Recently there is an article in the South China Morning Post about secret briefing and auditors being assigned to investigate purchases funded by unreported foreign income in our housing market. Whether the details of the leaked briefing are true or not, the fact remains that the CRA is, and has been actively monitoring and auditing real estate transactions in British Columbia.
As stated on the Canada Revenue Agency website, there are five main areas of concern:
- questionable source of funds
- property flipping
- unreported goods and services tax/harmonized sales tax (GST/HST) on the sale of a new or substantially-renovated property / GST/HST new housing rebate
- unreported capital gains
- unreported worldwide income
On the website it also lists the results of the audit:
Result of audit activities related to real estate in British Columbia during the year ending March 31, 2016
Number of files completed
The CRA will apply a penalty equal to 50% of the additional tax payable if a taxpayer knowingly makes a false statement when filing a return. During the period April 1, 2015, to March 31, 2016, the CRA applied 447 penalties, totalling about $9,720,256. The highest penalty was almost $2.5 million.
So if you haven’t reported, or made a mistake in your reporting, better have it corrected right away.
What happens if you suspect someone is not reporting their taxes like all law-abiding taxpayers should? Well, CRA offers the Informant Leads Program! The Informant Leads Program reviews information provided by the public to assist the CRA in identifying taxpayers who are violating tax laws, and you can report suspected tax evasion anonymously.