My_question_is: Applicable to Another Jurisdiction or Multi-jurisdictions
Subject: How does the the CRA know?
Expert: taxman at centa.com
Date: Wednesday January 17, 2007
Time: 12:16 PM -0500
QUESTION:
Hello,
I am a Canadian citizen who has been living in a tax-treaty country (Brazil)
for the past seven years. I have just bought a small condo in Canada for
occasional visits. I don’t expect to use it for more than two or three
months a year and my wife (a foreign citizen) even less. I am aware of the
potential tax consequences of the purchase, thanks to advice from you and
others.
My question this time is: How does the Canada Revenue Agency know what you
own and how much time you spend in Canada? Is customs entry information
shared with the tax people? Is real estate purchase information passed
along? And if Canada were to decide to tax me on a portion of my world
income relative to the amount of time spent in Canada, how would they
determine what that world income is? I’m not concerned about my residency
status, since my home, work, family and life in general is outside Canada.
Nor am I looking to do anything sneaky. I’m just curious to know how it
works.
Thanks,
----------------------------------------------
david ingram replies:
With all due respect to the guys and gals at the CRA, in my opinion, most if
the individuals caught are caught because someone turns them in.
It can be a building manager you offend, it can be a taxi driver you say
something to when you go to your Canadian home.
Canada does not have a reward system but I am told there is a certain self
satisfaction that people get from turning someone in.
At one time, I had traced at least a dozen cases back to Burnaby General
Hospital. Over a three year period, I had at least a dozen people caught
and the only common denominator was that they had all been to Burnaby
General Hospital for something. An alert clerk, nurse or hospital
administrator had spotted the fact that these people all had BC Medical
cards and were from out of the country.
However, the usual person to turn you in is a relative. Just yesterday
(honestly, yesterday at about 3 PM) I was talking to a former client who had
actually received jail time because a sister turned her in.
So don't piss off:
The taxi driver
the building manager
the teller at your bank
your best friend
your next door neighbour
someone at your health club
someone letting you into Canada at the border or airport. I understand that
about 1 out of five customs people used to work for the Income Tax division.
For instance, the present District Director of Income Tax used to be the
Head of Customs for BC and the Yukon
etc.
Under Article XXV of the Canada / Brazil Income Tax Convention Canada has
the absolute right to ask the Brazilian Government for details of your
Brazilian Income for the past seven years. The Act reads "shall" exchange
as opposed to the less onerous "may" exchange.
----------------------------
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
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North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
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