Canada Revenue Agency Tax Fraud: audit Scam
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Illegal Tax Saving Schemes Promoted by Charity Promoters
At the end of the year with Holidays, Christmas and Gift of Giving makes us all charitable and there are these Charity Promoters, who take advantage of your Good Will by tying your charity/donation contribution with tax savings.
Donations in excess of $200 each year will save you 44% in taxes. That is the amount you get as Tax Credit to reduce your overall tax bill.
This is where the Charity Promoters take advantage of you. They promise to give you a charitable contribution receipt many times more than the actual cash contribution. Even with your good will to help the needy, you fall hostage to your greed and give in to their shady scheme. These charity promoters offer you a receipt in the range of $4,000 to $5,000 for every $1,000 cash donation. Their reason for offering the additional money in the donation receipt is that your $1,000 will have such a great effect on the needy, that it could be easily valued at $5,000, so they can issue a $5,000 donation receipt for you.
The problem is this kind over valuation of Cash donation is in violation of Canada Revenue Agency regulation.
If you are given a donation receipt in excess of your Cash donation by a charity promoter, be sure that your tax return will be audited and your donation contribution for tax savings purposes will be disallowed
Donation to your favourite charity is a great way to help the needy also reduce your taxes. There are many other legitimate ways for tax savings other than inflating your actual cash donation.
CRA is actively prosecuting these kinds of Charity promoters.
Canada Revenue Agency Income Tax Real Estate: IRS US Tax
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Tax Issues To Consider By Canadians Investing In US Real Estate Market
I am often being approached by many Canadians asking about the current investment opportunity in US real estate market.
The opportunity might be very attractive, but investing in US or any other country for that matter is very complex for ordinary Canadians.
There are major tax implications to consider for investment property from both US and Canadian Tax agencies.
As a Canadian investor, you must report all your foreign investment over $100,000 to Canada Revenue Agency and also your income from your foreign investment sources to determine tax payer taxable income,
In US, Canadian investor must also file US income tax return and report all income from investment property to the US tax authority. Canadians also must obtain a US tax payer identification number (TIN) from IRS. Without a TIN, Canadian investor would not be able to realize the income from the property and transfer it to Canada. There is also the possibility of 30% source deduction of any profit from the investment property by the IRS.
If you are considering investing in US properties, it would be prudent to seek advice from a qualified tax or investment advisor, who are experts in cross border taxation.
Income Tax
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How Much Does it Cost Oprah Audiences to Receive Free Gifts?
Oprah, the queen of gift giving has once again proved how material the world is. The joy of getting things supposedly for free makes her audiences euphoric. The mainstream media is over this news head over heels.
The first reaction I had watching clips of her show titled Oprah’s Favourite Things 2010, is oh! well, I am not Oprah and I do not make money like Oprah, so these could certainly be her favourite things, not mine.
Then again, it’s a commercial TV show. All her favourite things were paid for by the manufacturer of the products for free to Oprah show, to promote their products for the 2010 Holiday Season.
So, if Oprah really likes to drink Coke and Pepsi provides free drinks to her audiences, what is Oprah going to say her favourite drink to the audience? Pepsi or Coke?
Oprah show is just another platform of advertising for the products listed on her 2010 favourite things. Once you understand this simple concept, you will see her gift giving in a whole different way.
Hundreds of product manufacturer line up to show their products on Oprah show. It’s the holy grail of product showcase, because of the sales bump the products receive after showcasing on Oprah show. They enthusiastically agree to provide free products to Oprah audiences. Its their advertising cost.
It does not cost Oprah a single penny to give her audiences lavish gifts, be it a Pontiac G6, 2012 Volkswagen Beetles, or thousands of dollars worth of other gifts.
But for the gifts recipients these free gifts could be a ride through the hell.
All because of IRS, the US Tax Agency.
In 2004 Oprah, presented her audiences a Pontiac G6 (now a company, erased from the face of the earth), but many of them had trouble accepting the gift, because the Taxes they would owe, if they receive the gift.
The gift promotion cost Pontiac about $3 million, her audiences cost sales tax and income tax, and cost to Oprah was zero.
On, November 22, 2010 Oprah again gave away 275 2012 Volkswagen Beetles. But this time she was able to negotiate “all taxes and fees” from Volkswagen with each car. So, her audiences will not have to pay any money out of pocket to receive the cars.
But another Tax they will be incurring is the income tax. They will have to add the total value of the car, all taxes and all fees and report it in their income tax return and pay tax.
It goes same for all other gifts too. The gifts are free. But you still have to report, the value of your diamond watch, cashmere sweater, cruise and all other gifts and pay tax to IRS.
If I am right, it would be Oprah’s company responsible to distribute the gifts and also hand out IRS approved income slip to each recipient and send a copy to IRS. Coming tax time, each recipient will have to report that income slip with their tax report.
I just read some news report that many Oprah gift recipient are planning to re-gift the gifts they will receive. Along with making someone else’s dream come true, that’s a very smart Tax Saving Strategy too.
Canada Revenue Agency Income Tax: IRS US Tax
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Income Tax on World Series of Poker Winner
You probably heard from any of your favourite Canadian news sources that Jonathan Duhamel, 23 year old from Canada has won the World Series of Poker in Las Vegas. The winning awards him US$8.9 million in prize money.
Unlike the Vancouver Lotto Jackpot winners, who don’t have to pay any income tax on their $50 million winning, Duhamel, will have to pay tax in USA, Canada and his province of residence. There have been interesting developments in tax on Poker winnings in Canada for last few years.
An increasing number of Canadians are playing online poker regularly and winning. To begin with, lottery and gambling winnings in Canada are not subject to income tax, as I mentioned in my previous post, since these income are not from an “income from a source” of employment, business or investment income.
This all changes when Poker or Gambling winning becomes a source of income from a running a business. If you spend a significant amount of time, playing poker, spend a substantial amount of money for playing poker and pay for your living expenses from your poker winning you are in a business and you must report your income from playing poke to Canada Revenue Agency. Canada Revenue Agency can decide if your poker winnings are taxable or not by reviewing taxpayer’s poker playing habit.
Regarding Jonathan Duhamel’s winning, he won in a professional poker tournament that makes his winning taxable both in Canada and USA. Since he won the prize money in USA, he will get the prize money after tax. If he has a Social Security number, he can get all the winning but he will have to report the winning in his USA tax filing and pay tax on the winning.
Since he is a Canadian citizen, and assuming he does not have a US Social Security no., he will get his prize money after 30% tax deduction by IRS. He will have to request for a US non resident Tax Payer Identification (TIN) no. and file a US tax return and could get some of the tax deduction back from IRS.
In Canada, he will have to report his winning in his Income Tax Return and also the taxes that he has paid in USA. Since Canada and USA have income tax treaty, he will get credit for taxes paid on his winning in USA and will pay a smaller amount of Tax to the Federal Government. Then the Province of his residence will come after him for their share of Dhuamel’s winning.
After doing a rough calculation, he is expected to net $4.6 million after tax from his $8.9 million prize winning.
I am assuming that he will claim that he is not a professional poker player, to avoid reporting his income in Canada. So far, all the news I have reviewed about Jonathan Duhamel, I don’t think his claim is going to fly over CRA. His Tax Advisors will have a hard time to prove that he is not a professional poker player.
Bloomberg news reported that there is an evilcpa, and Las Vegas poker players bring her to keep their poker winnings from IRS’s tax grab. Jonathan Duhamel should seek her help too.
Canada Revenue Agency Income Tax: CRA Income Tax payroll tax Tax Tax Rate US Tax
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How Much Tax Do You Pay on $50 Million Jackpot Winning?
After a $50 million Jackpot was won in Vancouver, people are curious as to how much tax do you pay for that Lotto winning?
The winners should thank their luck that they have won the Jackpot in Canada.
If they had won the Lotto in USA, they would have to pay 38% or more of their winning to IRS.
Since they have won it in Vancouver and are not U.S. citizens, their Tax liability to the Canada Revenue Agency is, “0”.
Lotto or any other lottery winning is not taxable in Canada.
As per Canadian Income Tax Act “Income from a source” of employment, business or investment is taxable income. Since lottery winning is not a regular source of income, not a single penny of the winning is Taxable under Canadian Income Tax Act.
Unfortunately it is a different situation for U.S. citizens or lottery winning in USA.
If you are a U.S. citizen, it does not matter where in the world you win a lottery; you must report and pay income tax on your lottery winning.
If you are not a U.S. citizen and you win lottery/gambling in U.S.A. 30% to 38% of your winning will be taken out and sent to IRS, before you are given the winning proceeds. You must file a Non-Resident Income Tax Return, to get the tax deducted at source back. How much you will get back, depends your foreign residential status and any tax treaty agreement between the USA and your country of residence.