The Panama Papers, the CRA ... and me
Does anyone remember the Panama Papers? Oh, the hope and joy that comes with the discovery of documents about tax cheats in their tax havens! Oh, the gleeful rubbing together of hands! Those filthy rich tax avoiders will finally get their comeuppance! Or not. This spring it will have been two years since the Panama Papers were breaking news, and many countries have used the Papers to track down tax evaders, recouping losses to the tune of $500 million. Canada is not one of these countries.
Malta, on the other hand, has used the Papers to track down and recoup more than $9 million in previously lost taxes. I mention Malta specifically because Malta IS a tax haven.
That’s right: the tax havens are doing a better job of tax reclamation than Canada.
And what’s more: the Canada Revenue Agency has disclosed that it will be two and a half years before it even knows how much it hopes to recoup! How, with our long, proud history of a strong (ish), fair(ish) tax system, is this possible? Malta is kicking our taxation ass! MALTA!
I’ll tell you how it’s possible: The CRA is far too busy with other, more pressing matters than the Panama Papers. It is far too busy investigating me.
It started innocently enough: I’d get requests every year or so for copies of my tuition receipts, just to make sure I was still actually a student (so it goes with grad studies). Things ramped up considerably when I had my first child. Prior to my mat leave, I called the CRA to ask if I was supposed to declare net or gross income while on leave; the CRA agent answered that I should only declare net income. Fine — my home-based business would not be making any profit, so I had my answer! I was so naive. I didn’t know at the time that at least 25 per cent of the questions answered by the CRA in this fashion are answered incorrectly.
About two years later, I was referred to the “Office of Integrity” (now that I was suspected of having none), which began a year-long investigation into my failure to turn a profit while on mat leave. I sent them a large box of all our receipts and paperwork. My case was passed on from one person, to a team of people (one of whom told me that they’d heard about “the box” and were expecting its arrival any day), and then back to one person who found me guilty and owing $3,000. I appealed, spoke to a different person, explained that I had a very small, home-based business that didn’t turn a profit during my leave. “Oh,” she said, and then after a brief pause: “You don’t owe anything, then.”
Things were fairly quiet for a while — nothing more challenging than sending in the odd receipt — until this past year, when a lovely gentleman at the CRA carefully, gently, broke it to me that I’d been making a crucial mistake: the $40,000 cut-off for collecting HST was, it turns out, actually a $30,000 cut-off. I owed a lot of HST. Happily, much of it would be offset by all the HST I’d paid over that time.
Thus began about two months of back-and-forth. When the phone rang and the kids saw “CRA” on the call-display, they shouted, “MUM! It’s Atool!” We got to know each other, Atool and I. He would ask me to send spreadsheets and I told him I would transcribe my hand-written records into a Word document.
He’d ask me if I had receipts and I’d say things like, “Are you kidding? This is my favourite part!” While I didn’t get to make up a box this time, I was able to scan and post enough documents electronically to, surely, convince Atool that someone with such a clear devotion to receiptkeeping could never really do anything bad. Not on purpose, anyway.
This time I really did end up owing $3,000, but it was money I’d already paid in other ways, so it only reduced my rebate. At the end of our last phone conversation, I thanked him for helping me fix my mistake, and said, “Atool, I think I’m going to miss these chats.” And he laughed and said that he would, too.
So what I’ve learned over the years is that sometimes I owe money, and sometimes I don’t. Sometimes the agents are helpful, and sometimes they’re not. Namely, I’ve decided that my enthusiasms for receipts and record-keeping are, while certainly a bit nerdy, most definitely a benefit, when one so regularly merits the CRA’s attention.
Maybe Atool was in training to work on The Panama Papers. I think he got a lot of good experience working on my returns.