CRA Audit – Corp vs. Personal

Anyone who has been reading this Blog for a while is probably wondering if I hate the CRA?  I mean it is rare (read never) that I have something positive to say about them.  No I don’t hate them, but that said they very, very rarely do anything worthy of positive kudos.  Further, if they did their job right I wouldn’t have anything to write about.  And while we are at it, when was the last time you got kudos for just doing what is expected of you?

Now it is story time.  The CRA is on a mission to make everyone employees.  I think I have mentioned this before.  This is not about whether they are right or wrong (but they are wrong, just sayin’), but about whether they are doing it right.  I have a client (true story) that has been reassessed by the CRA.  The issue was payroll.  The client received remuneration (not trying to use $5 words, just want to be clear that it is not salary in case the CRA read this blog) from their company and reported it on their personal tax return, paid the tax, and paid the CPP.

Problem?  You wouldn’t think so but the CRA wants everyone using their corporate payroll account to remit tax and CPP.  So the auditor came out did his thing and said pay the payroll account and you will get the tax paid and CPP back that was paid upon filing the personal return.  Sounds like a make work project.  The CRA get a $100 penalty and everything else stays the same (and more importantly the CRA goes away).

Remember when I said “make work project”?  Truer words have never been unintentionally spoken.  This was and is totally a make work project.  For me!  Remember all that about reassessing and getting the tax and CPP back that was paid personally because now CRA want it in the corporate payroll account?  Well guess what?  Yah, they did not fully reassess everything.  They moved the income, but they forgot (messed up, whatever) to reassess the CPP and Tax and refund the amounts the client paid personally.  So now CRA has the money twice.  Oh, yah the make work project crack I made, I have spent so much time trying to figure out what they did (or more importantly, did not do) so that I can explain it back to the CRA so they can fix what they messed up in the first place.  Why do I have to explain their process to them, so that they can fix their mistake, which they should never have made in the first place.  The CRA make work project has turned into a make work project for me (like I didn't have enough to do).

You would not think that when they come to you to change things that they would only do half the job, when they have told you what is going to happen.  All this exasperation the client and I have to endure, because the CRA wanted the money from your left pocket instead of your right pocket.  Now that I think about it, it is a great way to balance the budget.  Make everyone pay twice, and then hope they don’t notice, and if they do make it really, really hard to get their money back.

Even Red Green and all his duct tape couldn’t fix the CRA.  We can dream though, right?