You’ve seen it a lot on social media I’m sure. Those ‘friends’ that continually bombard their pages with evidence of their lavish lifestyle; vacation pictures from exotic locations, location updates from fancy restaurants and clubs, new cars, new boats, new motorcycles, you name it. All in an attempt to make their on-line audience of ‘friends’ envious of their exquisite lifestyle. Don’t be envious. Instead have a little chuckle in knowing that Canada Revenue Agency (CRA) may very well be checking out your on-line baller friend as well.
It’s referred to as Indirect Verification of Income and it has become a new audit technique employed by CRA. If one’s lifestyle and reported income don’t match up the CRA may decide to look into your affairs a little more closely to see what’s actually going on. So, if you’re driving a luxury car, living in high-income real estate, and vacationing in exotic and expensive resorts but only reporting $40,000.00 of income on your tax return per year then you’ve likely made yourself a big juicy target for an audit by the CRA.
Open social media accounts (and trust us, most of them are) are publicly accessible. There is nothing stopping a CRA auditor from gathering social media data to build a case against you. If you’re audited and your lifestyle is not in line with your reported income, and you cannot explain the difference then the CRA can assess taxes based on indirect methods of calculating your income. This can then lead to taxes owing, severe penalties, interest, and potential criminal convictions.
What should a social media baller do? Start with being honest, pay your taxes, spend frugally, walk with humility and channel some time currently being spent building your social media presence, and instead, invest some of that time reading a couple of good books on how to improve upon your current level of self-esteem.
Should you be experiencing negative changes in the payment behavior of your customers CASE can help! As a collection agency with offices in Edmonton, Calgary and the GTA we can apply our best professional efforts in order to make your past due accounts receivable a top priority.