In previous posts when I’ve written about tax amnesty, I’ve received some comments from readers saying that I don’t know what I’m talking about because they’ve had unreported income for years that the CRA doesn’t know about and that the CRA will never find out about. Everyone thinks that until they get caught. Then they call me.
One reader posted on a public Facebook group that he had 7 crypto wallets that the CRA doesn’t know about and they haven’t found him yet. I replied, ” they know about it now, or they will. You just told the world.” I’ve read similar posts on my TikTok channel from people boasting about their offshore income that CRA doesn’t know about.
Those people have just made CRA’s job of finding them a lot easier by admitting on a public forum that they are essentially engaging in tax evasion. And don’t think that hiding behind your username gives you anonymity. The Canada Revenue Agency has in the past obtained court orders against big companies such as Ebay, Home Depot, Rona, and Coinsquare – ordering those companies to release the account details of their customers, including their identity, address, and total transaction amounts by each customer. And those are just the companies that I know about off the top of my head. I’m sure that there are lots more.
In addition to the 93 Tax Treaties and 24 Tax Information Exchange Agreements (TIEAs) that Canada has with other countries, the CRA uses the internet to find and analyze all kinds of data so that they can audit people that they think are evading taxes.
So how else can the CRA find out about me you ask? Here are some of the ways CRA uses to find people.
1. Your social media accounts
All of your social media accounts are publicly accessible. If I can find out about your offshore accounts without even trying, what do you think the CRA can do? They have vast investigative powers under the Income Tax Act that you won’t even know about until you get that audit letter in the mail.
2. Your ecommerce activity
If you sell a one-off item on Ebay or Kijiji, that’s probably not going to attract any attention. But if you’re a “Power Seller” then you’re running an online business and you have to declare your profits on your tax return. CRA can data-mine these ecommerce sites easily. And if they have to, they’ll get a court order requiring Ebay, or whoever, to give up your details to the CRA.
3. Credit card transactions
CRA can compare your credit card transaction data to your reported income to determine if you have under-reported.
4. Bank accounts
The CRA has access to information from all Canadian financial institutions including brokers.
5. Unreported Foreign Pension Income
Under the various Tax Treaties and Tax Information Exchange Agreements that the Canadian Government has with numerous countries, the CRA can obtain information about that foreign pension income that you’ve been collecting in another country but haven’t reported as income on your Canadian tax return.
6. The “Snitch Line”
The CRA has a “snitch line” for people who want to report someone for tax or benefit cheating. The current number on the CRA website is 1-866-809-6841. You can also report someone by mail, or fax, or you can use their online lead form. The online method has a disclaimer that says “Warning: If the information you wish to provide could place you in imminent danger or at the risk of serious physical injury, do not use this online reporting system. Instead, contact the National Leads Centre.”
My advice to clients is to always give full disclosure on your income tax return. If you don’t, they will eventually find out about it and come after you. If you have unreported income, then my suggestion is to report it now through the Voluntary Disclosure Program before the CRA gets to you.