| Income taxes are a very important thing for any | | | | fines or interest charges. So if the taxpayer has fillet |
| properly working government. Usually it is levied on the | | | | the return too late, failed to fill a return, hasn’t |
| on the financial income of people, corporations, or other | | | | reported an item of income in the return or made a |
| legal entities. There are various types of income tax | | | | false statement or an omission on a return, penalties |
| systems with varying degrees of tax incidence. The | | | | can be laid upon him. |
| Level of Canadian Taxation is average among | | | | When the CCRA representatives are searching for |
| Organization for Economic Co-operation and | | | | documents of a suspected taxpayer, they can look |
| Development (OECD) countries and approximately | | | | through the books and records at a taxpayer's place |
| 70% of the Canadian government's income comes | | | | of business without a search warrant. But any search |
| from taxation. Due to such high percentage of income | | | | and review of document at taxpayers house requires |
| the Income Tax System is protected by serious laws. | | | | a warrant. After an audit is finished the results can |
| Canadian system is built on the principle that people | | | | lead to a reassessment of the taxpayer's liability. The |
| repost their income themselves to the Canada | | | | taxpayer will owe more money to Canadian |
| Customs Review Agency (CCRA), by filling an annual | | | | government and if he does not agrees to this he can |
| return. The CCRA is represented by numerous small | | | | contact the local CCRA office and try to resolve the |
| offices across the country, the make the whole tax | | | | problem. If the problem can’t be resolved at the |
| collecting process easier. In most cases there is no | | | | local office the problem can be resolved by appealing |
| problem with people who have a normal job and a | | | | serving a Notice of Objection on the Minister of |
| corresponding income, the system is targeted at | | | | National Revenue through the CCRA office. |
| people whose income is expected to be | | | | When the message is received the case can be |
| under-reported. Wage earners' income can easily be | | | | presented to the Minister, he will review the case and |
| confirmed by comparing the info given from taxpayer | | | | make a decision to whether uphold, change or cancel |
| and from his employer. But if a taxpayer has an | | | | the assessment. The taxpayer will be informed of this |
| income from a source that can’t be confirmed | | | | decision. If the taxpayer disagrees he or she can |
| easily, this person will be most likely chosen for auditing. | | | | appeal to the Tax Court of Canada. The type of |
| Even in case if person is suspected he still maintains | | | | appeal depends on the sum of tax in dispute. If it is |
| his rights and has all the possibilities to explain the | | | | more than $12.000.00 the procedure can be informal |
| under-reposted income. | | | | and easy, if the sum is larger there will be a formal |
| In order to enforce the income tax system the Income | | | | procedure that is similar to court hearing. |
| Tax Act (the 'Act') has a number of civil penalties like | | | | |