If the Canada Revenue Agency (CRA) has sent you a form called a Statement of Assets and Liabilities, requesting that you complete it and send it back to them, beware. You may receive this request for information with respect to tax years where you have already filed returns with the CRA and have received a Notice of Assessment.
This form is a request for you disclose income, expenses, assets and liabilities for one or more tax years. They also ask you to disclose income sources, bank account information, property details and more If this information request was sent to you by an auditor in the enforcement division this is an even more serious situation.
Heres why. If you simply owed money to the CRA they would use this form to find out financial information about you to aid them in collecting the tax debt. If you do not owe the CRA money then the only reason they want this form is to determine if you earned more income than what you disclosed on your income tax return.
If you are behind filing your returns and you have received this request for information from the CRA, it is likely so that they can attempt to assess your income based on your expenses. This theory is that you ought to have earned as much income as what your basic living expenses for the year would have totaled.
Lets review your options:
1.Complete the form and face a possible net worth assessment based on the information you disclosed.
2.Refuse to complete the form and risk a full audit.
3.Find a chartered accountant that specializes in these types of situations.
If the CRA determines you earned more income than what you previously disclosed on your initial tax return, they will apply large interest and penalties to the amount that you owe.
If you cannot pay the CRA they will proceed to try to collect the money that they believe you owe them. This could include freezing your bank account, garnishing your wages, placing a lien on your property or even sending your clients direction to forward your receivables to the CRA.
The good news is that there are firms (and ours is one of them) that specialize in these types of cases. Negotiating with the CRA on your own can have serious consequences. So what should you do?
Treat the information request from the CRA as serious. Gather your returns for the tax years in question, any correspondence you have received from the CRA and any other financial information that you think is relevant. Book a complimentary consultation with Mark Feldstein and Associates. Our accountants and advocates will work with you on a strategy to deal with this potentially threatening CRA request for financial disclosure.
This form is a request for you disclose income, expenses, assets and liabilities for one or more tax years. They also ask you to disclose income sources, bank account information, property details and more If this information request was sent to you by an auditor in the enforcement division this is an even more serious situation.
Heres why. If you simply owed money to the CRA they would use this form to find out financial information about you to aid them in collecting the tax debt. If you do not owe the CRA money then the only reason they want this form is to determine if you earned more income than what you disclosed on your income tax return.
If you are behind filing your returns and you have received this request for information from the CRA, it is likely so that they can attempt to assess your income based on your expenses. This theory is that you ought to have earned as much income as what your basic living expenses for the year would have totaled.
Lets review your options:
1.Complete the form and face a possible net worth assessment based on the information you disclosed.
2.Refuse to complete the form and risk a full audit.
3.Find a chartered accountant that specializes in these types of situations.
If the CRA determines you earned more income than what you previously disclosed on your initial tax return, they will apply large interest and penalties to the amount that you owe.
If you cannot pay the CRA they will proceed to try to collect the money that they believe you owe them. This could include freezing your bank account, garnishing your wages, placing a lien on your property or even sending your clients direction to forward your receivables to the CRA.
The good news is that there are firms (and ours is one of them) that specialize in these types of cases. Negotiating with the CRA on your own can have serious consequences. So what should you do?
Treat the information request from the CRA as serious. Gather your returns for the tax years in question, any correspondence you have received from the CRA and any other financial information that you think is relevant. Book a complimentary consultation with Mark Feldstein and Associates. Our accountants and advocates will work with you on a strategy to deal with this potentially threatening CRA request for financial disclosure.