audit Trail report is handy for those situations. You access the Audit Trail report through Reports / Accountant & Taxes / Audit Trail.

The default sort order for the report is by user, transaction type, and transaction date. In this Audit Trail report for a sample company, you see transactions entered or changed by the Admin:

The third entry down shows when the date of a previously entered invoice was changed. You can tell because of the boldfacing on the date.

Here’s another section of the same report:

Here you can see that changes were made to the terms of the invoice, and in the second grouping, the amount. If you could see the next column to the right, you’d see the particular G/L account line item that was changed. By clicking the Customize Report button, you can change what columns of information you want on the report. The Audit Trail report only shows changes that could possibly have accounting implications.

This is great in the following situations:

Tracking down “lost” transactions
Determining who entered what, when
Accounting audits (obviously!) and accounting forensics
Evaluating effectiveness of existing accounting controls

The Audit Trail function in QuickBooks used to be an optional one — you could turn it on or off. But it has been “on” all the time now over the last few releases of QuickBooks.

Source: QuickBooks and Your Business Blog, 2011

Maple resident fined $2,000 for failing to file GST/HST returns

Newmarket, Ontario, September 7, 2012 … The Canada Revenue Agency (CRA) announced today that on September 5, 2012, Bernardino Ianeiro of Maple, Ontario, was fined $2,000 in the Ontario Court of Justice in Newmarket, Ontario, after pleading guilty to two counts of failing to file GST/HST returns. He was fined $1,000 per count, for a total of $2,000. He has 60 days to pay the fine.

Mr. Ianeiro failed to file two annual GST/HST returns for the periods ending December 31, 1998 and December 31, 2000. All outstanding returns have since been filed.

The preceding information was obtained from the court records.

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

Bolton man fined for failing to file tax returns

Brampton, Ontario, August 21, 2012 … The Canada Revenue Agency (CRA) announced today that on August 17, 2012, Jim Payne, of Bolton, was fined a total of $12,000 in the Ontario Court of Justice in Brampton. Ontario. He pleaded guilty to five counts of failing to file personal income tax returns and seven counts of failing to file corporate income tax returns. He was given four months to pay the fine. All outstanding returns have been filed.

Mr. Payne failed to file his 2006 to 2010 personal income tax returns. In addition he failed to file the 2006 to 2008 corporate income tax returns for Pashin Holdings Inc., a real estate development company as well as the 2007 to 2010 corporate income tax returns for V2R Group Inc. which performs general contract consulting.

The preceding information was obtained from the court records.

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

File Organization - A Portable Document Filing System

File organization is key to running your business efficiently and ensuring you get all the tax deductions you are entitled to.

This portable document filing system is perfect for you, if you operate a part of your business from your vehicle. Incorporate it into your home office organization and small business accounting system to manage your business receipts efficiently.

This portable document filing system will create streamlined file organization so you have all your information available at your fingertips. This simple filing system will help you get your business receipts organized ... and keep them organized effortlessly. Audits should go smoothly and your accountant will love you at year-end too!

File Organization - Here's What You Need

Buy a letter size plastic file caddy with a handle (so you can tote it about easily)
Keep a pen, a pencil (for writing in winter time), some paper clips and a letter opener in your caddy.
Place eight hanging folders with tabs inside the caddy.
Sort eighteen file folders or hanging box file folders behind each section as directed below. The color suggestion for each section is listed in brackets below. (File Organization Suggestion: You may want to use hanging box file folders instead of regular file folders so that you don't lose any small bits of paper as you take the folders in and out of the file caddy to do your data entry.)
One plastic sleeve for your Chart of Accounts.
Label the eight tabs. Behind each tab, place the suggested file folders.

Expense Receipts (Red). This section is sorted by payment type.

Chart of Accounts: so you can code your invoices and expense receipts before you file them. Place it in the plastic sleeve just behind the tab for easy access.
Banking Transactions/Receipts including your personal draws here along with other bank transactions.
Credit Cards Transactions/Receipts
Cash Transactions/Receipts
Expense Reports/Receipts for purchases made from your personal funds. Keep some blank expense report forms filed here for easy access.
Unpaid Bills

Permanent Records (Purple)

Purchase and Sale of Capital Assets
Financial Loans/Insurance/Contracts

Monthly Financial Reporting Package (Manilla)

Government Paperwork (Yellow): There is no need to sort it here. You will do that later in your office.

Payroll (Blue): There is no need to sort it here. You will do that later in your office.

Statements for Reconciliation (Orange): This section is sorted by type of reconciliation

Bank Statements (including deposit slips)
Credit Card Statements (including payment slips)
Vendor Statements

Revenues (Green): If you have more than one sales account, use your Chart of Accounts to code the invoices/receipts before you file them.

Customer Invoices
Sales Receipts
Outstanding Customer Invoices
Money Collected/Received: the money will get deposited after it has been processed in the office. If it is for an outstanding invoice, pull the invoice and clip the payment to it before slipping it into the folder.

Mail: if it is not delivered to your home and you have to drive to go pick it up.

File Organization - Here's What To Do

For this file organization system to work, you must keep the file caddy in your vehicle with you.

As you go through the day, instead of chucking receipts onto the floor of your vehicle … or stashing them in the glove compartment, side door pocket, or purse … take a second to code the expense receipt or sales invoice using your Chart of Accounts ... then open the caddy and place the receipt in the appropriate file folder.

Do the same thing when you open your mail … drop it into the appropriate file in your caddy as soon as you open it. If the mail doesn't pertain to bookkeeping, then leave it in the Mail section to deal with later back in your office.

If you hand write sales receipts (you receive payment on the spot) or invoices (the customer will pay you later), put your copy in the alloted file folder. These documents should always be on pre-numbered forms.

The caddy now holds all of your unprocessed paperwork … nicely organized, coded for data processing, and easy to locate with no effort.

Each night, write up your bank deposit slip for the money you received that day so you can deposit it in the bank the following day. Your cash flow is important so don't put this task off.

Once a week or month (the timing depends on your routine and the amount of transactions you have), bring your caddy into your office, and process each piece of paper you collected. Make sure you stamp it with an “entered” or “posted” stamp so you know you’ve entered the work into your books.

You may want to consider moving to paperless technology to process your work. You will need to organize your paperless workflow a bit differently. If you decide to scan, you still need to keep your original receipts in the event of a CRA audit.

After you have processed your work, file it into the office filing cabinet in the appropriate spot. Your file organization becomes effortless and habitual if you use it every day of the year.

Please don't keep more than one month's receipts in the caddy. Make sure you file the processed documents in your home office. The reason is to prevent loss of your source documents due to a car accident or vehicle theft.

Here's Your Home Office Organization

For your home office organization, your office filing cabinet should be organized as follows:

Financial Reports (manilla file folders) - will hold all of your monthly reporting packages … except the current one which is in your caddy so that you can reference it throughout the month if you need to.

Permanent File (purple file folders) - will hold copies of all of your processed capital transactions along with all of your financial and contractual obligations.

Government Correspondence (yellow file folders) - will hold all your forms/reports that have been submitted to any level of government. Have a file folder for each type of tax.

Bank Statements (orange file folders) - will hold all of your reconciled bank statements, reconciliation reports, and cheque images. If you have more than one bank account, you can have a folder for each one OR you can place all of them together into monthly file folders ... one folder for each month in the year.

Credit Card Statements (orange file folders) - will hold all of your reconciled credit card statements and reconciliation reports. If you have more than one credit card, you can have a folder for each one OR you can place all of them together into monthly file folders ... one folder for each month in the year.

Payroll (blue file folders) - will hold all of your processed payroll information by employee name ... include copies of the pay cheques.

Sales Transactions (green file folders) - will hold all your paidcustomer invoices in numerical order. If you also have processed sales receipts, they should have their own folder as well. Any outstanding invoices will stay in your caddy in the Outstanding Customer Invoices folder. They should have an "Entered" stamp to show you have already input them into your accounts receivable. You may also want to print out a new aged Accounts Receivable report to put in the caddy.

Expenses (red file folders) - will hold all your processed expense receipts, one file folder for each month OR filed alphabetically by vendor … your choice … it depends how often you have to look up invoices. Personally, as a small business doesn’t have a lot of transactions, I prefer to file by month as it is quicker to file. I can always look up the details of an invoice by vendor in my accounting system without touching a piece of paper.

Paperclip all your small receipts together so they don't get lost, or consider slipping them into a small envelope before you place them into the file folder.
Any unpaid bills will stay in your caddy in the Unpaid Bills folder. They should have an "Entered" stamp to show you have already input them into your accounts payable. You may also want to print out a new aged Accounts Payable report to put in the caddy.

If you ever need to pull out a piece of paper work for some reason, have blanks forms at the front of your filing cabinet that you can fill out (i) what was taken, (ii) who took it and (iii) when. Put the slip in the same spot where the paperwork was removed. When you file it back, remove the reminder form. Your file organization remains intact.

If you are going paperless, then part of your processing routine will include scanning all your paperwork into your computer once it has been processed. Your home office organization is simple ... keep two years of files in your office - current year in the higher drawers and prior year in the lower drawers.

At the end of each year:

Remove and box the prior year file drawers . Place it in storage.
Move your current year files (excluding the Permanent File, leave it in your current filing drawer) into the prior year file drawers.
Setup the current year file drawers.

This way your office space stays clean and tidy … and you don’t run out of office filing cabinet space.

Benefits of File Organization in the Long Run

If you are audited, you just have to pull out your boxed file … everything the auditor needs should be there … as long as you haven’t gone in and taken out pieces of paper and not returned them.

The auditor will love your file organization! Just remember, never let the auditor take original source documents, always make a copy of anything needed for their files.

If your accountant prepares your financial statements and tax return at year-end, it will be easy to copy the documents required, leaving the rest in the prior year filing drawer.

If you have gone paperless, you can put the required information/reports on a CD for your accountant to use.

Your accountant will love your file organization! Just remember, never let your accountant take original source documents, always make a copy of anything needed for their files.

This portable document filing system is a simple and effective way to keep organized all year long.

Source: The Bookeeeping-Essentials Blog