Canadians admit to sidestepping the tax man
(NC)—The majority of Canadians admit to paying cash to avoid the sales tax, according to a recent survey by Leger Marketing for H&R Block. Even more telling is only 30 per cent of Canadians said it was wrong to avoid tax by paying cash.
“Canadians like to complain about the weather and taxes, so it is not surprising that some people are trying to take some measures to reduce their tax bills,” says Cleo Hamel, a senior tax analyst with H&R Block.
“Paying cash may be tempting but there are legal options to pay less tax.” Hamel recommends exploring legal shelters like Registered Retirement Savings Plans (RRSP) and Tax Free Savings Accounts (TFSA) for some tax relief. Tax loss selling of investments and donating to charity can also help reduce your tax liability.
The survey also showed Canadians were not just looking for tax breaks for themselves. Fifty-one per cent said waiters and waitresses should not have to pay taxes on their tips. And even though the majority of Canadians said they had never bartered, 69 per cent said you should not have to report bartered or traded items or services on your annual tax return.
“Unfortunately, tips are considered income and need to be reported on your tax return, whether you think they should be included or not,” explains Hamel. “The same applies to bartered goods and services.
If you do have undeclared income that you want to report, Hamel recommends the Voluntary Disclosure Program. It allows you to disclose unreported income without penalties. It does not exempt you from the taxes or interest owing, but you may be able to avoid penalties. However, you cannot use the VDP if you have already been contacted by the Canada Revenue Agency.
“Saving a few dollars may be tempting but the penalties and interest on unreported income can be quite substantial,” says Hamel. “The risk is not worth the reward in the long run.”
For more information visit www.hrblock.ca.
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