Do you like posting your life to social media? Many Canadians do. But did you know that your social media accounts can be public and are fair game for Canada Revenue Agency (CRA) auditors? I bet you didn’t.
In a Financial Post article dated October 25, 2014, I wrote an article called “Is the CRA creeping your Facebook page?” where I outline one of the tools the CRA can use to audit suspected tax cheats: Indirect Verification of Income.
Indirect Verification of Income is an audit technique the CRA may employ to help them determine if your reported taxable income and financial lifestyle don’t add up. For example, if you are posting Instagram pics of major renovations being done on your house followed by your fancy two week trip to Hawaii but only reporting $50,000 per year of taxable income the CRA will have ample ammo to proceed to an investigation.
Many social media accounts are publicly accessible which means the CRA has open access to them. If your reported income and lifestyle don’t add up it would not be unreasonable for the CRA to target you for an audit and request further information to corroborate your taxable income.
So what can you do if you haven’t been reporting all your personal or corporate income on your tax returns? You can correct the problem by coming clean using the CRA’s Voluntary Disclosures Program (VDP). This program, upon acceptance to it, can allow you to correct past errors or report previously un-reported income and possibly free you from penalties and prosecution. You can even make an anonymous initial submission without revealing your identity prior to program acceptance.
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