CRA reports $240m in real estate tax fraud

The CRA crackdown on real estate tax fraud is producing some big numbers in audit recoveries.

Read: Feds close loophole on capital gains exemption

The CRA’s website shows that, for the last year and a half, audit recoveries in B.C. and Ontario total more than $240 million. In B.C., $30.3 million (from 2,366 case files) was recovered; in Ontario, that figure jumps to $210.4 million (from 13,403 case files). The CRA applied an additional $12.5 million in penalties.

Taxes on real estate transactions in the Greater Toronto Area have been under greater scutiny for some years. In 2015, the CRA doubled its efforts in B.C. That was the same year the tax agency started a review of 500 high-dollar real estate transactions in B.C. to uncover tax issues not already identified.

Read: Principal Residence Exemption: What’s changed, what hasn’t

On its website, the CRA lists its top areas of concerns for real estate tax compliance, including:

• questionable fund sources for buying property,
• property flipping,
• unreported GST/HST on the sale of new or renovated property, and
• unreported capital gains.

Taxpayers identified as high-risk are audited. The CRA applies penalties equal to 50% of the additional tax payable if a taxpayer knowingly makes a false statement when filing.

Also read: Impacts of mortgage rules unknown: Minister

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.