Almost Canadian

That is a burden of proof for claims and deductions which, of course, rests with those claiming them. Just as when "assessing an income" the burden of proof rests with those "assessing the income". He who asserts, must prove.

I read the OP's post to mean they wish to obtain documents to determine foreign income. I apologize if I made the incorrect inference.

Almost Canadian

See my above post

JonboyE

Section 230 states:

(1) -- Every person ... who is required by ... this Act, to pay .. taxes or other amounts shall keep records and books of account ... at the person's place of business or residence in Canada ... in such form and containing such information as will enable the taxes payable under this Act ... to be determined.


It does not limit this to just claims and deductions.

One, now ex, client was being less than cooperative. The CRA assessed every receipt in his bank account as taxable income (as well as denying every business expense) unless and until he could prove otherwise. I have direct experience of numerous examples of the CRA determining "facts" then assessing against them.

They generally do this when when they suspect the taxpayer is being deliberately obstructive.

Once the tax is assessed it is passed to Collections who do not give a rat's arse about why the tax has been assessed. The only way to stop Collections is to file a Notice of Objection - which means you have to prove what they have assessed is incorrect.

I agree with you if it is simply a matter of production of documents from a foreign source. If a taxpayer steadfastly refused to provided documents they wanted to see the CRA would have to ask for a court order. They find the assessment route a much easier and quicker way to ensure compliance.

Shirtback

Yes to paragraph 1. No to paragraph 3. Re your paragraph 2, as Jonboy mentions, they can estimate an assessment & it's then up to you to contest/prove them wrong.

^^^ this.

+1. And why would one need to??

^^^ this again, & + 1 again. My ex was selected for an audit a few years ago, mainly concerning overseas income, & although he was "clean", it was a time-consuming, nerve-wracking process to prove it.

Wombat7

canadian residents are taxed on world wide income, this CRA does care about what people have abroad...makes sense to me.

JAJ

In both cases (rentals and pensions) one should assume that HMRC have enough detail both to enforce U.K. tax compliance and share information with CRA. With pensions it's obvious that details may be reported to HMRC even if no tax is deducted. While with rentals, if one wants to be U.K. tax compliant that means a completed NRL1 form and (usually) an annual U.K. tax return.

And anything that HMRC has may be provided to CRA, and vice versa.

Wombat7

As it should be.

Never understood why people are happy to fiddle taxes...in which case why not go into shop lifting, bank robbery etc.

Steve_

Look, they're not psychic. The way the tax system works is to essentially overtax you slightly (or perhaps a lot if you claim the RRSP credit), therefore requiring you to file a tax return in order to claim a refund by claiming various basic credits, such as the employed person's deduction. So therefore - the burden is proof is on you, not them.

As Jon pointed out, they assess what they think and place the burden on you to prove otherwise. Which is essentially what that judge points out in his ruling.

Say you want to reduce the amount of withholding you do in order to receive a smaller refund based on the RRSP credit - you have to file the T1213 and convince the CRA.

The classic example is the CRA deems you resident for tax purposes. Well you have to convince them on NR73 that you aren't and moreover under the tax treaties they can even negotiate with the other country where you claim to live as to where you are in fact resident for tax purposes. The burden of proof is on you to prove where you reside.

But that's not some minor thing, that's the whole crux of the matter. They apply the tax law, you make a claim that you don't owe X amount.

Almost Canadian

When claiming deductions, I agree with you.

You have the burden of proof backwards. If CRA wishes to claim you are a resident for tax purposes so that they can tax you, the burden is on them. It is never on the "non resident". I appreciate that, as an administration, CRA can tell you what they wish but, if you object and take them to Court, the burden remains with them. So, at an administrative level, I accept that they can state what they want, just as a cop can charge you with whatever they wish to. However, that doesn't alter the fact that, in any Court proceeding, the burden is on the one that asserts.

So, if CRA wishes to allege your income is X, they have to prove that it is, you don't have to prove anything. If you wish to claim a deduction Y to reduce your income (assuming that that income has been established) the burden is on you, the CRA doesn't have to prove anything. He that asserts, must prove.

I thought it was relatively straightforward.

JonboyE

My reading of case law suggests that the courts put a lot of emphasis on the credibility of the taxpayer.

That said, I don't argue cases in court. I deal with the CRA at the coal face. I know they use arbitrary assessments of taxes as a stick to beat taxpayers who do not cooperate. It is so commonplace it is unremarkable.

Almost Canadian

My current accountant is ex-CRA, so I am aware of the practices they use at the "administrative" level and I am confident that, for most situations, this works well for them but it doesn't alter the fact that, there is an appeal from a decision of administrator.

Of course, credibility affects both the one asserting and the one opposing that assertion.

In any event, we appear to be drifting somewhat from the thread so I will leave it there.

Steve_

The point is though that the burden of proof is on you to disprove what they have said. They're the ones who've got the power of taxation, so they take the money and then you have to try and get it back. Which places the burden on you, usually. Even if you bugger off to another country they can still get at your money through the tax treaty, so you still have to appeal.

As a practical matter the burden of proof is on you.

Here is a bit of case law that illustrates what I'm saying: CanLII - 2005 TCC 479 (CanLII)

They decided he was resident, he said no I'm not, they reassessed, he disagreed, he had to appeal it.

But the whole purpose of the tax system is to gather the information which they use against you. Going back to the OP, the answer is yes they can get into your foreign bank accounts with some effort, via the tax treaties. And the reason they keep refining T1135 is to hit you over the head with that as well. So once they've got that information and hit you over the head with it - the burden of proof is on you to prove otherwise.

dgagitw

I hope never to find this out - I'm the sort of person that declares the 3 cents interest I make from my US account that I've never got around to closing - but what do they do about documentation now it's mostly electronic? I don't think I receive a single paper financial statement these days, it's all online. If I was asked to provide statements, I'd have to print them all out myself and, I expect, it would be pretty clear that I wasn't presenting something exactly official from the bank. Mostly they would be very easy to alter as well. What's the deal?

JonboyE

There is a world of difference between not being able to supply documents that do not exist and the willful refusal to supply copies of documents that do. This was the premise of the OP.

Though there are still jobsworths (for want of a better family friendly name) at the CRA I generally find their assessment and compliance people are perfectly reasonable if you play ball with them. I have only once known an auditor question the authenticity of digital documents but he retired before the audit was completed. His much younger replacement was fine with them.

That said, the onus is on you to keep whatever documentation you can. Electronic copies are fine as long as you can print them. People fall foul of this if the current version of their software cannot open archived copies. I print everything (e.g. statements, bills, invoices, tax returns and screen shots) to pdf files. I can't believe Adobe will sell a copy of Acrobat hat is not backwards compatible.

dgagitw

Useful information, thanks. I keep PDF copies of everything in the general case so it sounds like I'm covered.