7 ways the tax man is watching you

By Julie Cazzin on February 16, 2017

CRA is scouring your social media & donning disguises

Whether it’s through a photo on social media or a casual conversation with a friend, the Canada Revenue Agency is always watching and listening. And their investigators will pursue you tirelessly if they think you’ve been lying on your tax return. Their subject of choice? These days, it’s anyone and everyone. “We always think it’s only the rich who the tax man is interested in but it’s the little fish they like the best,” says Paul DioGuardi, a senior tax lawyer and author of The Taxman is Watching. “The Internet is becoming a favoured weapon for the CRA to find and analyze all kinds of data so they can watch people they think are cheating on their taxes.”

Here’s five ways the CRA may be watching you that you probably weren’t aware of.

1. Your social media

Any of your open social media accounts are publicly accessible and some posts could prompt a CRA investigation into your financial life. From the CRA’s point of view this is a legitimate practice on their part because posts on social media really aren’t private. How does this work? Say you just bought a new $85,000 sail boat and are boasting about it by posting a photo of it on Facebook. The CRA could see this and then check it against what you declared as income last year. “If you declared $40,000 in annual income, or a modest amount, they’re going to be suspicious and come calling,” says DioGuardi.

2. Your sales and purchases on Kijiji, Etsy and Ebay

Is your passion for vintage furniture really a hobby? Or are you running a small business from your living room and not declaring the profits on your tax return? “To compare this data would take years in the old days,” says DioGuardi. “Now the CRA can data-mine these non-traditional sources of info in a heartbeat pretty much whenever they like. They are a collection agency with police-like powers.”

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3. Your small business’s sales data

Cheating on your company sales numbers by declaring lower revenue than is actually the case? Don’t. The CRA is able to use data to plow through years’ worth of your credit card transactions with the aim of matching your stated sales with electronic data they’re able to access.

4. Bank accounts and investments

To spot undeclared, taxable interest, dividend and capital gains income, the CRA has access to info from all Canadian financial institutions. They can also determine if you’ve exceeded your TFSA and RRSP contributions and penalize you accordingly.

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5. Capital gains from condo and real estate sales

“In the old days I had to go to the registry office to find out when a piece of real estate had been bought and sold,” says DioGuardi. “Not anymore. The Internet changes the game.” Now, the CRA can look at all real estate transactions and easily flag suspicious transactions. What are they looking for? Condo flippers and real estate sales where the owner hasn’t declared capital gains and paid the appropriate taxes. Multiple property ownership where the taxpayer isn’t also declaring rental income is another trigger for investigation.

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6. Your income and pensions

The CRA is hunting for disparities in retirement income. It can access info on your bank account balances and income and match it with previous tax returns. If there’s a wide discrepancy, be prepared to answer more questions.

7. Mystery shopping

Don’t be surprised if CRA agents show up at your restaurant or other small business, in disguise to eat a meal with the intention of rooting out suspicious financial behaviour. The agents could pose as a couple out for a meal to see how your business works and what the count is for people frequenting your business to ensure it is aligned with what you have reported in previous tax returns. “It’s a big job and I think they will sub-contract a lot of this out in future,” says DioGuardi.

What does all of this mean? That the shift of responsibility is really shifting to the taxpayer and not the tax collector. In the past, the tax man simply told you what you owed. These days it’s completely up to you to declare what you should be paying, and they have the means to check that what you’re saying is absolutely accurate. “Remember, they can search anything, put liens on your property and slap you with penalties and late fees,” says DioGuardi. “My suggestion is to always give full and complete disclosure on your annual tax return. With data mining the way it is today, if you don’t, then believe me, they will find you.”

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Comments Cancel reply

BONNI says:

June 1, 2020 at 7:46 am

do canadaian citizen living in usa ( GREEN CARD HOLDER) have to claim Canadian income in on income taxes in the usa? If not claimed then what?

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Mike says:

September 9, 2020 at 2:54 pm

This is absolute nonsense, the CRA watching kijiji or social media lmao. How the hell would they know you sold anything on kijiji if you don’t use your main email address and a different name lol
Ridiculous article.

Reply
Gloria says:

November 30, 2020 at 7:07 pm

Bonni
As long as CRA considers you a non-resident and you do not receive any Canadian based income than you are not required to file a Canadian tax return.

I assume since you have a green card and reside in the US it’s safe to say you do not have any residential ties to Canada such as a spouse here, property of any kind, a Canadian driver’s license, bank account etc. that would possibly deem you a Canadian resident for tax purposes.

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Will Vines says:

March 18, 2021 at 9:01 am

I’m not sure about Kijiji and ebay etc…. however, having worked in Canadian Embassies I can assure you that if suspected of dealings that remotely show a possibility of tax fraud, they will snoop. Even if you are a Canadian overseas on holiday or for an extended period of time they ask you to register with them. This is asked to be done for your security, which is true. At the same time, can see financial capabilities as well as possible investments that may just interest them. Without getting into detail, most would be surprised as to what we are trained and how to find out what we want in a very short period of time. Now understand that the gentleman or lady traveler who spends 4 months in a grass hut may not be given a second thought. Its the individual living the lifestyle in a villa with 6 bedrooms who will be invited to Embassy events and given the VIP treatment so they feel important and end up giving out all the infos the government wants, themselves. And this all occurring during casual discussion at a picnic fundraising event for example. Just a guess ……….

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Nam says:

August 14, 2021 at 8:15 pm

Bs i sell for 20 years on Ebay and have never reported anything and i never got into trouble. Same goes for Kijiji, they cannot trace that. As for Banks, that is a a different story..although they can see TFSA and so forth, they cannot access you personal savings account unless it is over a certain amount and declared by the banks which is about 50 k usd.

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