Vince Iannello explains how the Canada Revenue Agency (CRA) intends to examine taxpayers.
Vince Iannello says that the CRA has approved over 2.7 million Canada Emergency Wage Subsidy (“CEWS”) since March 25, 2021. These funds amounting to $71 billion are for charities, organizations, and businesses in the not-for-profit sector to support over 5 million employees. Since August 2020, CRA has initiated post-payment audits of CEWS to check if there is non-compliance. If the recipients misused the payments, CRA would impose penalties, including paying the wage subsidy back, an extra 25% fine, and jailing any fraudsters, Vince Iannello adds.
Transfer Pricing Transactions
According to Vince Iannello, the federal government aims to bolster transfer pricing to ensure that businesses report the correct amount of profit. CRA increases transfer pricing audits to determine if buyers and sellers operating in the same multinational group are pricing goods and services properly. Vince Iannello adds that the revenue agency will consider transactions occurring under arm’s length rules. So, taxpayers involved in non-arm’s length cross-border transactions must keep proper documents and accurately price their goods and services.
Gains or Income from Cryptocurrency Transactions
Another area that the CRA wants to examine is cryptocurrency transactions to make sure investors pay tax. Vince Iannello says that the Minister of National Revenue’s application to ask a key cryptocurrency trading platform to provide a customer account list with cryptocurrency transactions received a green light from the Federal Court. In addition, CRA considers cryptocurrency, for example, Bitcoin, as a commodity, and as a result, taxes earnings from cryptocurrency transactions.
GST/HST Avoidance and Evasion
Vince Iannello also adds that the CRA looks into fraudulent and unjustifiable GST/HST repayment and rebate claims. It’s investigating big businesses that it sees as having non-compliant issues, including the real estate development industry. The GST/HST New Housing Rebate is one scheme that the CRA has scrutinized for some time.
Tax Evasion Involving Trusts
The CRA’s tax scrutiny has also extended to tax avoidance regarding trusts, specifically in cross-border activities, transactions concerning low/nil countries, and non-arm’s length transactions, Vince Iannello says.
Transactions Involving Treaties
As Vince Iannello notes, CRA is also looking to examine transactions involving treaties. That’s because the media has reported the use and misuse of these transactions to avoid or decrease taxes, leading to a loss of tax revenue for the federal government. As a result, CRA is examining cross-border transactions concerning treaties to minimize tax evasion and avoidance.
Vince Iannello further observes that the CRA is also looking into how employees and officers use corporate assets, for instance, yachts and private jets. The CRA requires businesses to keep accurate records and logbooks for filing purposes if they’re operating on these assets.
Vince Iannello is a Chartered Professional Accountant, who has operated his own Accounting and Tax Practice, Vince Iannello Professional Corporation, since 2016. Vince Iannello has a decade of experience as a Chartered Accountant, he has worked for small and mid-sized firms while providing various tax and accounting services to charities, not-for-profits, and owner-managed businesses.
Furthermore, Vince Iannello is also a mortgage professional with Capital360, concentrating on getting clients to create tailor-made solutions to meet their needs.
Vince Iannello also enjoys traveling, sports, hanging out with his friends and family, and perfecting his daughter’s soccer skills.