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This is a collection of factual accounts provided by Canadian Taxpayers who wish to share their experience in dealing with the Canada Revenue Agency (CRA). If you have had a good or bad experience, share it with us today. Why? Because Canadians deserve to know how the Agency treats other taxpayers and the tax problems that can arise from everyday situations. Click here to add your story!
Illegal Lien placed on Home
I was in the middle of being audited when I found out that the CRA had put a lien on my home. I found out right before Christmas when I was trying to renegotiate my mortgage. When we tried to get information from the CRA, it turned out they had assessed me for GST in the middle of my audit without telling me. They had the notices of assessment sent to the auditor’s address at the CRA office so I wouldn’t know about it and then told collections to immediately certify the debt and put a loan on the property without contacting the taxpayer. None of the agents at the CRA would listen to my arguments that it was illegal and just told me to appeal to Court if I didn’t like it. I didn’t have the money to go to Court and the bank insisted on renegotiating my mortgage to include the additional tax amount so I had to take a larger mortgage or risk losing my home. When I made a complaint about the CRA behaviour, they first said everything was done legitimately and then 6 months later sent me a letter admitting it was illegal and apologizing for their oversight in not sending me the assessments or giving me the opportunity to pay voluntarily. It wasn’t an oversight, it was done deliberately and as far as I know nothing has been done to stop the power hungry agents from doing the exact same thing to any other person. I was shocked at the unbelievable lack of accountability in an agency that is meant to uphold and believe in taxpayers rights.
Keep your Receipts
I have never been great at keeping paperwork but always make sure I use a credit card for my business expenses so there is some proof of paying my expenses. I get mostly online invoices and statements and don’t usually print them. Imagine my surprise when I got audited and found that the CRA would not accept my credit card statements as proof of business expenses. Apparently, I am meant to keep the receipt listing the items purchased and to note on the receipt my expense relates to earning income. Surely nobody in the world does this? Over half of my expenses got disallowed as I could not prove what I thought were obviously business expenses. The auditor never considered that I would have had to incur expenses to make my income and focused only on whether I could prove down to the last detail what my expense was for. I have given up fighting as it will cost me more in headaches and fees to challenge the CRA than it will to just forget this and learn for the future. I understand that the auditor is just doing their job but it felt like they were just unreasonably demanding information nobody would keep.
Proof of Marital Status and Custody
How do you prove that your child exists and lived only with you after splitting from your ex? The CRA agent told me to get a copy of a court custody order and a letter from the child’s father, copies of mail correspondence to the child at my address, get letters from his doctor and provide school reports to prove I was entitled to benefits. I do not speak to the father and we have no formal court order regarding custody. My child is 13 and doesn’t receive any mail or have a bank account so there are no letters. Luckily, my son hasn’t been sick so the fact we have no family doctor has not been a problem until now when I apparently need a letter. The walk in clinic just said they couldn’t do anything as they hadn’t seen me or my son before. I managed to get a letter from the school but I don’t keep any old school reports. The CRA took the view that because I hadn’t responded to their requests for information over the past few years, I was lying about my responsibility for my child and that a real mother would keep school reports or some kind of correspondence relating to him. On that basis, their decision was to deny my son all child tax benefits that the Government supposedly pay to low income families. I was told to appeal the decision to Court. Like I have the spare time or money to take this to Court.
Law has no Flexibility for Poor Planning
An retired couple decided to take advantage of new legislation that allows you to apply to access a portion of locked in retirement funds. The couple decided that as there was little investment income from the funds because of the economy, they could take out $20,000 to pay down their existing debt. As they are both on pension income, they would rely this and the several thousand dollars in various benefits paid by the Government to low income pensioners. When they filed their tax returns for the year they took out the retirement funds they were required to report the amount withdrawn as taxable income and properly did so. Unfortunately, they were no given any advice regarding the potential impact this would have on their benefits. The increase in their taxable income, despite it being only a one off payment and used entirely to pay off debt, meant that they were now over the threshold for all of the benefits they used to rely on to live. For the next year, they are now looking at a substantial decrease in their regular income because of the reduction in the benefits. When they asked the CRA for special dispensation because of the one time nature of the payment and the fact if properly advised they would have put a portion of the funds into an RRSP and could have easily still been under the income threshold for this year’s benefits. The CRA responded that there was no flexibility in the application of the laws and you cannot embark of retroactive tax planning. Even though it undermined the purpose for which benefits are paid to low income pensioners, there was no compromise.
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