QUESTION:
My brother has run afoul with Rev Canada.
The matter is further complicated because we jointly own a small rental
property and his problems with taxation have also become my problems.
He was unemployed for 2 years and had no earned incme other that a small
income from the rental property jointly held. He did not file income tax
for 2 years thinking that he didn't have to since his deductions far
exceeded his income. During that time he started and failed in a small
business endeavour.
The problem is not that Taxation has filed against him and has fined him
based on his previous income. They have placed a lean against the property
and I have been forced to forward .5 of all gross income(his share) form the
property (950$/month) with all the costs being borne by me. This is further
complicated because he owes me money and I can't sell the property to gain
my share owed because the government now has first rights.
Taxation basically 'ball parked' an average of his income and taxation from
the previous 5 years, doubled the amount owed and added another $20,000 as
fine. Although I am not privy to the exact amount, I surmise it is around
$80K.
How can that be construed as legitimate or fair? Words like draconian and
evil are more apt.
He legitimately did not have a job for an extended period. He was trying to
establish a business and did not draw a salary for almost 16 months.
While working the business and lived off of savings and money borrowed from
me; which he signed demand notes for; and monetary gifts from our mother
He has become some despondent--unable to cope with the situation and people
at Taxation; he didn't even file an statement this year for 2004.
He is emotionally or intellectually able to get things together and I worry
he might do something drastic to himself. He is 45 years old and has always
been straight with Taxation except for the past 3 taxation years.
Over 2 years of documents, correspondence and other pertinent information
sits unopened in a box in his home.
The question is "What do I have to do in order to get him square with
Taxation?" I need some concrete steps to present to him so that I can get
him going on a process of resolution.
His attitude is as long as they are getting some of the money he owes, they
won't send him to jail.
What kind of tax specialist is required to prepare past taxation documents
when the records are a mess and incomplete?
Is it possible to get Taxation to move off of the punative and grossly
unfair taxation position they have taken?
Any direction and facilitation in this matter is appreciated.
Sincerely
-------------------------------------------------------
david ingram replies:
He is not at all unusual. I have four others in my home office now. One
goes back to 1988, one to 1989, one to 1997 and the other to 1998. People
just get out of synch. Of course, the owner of Colour Works in North
Vancouver was just sentenced to 60 days in jail for failing to file 1999 to
2003. He also received a total of $27,000 in fines plus the late filing
fines and taxes and interest for those years.
All were incapable emotionally of dealing with the problem.
Arbitrary assessments are just that. They are intended to make the person
deal with the problem - if he or she does not do so within the allotted
time, the arbitrary assessment stands. The good news is that we can still
go back three years easily. In fact, we can go back to 1994 before 2006.
(we could go back to 1985 b before Dec 31, 2004). The tax office can go back
to 1967 if a tax return was not filed. They can go back 8 years if a return
was filed and they think fraud was involved and can always go back three
years.
If he went into business and lost, those books have to be done to show the
loss. His investment taken out of savings and the monies you advanced need
to be documents.
And, you can forget about paying the third party demand if he owes you money
and you are looking after it. I may be wrong because of the way you have it
set up but, (just like a bank) you might have first claim against the money
under what is called right of offset. (it is a stretch but I would seriously
investigate it.
I cannot do it now and am going away for three weeks starting Sunday or
Monday but would be happy to consult with you around Sept 8th or 9th and can
tell you that I have dealt with the same situation a 100 times or more
during my forty years in this business.
>From the situation you describe it is not even remotely hopeless.
Answers to this and other similar questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, I, david ingram am a
permanent guest on Fred Snyder of Dundee Wealth Managers' LIVE talk show
called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the internet
at
www.600AM.com <http://www.600am.com/>
Call (604) 280-0600 to have your question answered. BC listeners can also
call 1-866-778-0600.
Callers to the show and questioners on this board can also attend the
Thursday Night seminars on finance and making your Canadian Mortgage
Interest deductible.
Answers to this and other similar questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, I, david ingram am a
permanent guest on Fred Snyder of Dundee Wealth Managers' LIVE talk show
called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the internet
at
www.600AM.com <http://www.600am.com/>
Call (604) 280-0600 to have your question answered. BC listeners can also
call 1-866-778-0600.
Callers to the show and questioners on this board can also attend the
Thursday Night seminars on finance and making your Canadian Mortgage
Interest deductible.
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
Home office at:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 9 AM to 9 PM 7 days a week (please do not fax or phone
outside of those hours as this is a home office)
email to taxman at centa.com <mailto:taxman at centa.com>
www.centa.com <http://www.centa.com/> www.david-ingram.com
<http://www.david-ingram.com/>
Disclaimer: This question has been answered without detailed information or
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