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Canada Revenue Agency monitoring Facebook, Twitter posts of some Canadians

By Elizabeth Thompson, CBC News Posted: Jan 19, 2017 5:00 AM ET

Agency is increasingly turning to cutting-edge data analysis techniques to improve service and 'compliance'

The Canada Revenue Agency is scrutinizing the Facebook pages, Twitter feeds and other social media posts of Canadians it suspects could be cheating on their taxes.

That's just one example of the agency's increasing focus on what it can learn by collecting and analyzing many kinds of data — both its own internally generated information and what it calls "publicly available information."

"The CRA does practice risk-based compliance, so for taxpayers identified as high risk, any relevant, publicly available information relating to the specific risk-based factors for the taxpayer may be consulted as part of our fact-gathering processes," said spokesperson David Walters.

Among those considered high risk are wealthy Canadians with offshore bank accounts, said Jean-François Ruel, director of CRA's Strategy and Integration Branch.

"If we go with high-risk, high-wealth individuals that do offshore [banking], then we would look at all information that is public for compliance action."

Tobi Cohen, spokesperson for the privacy commissioner, said CRA notified it of its plan to collect publicly available information from social media in connection with "tax fraud and non-compliance risk analysis, audits and investigations."

However, David Christopher, of the advocacy group Open Media, said his organization opposes government agencies monitoring what Canadians are saying on social media.

"When Canadians post something on Facebook, they believe that they are sharing that with their friends and with their family. They don't believe that they are sharing that with some government bureaucrat in Ottawa," he said.

"Unfortunately, Facebook's privacy settings are notoriously complex and many people might think that they are posting something to their friends and it ends up getting shared with the whole world."

 

The revelation that the Canada Revenue Agency is checking social media posts comes as the agency is also expanding its use of cutting-edge technology and data analysis to better catch tax cheats, to target people for audits and to improve its service for Canadians.

Big data

Business intelligence, also known as big data, is a rapidly growing area within CRA. In 2016 alone, the agency posted three separate privacy impact assessments centred on its plans to use business intelligence techniques in its operations.

Former CRA commissioner Andrew Treusch says technology is changing the way the agency operates.

"Evolving technology is having a significant impact on our approach to compliance," he wrote in the agency's 2016-17 Report on Planning and Priorities.

"Data analysis and business intelligence are providing us with better insight into taxpayer behaviours, allowing us to spend less time and effort on lower-risk groups of taxpayers and focus our resources on dealing with deliberate non-compliance."

In the report, the agency says business intelligence, which includes "mining accessible data," is a key area.

"This is because of the far-reaching opportunities it presents to enhance strategies for compliance, services and debt collection. Business intelligence encompasses big data to improve non-compliance detection (predictive analytics) and behavioural economics (such as 'nudging') to improve compliance."

Future techniques

An internal CRA document, which CBC News first found on the website of the U.S Internal Revenue Service, outlines CRA's plans to use business intelligence techniques in the future.

The document, prepared in 2014, describes plans to move into such areas as predictive analytics, which can use data and algorithms to help officials decide whether someone who hasn't paid their taxes should get a gentle reminder, a phone call or an audit.

A chart in the document indicates CRA also planned to get data to analyze from "web and social media."

Ruel said while the agency was looking into the prospect at the time, it is not currently planning to include social media analysis as part of the business intelligence side of its operations.

"A lot of steps and a lot of work in terms of privacy would have to be done first and it's not one of the priorities right now."

However, he said the business intelligence unit does analyze data from CRA's interactions with Canadians through its own Twitter and YouTube accounts.

"When they communicate with us, we analyze this information to make sure that we understand what is happening," Ruel said. "If there is concern around scams, for example, we will take that information and then create a communications strategy to make sure that people have the information that they need."

Identifying offshore tax evasion

Ruel said the business intelligence section has a dual focus: improving service for Canadians while at the same time identifying cases that should be audited.

On the audit side, it is working extensively with data it has been receiving from Canadian financial institutions since January 2015 whenever someone makes an electronic transfer worth $10,000 or more.

The result has been a lot of information about countries of concern for offshore tax evasion.

"If we look at the case and we see there are a lot of funds transfers toward a country where we know there could be some offshore activities, then we link that information with all the other information that we have and we prioritize that way," Ruel said.

The agency has also begun text analytics, also known as text mining. For example, Ruel said the business intelligence section is analyzing auditors' notes to detect new tax schemes or techniques for avoiding taxes.

But as CRA and other federal departments increase their use of data, privacy advocates say they should also be asking tough questions.

In a speech prepared for a conference in December, Patricia Kosseim, senior general counsel at the Office of the Privacy Commissioner, warned that just because something is publicly available online, doesn't mean individuals have waived their rights to privacy.

"Government's objective of being more nimble and responsive to the needs and expectations of Canadians is playing out in a data-rich context nurtured by individuals who are increasingly exposing their personal lives on social media, discussion forums and online networks. Never before has it been so easy to data-mine these 'non-traditional' sources of information.

"While it may be tempting to cull data from these sites for recruitment, performance management, law enforcement or security related purposes — not to mention out of sheer curiosity — these are not lawless zones."

Colin Bennett, a University of Victoria professor who specializes in privacy, said government use of big data techniques is causing concern among privacy advocates.

When Canadians provide information to the government, they provide it for a specific purpose, not for algorithms and predictive analytics, he said.

"You are getting beyond the initial reason why the data were collected in the first place, which is to administer our tax system, and it is becoming far more hypothetical, far more speculative and concerning."'

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Couple asked by CRA to prove they have children a second time

The Canadian Press

A Saskatoon couple has two boys, four car seats and a nanny but they’re being asked by the Canada Revenue Agency to prove that their children exist — again.

Devin Dubois and his wife got a letter telling them to prove that they have children or their child benefits would be cut off. But Dubois says the CRA has the information in its possession because the couple got the same letter in 2014.

“It’s not that there’s anything new in our 2015 tax returns. These are the same two kids that we’ve always claimed. I don’t know what the CRA thinks has happened between now and then,” said Dubois.

“I don’t know what more proof positive we really could provide.”

Dubois says in 2014 he provided proof of their Canadian citizenship, social insurance numbers, child-care receipts and property tax details.

He also sent notarized copies of his driver’s licence, law society membership and Costco membership. There was also a lengthy letter, with a touch of sarcasm.

“If our kids haven’t existed for the past three and a half years, why the hell are we so tired? And why are we consistently doing laundry, why is our house a disaster and why are there raisins and Pepperidge Farms goldfish ground into our carpets, car-seats and couches?,” he wrote.

The documentation was accepted by the government.

That’s why the Saskatoon dad says it’s “absolutely ridiculous” for the CRA to ask for the information again.

“They actually have this information, so to send a letter saying benefits and the tax credits you requested won’t be granted unless you prove all of this, this is my problem with it, is that it’s silly and it’s flippant and it’s not necessary,” he said.

The revenue agency says on its website that people must reply to the letter or their child and family benefits could be terminated and they might have to repay benefits already received.

Regina resident Colleen Book got the same letter last fall, but a delay in mail delivery left her with just a couple of weeks to gather information or risk having benefits cut off.

“I ran around. I had to go to city hall to get our property tax information. I had to go to the daycare and ask them to write this lengthy letter saying that our daughter was ours and that she lived with us and then I ended up spending $14, $15 to send it overnight to make sure I hit their deadline,” said Book, who was pregnant with her second child at the time.

“I was annoyed, obviously.”

Like Dubois, Book also sent a letter to the CRA voicing her frustration. She says she asked how they choose people to audit and why the CRA was asking for specific details.

Book also says “the tone of their letter was insulting.”

“I’m not a scofflaw. I’m not someone who has lied to the CRA before. So to send me an accusatory letter demanding this information within a very short time period, without any justification or cause, was just totally unacceptable in my mind,” said Book.

“I totally understand why they would need to do this kind of review, but I think if they’re going to be demanding this information, they should be a little bit more accessible to answer questions and they should be a little bit more up front about why they’re asking for this.”

A call to Canada Revenue Agency’s media relations for comment was not immediately returned Monday.

In the meantime, Dubois says he’s drafting another letter to the agency.

“But I’m a little more perturbed even than I was before because it seems to me that this is really a colossal waste of time and resources, not just for the people who are having to deal with it, but also for the CRA.”

 

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Opinion: It's never too late for low-income Canadians to file their taxes

BY: GARY BLOCH & JOHN SILVER, VANCOUVER SUN

Most Canadians would like to see an end to poverty. What if we told you that one organization, using the existing social benefits system, found a way to get $21 million into the pockets of 9,000 low income individuals in Winnipeg?  This is not Robin Hood and his gang — it’s Community Financial Counselling Services, an organization that helps people living at low income to file their tax returns. They have been doing this important work for 42 years.

The latest federal budget makes an important commitment to low-income Canadians — to help them complete and file their tax returns. Many might assume this is a way for the government to bring in more revenue. In actual fact, for the large majority of Canadians earning less than $40,000 a year, filing taxes doesn’t mean a bill to pay — it means extra benefits to collect.

This part of the budget was called Helping Canadians Receive the Tax Benefits They Deserve and promises that the Canada Revenue Agency (CRA) will contact low-income individuals who have not filed a return, telling them what benefits they may be entitled to receive. 

We often hear about the impact of poverty and income inequality on health, educational outcomes and child and adult well-being. Might encouraging people to file their taxes help people avoid poor outcomes? A look at some examples suggests an answer.

In Sudbury, Ont., Mary, a single parent with two young children paying $800 a month to rent an apartment works part-time at minimum wage to earn $14,000 a year. By filing her taxes, she can access child benefits, the GST/HST credit, the federal working income tax benefit, the Ontario Trillium Benefit and the Children’s Activity Tax Credit. In other words, she could more than double her income to $31,845 by filing her taxes — not bad, and this would raise her family above the poverty line.

Raj, a recently widowed senior in Manitoba, aged 60 and disabled, struggles to live on $7800 a year in a private apartment. If she files her taxes she could receive a $674 monthly allowance for the survivor benefit since her deceased spouse was over 65. This benefit, as well as other federal and provincial refundable tax credits, would raise her annual income to $19,540, bringing her above the poverty line. 

And it is not just additional income that filing taxes provides. 

In Manitoba and Ontario, filing taxes allows some low-income people to access provincial prescription drug coverage.  It also allows people with severe disabilities to receive extra tax credits and retirement savings grants.

So why don’t many low-income people file taxes? 

Many Canadians have no idea they would get money back, and they fear being told they have to pay the government for back taxes they cannot afford. The CFCS, while accessing $21 million, found the total taxes owed by the 9,000 individuals they saw last year was $169,704. Most people owed nothing. 

Tax filing support is a hugely important anti-poverty and health intervention. 

The Canada Revenue Agency supports programs that prepare taxes for low-income Canadians through its Community Volunteer Income Tax Program — that’s a good thing.  But these programs mostly operate in tax filing season, when waits are long and demand exceeds supply. Before 2008, the CRA had more funding, provided more personnel, computers, in-person training and assistance with tax issues to agencies in many inner city areas.  Many of these programs were forced to scale back or close when the CRA’s funding was cut back.  

Tax filing services such as these should be reinstated — and in fact extended — to provide service to low income Canadians throughout the year. 

Volunteer tax filing clinics often have trouble dealing with complex tax situations. From our experience, it is difficult to train volunteers to deal with the variety of complex tax situations that arise. Volunteer tax filers need access to knowledgeable tax preparers to assist in these situations. The CRA provides a national toll-free line to assist volunteers, but more support is often needed.

Filing taxes is also often held up by individuals who don’t have the identification or documentation necessary to access certain benefits to which they may be entitled. The CRA should work with provincial governments to address this issue. 

It is time we make sure all low-income Canadians are accessing the benefits Parliament has already agreed they deserve. It is incumbent on the government to make sure everyone is aware of the benefits they are due. The CRA needs to provide strong support to ensure barrier-free tax filing for all those in need. 

Gary Bloch is an expert adviser with EvidenceNetwork.ca and a family physician with St. Michael’s Hospital in Toronto.  He is a founding member of Health Providers Against Poverty. 

John Silver has more than 30 years’ experience in community health and non-profit community service management. He is the executive director of Community Financial Counselling Services in Winnipeg.

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Photo GalleriesCBC SecureDrop 5 things to know about the new Canada Child Benefit

5 things to know about the new Canada Child Benefit
Is your family among the 90 per cent the Liberals say will be better off on July 20? You're about to find out

By Janyce McGregor, CBC News

b2ap3_thumbnail_trudeau-rouge-20160618.jpgPrime Minister Justin Trudeau and his wife, Sophie Grégoire Trudeau, pose with kids during an event in Toronto last month.
Nine in ten Canadian families will be better off once the Canada Child Benefit rolls out July 20, the Liberal government says.
(Mark Blinch/Canadian Press)

 

The Liberals promised during last fall's federal election that nine in 10 Canadian families would be better off once their new child benefit package rolls out.

Significantly better — to the tune of $2,300 annually, on average, according to the finance department's calculations for the 2016-17 benefit year..

Is that really true?

On July 20, Canadian families will find out exactly how much their new monthly payments will be.

But assessing the full impact of the new Canada Child Benefit (CCB) may take longer.

Here are some things to know about the new monthly child benefit: 

 

How much will families receive?

When the federal budget came out in March, the finance department put out a simple calculator.

Since then, the Canada Revenue Agency has added a more complex calculator for all government benefits. It requires inputting more information, but calculates a more exact figure.

For lower-income households, the CCB is billed as a game-changer. Finance Canada says the CCB will lift 300,000 children out of poverty, compared with 2014-15 figures.

Here's why: families with less than $30,000 in annual net income receive these maximum yearly benefits:

  • $6,400 per child under the age of 6.
  • $5,400 per child aged 6 through 17. 
  • An additional $2,730 per child eligible for the disability tax credit.

Families with higher incomes receive progressively less, until the CCB phases out entirely for the richest households. But the exact calculation of when that point it reached is a bit complex.

The number and age of children is a factor. So are all the components of a family's adjusted net income, which is based on line 236 on your federal tax form.

A high-earning family with a lot of deductions may come in just low enough to receive some of the benefit. A single parent making the same individual income as a married parent may receive more benefits than the two-income household. 

In calculating family net income for CCB purposes, the former Universal Child Care Benefit (UCCB) and Registered Disability Savings Plan (RDSP) income are subtracted from your taxable income.

In other words: the monthly UCCB payments families received until now aren't padding the income on which the new amounts are based.

Can't wait for July 20 to find out the exact amount of the benefit? Anyone registered for an online CRA account can look it up now, based on a 2015 tax assessment.

 

Is this benefit retroactive?

No. Unlike the previous Conservative government's rollout of its enhanced UCCB last July, there's no lump sum retroactive payment dating back to Jan. 1 this time.

The legislation to create the new benefit only received royal assent to become law in June. But the federal benefits year begins in July, meaning programs are split over the calendar year anyway.

 

What's been cut?

The revised benefit isn't the only impact on a family's bottom line.

The CCB is also meant to simplify things, so it replaces:

  • The UCCB, the current monthly child payments of $160 per child under six and $60 for kids between 6 and 17.
  • Canada Child Tax Benefit (an additional income-tested family benefit).
  • National Child Benefit (a supplement for low-income families).
  • The Conservatives' Family Tax Cut — also known as "income-splitting for families" with children under 18, which significantly lowered the tax payable, up to $2,000, for families when one parent or guardian made significantly more than the other.
  • Children's Fitness Tax Credit and Children's Arts Tax Credit. These deductions worth up to $150 and $75 per child, respectively, are being phased out — cut in half in 2016, then eliminated entirely for 2017 and beyond.

Unlike the previous UCCB, the new CCB is not taxable income, so there will be no extra tax hit next spring. That means that even if your monthly payment amount has decreased, you may still be better off overall.

b2ap3_thumbnail_pm-trudeau-and-finance-min-bill-morneau-fed-budget-2016.jpg
Families have to do all the math — the taxes no longer paid, but also the credits no longer claimed — before drawing conclusions about whether they're better off.

And don't forget: the federal tax brackets changed last January. The middle income rate dropped from 22 per cent to 20.5 per cent, while a new tax rate of 33 per cent kicked in for incomes above $200,000.

 

How can I make the most of it?

The key to maximizing the CCB lies in minimizing a household's net income. Any deductions that lower the amount on line 236 of the federal tax return will result in higher monthly benefit payments.

For example, people who don't contribute the maximum to their registered retirement savings plans (RRSPs) miss out on more tax-free CCB income.

Claiming costs like child care, moving expenses or union dues lowers the taxable net income amount as well. Keep those receipts.

 

What about Canada Post disruptions?

At time of writing, the risk of postal service disruptions this summer appears postponed, but not over.

In the event the labour dispute escalates, the Canadian Union of Postal Workers (CUPW) has agreed to continue delivering the CCB cheques issued on the 20th of each month. 

But the government encourages anyone who still receives benefits payments in the mail to sign up for direct deposit.

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Banka: Fighting back against tax fraudsters and scammers

By: Gabriele Banka - Kelowna Capital News

How many of you have received a threatening phone call in the past 12 months demanding payment of an amount that you are sure you don’t owe?

Statistics show that 90 per cent of people have been targeted by fraudsters and scammers.

The RCMP Scams and Frauds website lists all the scams that are currently out there. The frightening reality is that new ones are being invented every day.

They include identity theft, debit and credit card fraud, email fraud, telephone scams, charitable donation fraud, lottery winnings fraud, on-line shopping fraud, investments and securities fraud and counterfeit money.

It seems that our culture has moved away from the concept of ‘A Day’s Work, A Day’s Pay’ and is more focused on how to get the ‘easy money.’ With respect to the Canada Revenue Agency,  there are two scams that are currently a concern—telephone and email scams.

In my office, I have received reports that the people on the phone are very aggressive, even so far as threatening people with prison and bodily harm.

Unfortunately, many seniors are confronted by those kinds of threats.

If you are sure that you don’t owe any tax, then the call is definitely a scam.

You can always call your accountant to make sure that there is no balance owing.

If you get one of these calls and you are wondering if it’s genuine, ask for the agent number.

Every CRA employee has an agent number.

Then once you get the agent number tell them that you will call them back on the CRA general line (1-800-959-8281). If they refuse to give you their agent number, or give you a fictitious one, you can check with someone at the CRA general line.

If this person is requesting payment via a credit card, CRA personnel cannot process credit card payments directly so this is fraud.

How do you report this?  You can report it to your local RCMP detachment as well as the Canadian Anti-Fraud Centre at 1-888-495-8501.

You can also contact you MP or MLA and the Canada Revenue Agency at 1-800-959-8281.

Both the RCMP and the CRA website have a fraud section, so you can learn how to protect yourself.

The rule of thumb always is don’t give out any personal information about your finances on the phone.

Some CRA collection officers may be pretty aggressive, but by the time you receive a phone call from them, you would have already received several letters indicating that you have an outstanding balance and told to expect to receive a followup call.

If you receive an email demanding payment from CRA, then it is a scam.

CRA personnel do not email anyone directly.

The only access to receive online mail is through the My Account or My Business Account option directly through the CRA website. You may receive an email indicating that you have mail, but you would then need to log into your account with CRA in order to retrieve it

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Tax Strategy: A large down payment helps first-time homebuyers

 

Tax Strategy: A large down payment helps first-time homebuyers.

Canadian dollars are pictured in Vancouver, Sept. 22, 2011.

Canadian dollars are pictured in Vancouver, Sept. 22, 2011.

Jonathan Hayward / THE CANADIAN PRESS
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How to allocate funds for the purchase of a first home and how to collapse a Registered Education Saving Plan (RESP) in a tax-efficient way were among the topics raised in the latest batch of reader letters. Here’s what they wanted to know.

Q: My wife and I are looking at building a house in the $275,000 range within eight months and wondering what would be an appropriate down payment. I have $80,000 and my wife has an additional $20,000 in cash, both earning very little in the bank. Borrowing more rather than less would seem to be the way to go, with interest rates so low. What do you suggest?

A: Any time you can put down 20 per cent or more of the purchase price, you’re giving yourself a significant head start on the home ownership front, and you’d be in that range with a $55,000 deposit. At that level, the rate you’ll be charged for Canada Mortgage and Housing Corp. (CMHC) mortgage loan insurance is about half what someone putting down 10 per cent will pay. Houses usually cost more than most rookie homebuyers foresee, so it’s not a bad idea to leave yourself a bit of a financial cushion, especially at first, so you can get a feel for what your annual housing costs truly are. If you’re managing easily, then you could use some of the reserve cash for a paydown payment on the anniversary date of the mortgage. If you’ve got RRSPs and haven’t owned a home before, you and your wife could each borrow up to $25,000 apiece from the plans for the down payment under the RRSP Homebuyers’ Plan. You’d have up to 15 years to repay that money. In that scenario, you could boost your outlay to $100,000 by drawing $50,000 from your accumulated savings, leaving you with a low-interest mortgage in the $175,000 range and sizable cash reserves that you might consider parking in tax-free savings accounts (TFSAs).

Q: My wife opened a Registered Education Saving Plan (RESP) for our children in 1990 and we are thinking of closing it now. More than $80,000 was withdrawn from it for educational expenses over the years, but the children are done their studies and there is still more than $50,000 left over. Part of it is contributions and part of it is growth. As I understand it, the contributions can be reclaimed without any tax consequence. What is the most tax-efficient way to withdraw the rest? Does the fact my wife opened the plan mean that none of the funds can be transferred to my RRSP?

A: The key detail in this RESP-windup scenario may be who is officially considered the plan subscriber. If it’s your wife alone, your options are rather limited. Contributions can indeed be withdrawn tax-free from an RESP at any time, but not so for any accumulated income. The tax rules state that accumulated income generally can be paid only to the plan subscriber. And once the subscriber has made a withdrawal of this nature, they must collapse the RESP by March of the following year, giving them only two years to spread the tax blow, which could be considerable: withdrawals of RESP income by a subscriber not only are taxable, they’re subject to a special surtax (12 per cent for Quebec residents). You can get around the surtax by transferring up to $50,000 to an RRSP or spousal RRSP, if you have the contribution room. But if your wife is the only recognized subscriber, it will all hinge on whether she has the contribution room. If she doesn’t, you might want to hold off on withdrawing those funds until there is contribution room, or until a year when her other income is low. You’ve still got time, since the plan doesn’t have to be collapsed until its 35th year.

The Montreal Gazette invites reader questions on tax, investment and personal-finance matters. If you have a query you’d like addressed, please send it to Paul Delean, Montreal Gazette Business Section, Suite 200, 1010 Ste. Catherine St. W., Montreal, QC, H3B 5L1, or by email to This email address is being protected from spambots. You need JavaScript enabled to view it.

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The Importance of reporting ALL income from information slips

Many people assume that if they fail to include an information slip with their income tax return, the Canada Revenue Agency ("CRA") will simply adjust the return to report the income and adjust the income tax accordingly.This is half correct!The other half of the equation is a little known penalty the CRA imposes for repeated failure to report income. This penalty arises when an income slip is not added in your tax return two times in a three year period.

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Foreign Asset Reporting and the Extreme Costs of Non-Compliance

Several years ago form T 1135 was added to our tax returns for individuals, corporations, partnerships and trusts. It is a simple form that has been often overlooked and non-compliance has been high. More than likely this has been because the form does not enter into the calculation of income tax payable.

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