Cole rents a 100 sqr. foot junior bachelor suite in Dartmouth, but he believed that his 25 sqr. foot office was worth $475,984.00
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June 11, 2019
Cole Coal, gig-freelancer, received a sobering letter from the Canadian Revenue Agency informing him that they were opening up his 2018 tax-filing for review and audit. Enclosed in the letter was a request for all receipts that lead to an estimate of $475,984.00 in home office expenses. Mr. Coal reached out to us to try and explain the situation, "You know, it is sort of subjective, right? A buddy self-evaluated my business at 1.9 million, which is fair given all my potential (not revenue), and like 25% of 1.9 million is around 475K".
Unfortunately for Cole, this is not how accounting works. He said he was given bad advice from some guy he met at a hostel. The CRA can penalize Mr. Coal, and the courts could fine him up to 200% of the taxes evaded with a maximum of 5 years in prison. Cole doesn't think it will come to that, "you know, tax evasion and fraud; it is pretty subjective stuff." A costly mistake for him and his registered company "Giggle-Gigs and Freelancing Shit."
Even though the CRA could probably do a large portion of the tax submission for Canadians, they don't. It keeps CRA and accounting employees employed! Until the day the CRA leans up, it is up to YOU to not screw up.
For resources on how to not end up like Cole Coal and to do your taxes correctly, check out these sources below. Leave a comment if you know of another trustworthy source for Canadians Mobile Workers.
xx E.M Munster