Tempted to cheat on your taxes and play the ‘audit lottery’? These two cases should dissuade you
It may be tempting to cheat on your taxes, but it’s not a good idea. While the Canadian and U.S. tax systems are largely based on self-reporting, risking an audit by burying questionable expenses or under-reporting income can land you in hot water. For example, a businessman from Calgary paid his wife $12,000 for administrative services, but attributed the expense to office equipment. He was audited by CRA for his “mistake,” and the judge denied the employment expense deductions. Cheating on your taxes can be a time-consuming misjudgment that can cost you thousands to rectify. With CRA paying closer attention to tax compliance, hiring more auditors and comparing incomes, cheating on your taxes in a losing proposition. Speak with your Accountant if you want to know how to avoid these costly mistakes.