Small Business Corporations
Do you own a corporation? We can help. We have defended many corporations in tax audits. Common issues include deductibility of expenditures- CRA is primarily concerned whether various expenditures were actually incurred for business purposes.
Multi-Million Dollar Tax Audits
We have been able to win multi-million-dollar tax audits- ie. we have had CRA agree to reduce seven-figure adjustments by Tax Auditors down to $0. Looking for the next big one! Sometimes its not possible to get the assessment down to nil because of complex issues- in these situations we have been able to negotiate settlements. We had a case where the client’s assessment was in the $millions and after negotiations, we received a settlement offer from CRA where the client only had to pay under $250k. This offer reduced the clients situation from bankruptcy/losing $millions in assets to a debt level the client could manage within a year!
Commissioned Salespersons' Audits
We have defended many Realtors, Mortgage Brokers, Stock Brokers, Investment Advisors, Financial Planners, and Insurance Reps in audits of their business expenses. Typical issues include keeping proper books and records, motor vehicle use, home office vs paying desk fees at the Realty office, payments to spouses and children, travel, referral fees, etc. Fortunately, we have been able to reduce six-figure adjustments by Auditors, on multiple cases, down to nil through professional presentation of arguments. We have been able to obtain refunds for the client by finding additional deductions during our review.
Independent Contractor vs EmployeeThis is an interesting issue that arises many times when a small business incorporates and no planning is conducted in regards to how the owner(s) are to be compensated. CRA becomes concerned when people are being paid without taxes/pensions deducted. They can question and even make a ruling that you or a family member are an employee of a related corporation. This is a situation that even leaves many Accountants confused and frustrated.
Business / Rental Losses Denied
Do you have a rental property that is continually losing money? Have you been involved in a multi-level marketing business? Have you started a new business that needs you to nurture it during the growth phase before it takes off? The taxman is concerned about these issues because they can generate refunds and lower taxes. These are all issues we are intimately comfortable with.
We have been involved in defending a Group Audit of an association of independent contractors in the construction industry. The Association hired our firm to represent the contractors in the Group Audit of over 100 subcontractors. Ultimately, the tax department closed the audit without any taxes owing by any of the contractors. Liens on Property After an Audit- Prior to Appeal The CRA’s Collections Dept put a lien on our client’s home just prior to the completion date on selling the property. However, we had already filed a Notice of Objection to the Appeals Dept so that we could present a case relating to why the Auditor’s adjustments should be reversed. This lien prevented the Conveyancing Lawyer from transferring the property to the buyer. The Collector demanded our client direct the Lawyer to pay off the tax debt instead of using the equity in the home as downpayment on their next home. Our client feared losing the property they were about to purchase because of CRA’s actions. Fortunately, we were able to have the lien removed without the client having to pay CRA a single penny, even though the tax debt was owed. We found technicalities in the Income Tax Act that justified the removal of the lien.
Many times when taxpayers don’t file tax returns after being requested to file, CRA prepares tax returns for them. These assessments are prepared for the purpose of creating a tax debt much greater than what the taxpayer should legitimately owe. We have resolved many of these cases.
We have helped many people who have not declared all of their income in prior tax filings negotiate settlements with the tax department. Such negotiations have resulted in the avoidance of various penalties, fines, and excessive interest charges imposed by the Income Tax Act. We have even negotiated settlements for people who would have been facing criminal charges had their situation been allowed to continue.
Non-Arm’s Length Transfers
This situation arises when someone who owes taxes transfers assets (gifting money or other ways) to someone close to them. The taxman would prefer the tax-debtor pay his tax debt with scarce resources instead giving his assets away. This results in a situation that stops you from doing things in your life freely. Give us a call to see if your situation fits in with the cases we have resolved.
Incorrectly Prepared Tax Returns
A Canadian resident who worked for a US employer felt his lifestyle was impinged despite his larger income. We reviewed the previous returns and found that he had overpaid taxes through double taxation. His previous Accountant had erroneously omitted claiming foreign tax credits for US tax paid over the last five years due to misunderstandings with the employer’s payroll department. We presented the CRA with revised tax returns and after answering all of CRA’s questions, we were able to obtain a refund of over $100k for our client.
Director Liability held off by collections until business expenses and input tax credits approved to substantially bring client’s liability down to minimum. (GST/HST and Income Tax).
Subcontractor/ Employee Issue
Deemed employees by CRA successfully argued they were subcontractors . (Payroll)
Gross Negligence Penatly
GNP thrown out upon successfully arguing there was no “knowingly” element by client in GNP Audit Report. Due diligence supported. (GST/HST and Income Tax)
Investigation dropped as successful argument put forth of no attempt by client to evade or avoid tax. (Income Tax)
New Housing Rebates
Successful appeals made verifying entitlements to rebates by clients.(GST/HST)
Successful in approving many Voluntary Disclosures for clients and saving large penalties on assessments.
Audit Assessments / Appeals
Various clients reduced their assessments where initially no documentation was provided for expenses and input tax credits but analysis of books and records showed entitlements and expenses were verifiable by other means. (GST/HST and Income Tax)
Taxpayer deemed builder by CRA – Appeal reassessed to exclude 2 properties as exempt and others confirmed with entitlements to input tax credits and expenses. Minimized tax consequences for client. (GST/HST and Income Tax)