Comments on: Fear Of An Audit http://www.cambirch.com/fear-of-an-audit/ Thoughts about Business, Finance and all things interesting Sat, 14 Jan 2012 04:08:13 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Planning For A Government Audit | Cam Birch .com http://www.cambirch.com/fear-of-an-audit/#comment-266 Planning For A Government Audit | Cam Birch .com Mon, 27 Jul 2009 14:35:45 +0000 http://www.cambirch.com/?p=381#comment-266 [...] you run a small business you are likely in some type of constant fear of a government audit.  I wanted to help lighten your mental burden.  Here is the absolute truth: If you run a business [...] [...] you run a small business you are likely in some type of constant fear of a government audit.  I wanted to help lighten your mental burden.  Here is the absolute truth: If you run a business [...]

]]> By: Cam Birch http://www.cambirch.com/fear-of-an-audit/#comment-191 Cam Birch Mon, 20 Jul 2009 19:30:44 +0000 http://www.cambirch.com/?p=381#comment-191 You are quite correct. The audit process is designed to catch people who are wrong/incorrect and unfortunately not knowing the rules correctly is not a defense. One should certainly spend the time and effort to understand the rules and credits before you take full advantage of them. For example in your parents case they should be able to claim back 100% of the EI payments made. When you own the company you work for you cannot claim EI and thus you do not have to pay it either. For myself I find I save thousands of dollars each year because I don't pay EI. I don't get to claim it but I haven't actually found anyone who got more from EI than they had paid in, so I see myself as coming out ahead. The interesting thing in your parents case is that there is very likely nothing in the pure paperwork that would have caused an audit due to their EI issue. Likely they were randomly chosen for a more in depth search and suffered due to that more than anything. Fearing the random is just like planning your life around the potential of winning the lottery. It is huge when it happens but the likeliness is somewhat low. You are quite correct. The audit process is designed to catch people who are wrong/incorrect and unfortunately not knowing the rules correctly is not a defense. One should certainly spend the time and effort to understand the rules and credits before you take full advantage of them. For example in your parents case they should be able to claim back 100% of the EI payments made. When you own the company you work for you cannot claim EI and thus you do not have to pay it either. For myself I find I save thousands of dollars each year because I don’t pay EI. I don’t get to claim it but I haven’t actually found anyone who got more from EI than they had paid in, so I see myself as coming out ahead.

The interesting thing in your parents case is that there is very likely nothing in the pure paperwork that would have caused an audit due to their EI issue. Likely they were randomly chosen for a more in depth search and suffered due to that more than anything. Fearing the random is just like planning your life around the potential of winning the lottery. It is huge when it happens but the likeliness is somewhat low.

]]> By: Melanie Reformed Spender http://www.cambirch.com/fear-of-an-audit/#comment-190 Melanie Reformed Spender Mon, 20 Jul 2009 18:28:09 +0000 http://www.cambirch.com/?p=381#comment-190 By the way, this is not to take away from your argument in favor of tax credits. You're totally right that they exist to be used. By the way, this is not to take away from your argument in favor of tax credits. You’re totally right that they exist to be used.

]]> By: Melanie Reformed Spender http://www.cambirch.com/fear-of-an-audit/#comment-189 Melanie Reformed Spender Mon, 20 Jul 2009 18:27:22 +0000 http://www.cambirch.com/?p=381#comment-189 The thing is, sometimes they do win and they can be very nasty. The government ruled against my parents in an EI case of not being at arm's length (my mother works for my father) and even the judge admitted that he believed they didn't do it on purpose and that he was finding them guilty on very little. But because of their mistake, they had to pay back all benefits received, with interest (even interest accrued during the appeals process) balooning from 5000$ to over 20 0000$. I heard a couple talking about a similar horror story who were suing the government on CBC's The Current and I felt for them because I've seen the toll it has taken on my parents' mental and physical health. I realize their case is relatively rare, but it does happen and I can see why people fear it. The thing is, sometimes they do win and they can be very nasty. The government ruled against my parents in an EI case of not being at arm’s length (my mother works for my father) and even the judge admitted that he believed they didn’t do it on purpose and that he was finding them guilty on very little.

But because of their mistake, they had to pay back all benefits received, with interest (even interest accrued during the appeals process) balooning from 5000$ to over 20 0000$. I heard a couple talking about a similar horror story who were suing the government on CBC’s The Current and I felt for them because I’ve seen the toll it has taken on my parents’ mental and physical health.

I realize their case is relatively rare, but it does happen and I can see why people fear it.

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