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A Bizarre Tax Tale that Takes Another Twist :CRA SOTW

Bizarre tax tale manages to take another twist
Don Cayo, Vancouver Sun
Published: Tuesday, April 01, 2008

Remember Jim McAusland? He's the hero of the first column I wrote in
what has become a painfully long series about taxpayers abused at the
hands of Canada Revenue Agency. And he has another bizarre tax tale.

You may recall that McAusland is the concrete company owner who
remitted $46,000 -- payment in full, and made a week before it fell
due -- at the CRA office in Surrey.

For his trouble he got a receipt -- and a $4,600 fine. The CRA clerk
didn't tell him at the time, but it turns out the bureaucrats prefer
him to pay it a bank, not their own office. And, as we all should
know, you inconvenience CRA bureaucrats at your peril.

To his credit, he didn't pay. He fought back, in large measure through
the pages of The Vancouver Sun, where he let me air his private
business in public.

The story embarrassed CRA and its political masters enough for two
things to happen: Just before Christmas, the agency cancelled the
fine. And in his February budget, Finance Minister Jim Flaherty
rescinded the regulation that ensnared McAusland in the first place.

But don't cheer too quickly.

McAusland had another tax bill to pay a couple of weeks ago -- not the
same kind of remittance that caused the trouble in the first place,
but money nevertheless due to CRA.

So, although he'd won the right to pay his payroll deduction account
at a CRA office instead of at a bank, he didn't try to push his luck.
He paid at his bank.

At home that evening, the bank called to say -- you guessed it -- that
they aren't allowed under government rules to accept his payment. So
he'd have to pay this particular bill directly to CRA.

As far as I know, no financial penalty is being foisted on McAusland
this time, just the inconvenience to having to pay a bill twice. But I
tell his story here to underline the capriciousness and stupidity of
CRA clowns who put taxpayers through so many pointless hoops.

- - -

Remember Doug Lewry?

He's the 51-year-old Saskatchewan educator who eight years ago
"invested" -- i.e. threw away -- $200,000 in RRSP savings in an
offshore scam that promised returns of 10 or 20 per cent a month. He
not only lost it all, but also faces a fast-growing tax bill, now
$149,000, on the tax-sheltered money he withdrew.

I asked readers to tell me if they think he and other scam victims
deserve a tax break on what is, in effect, money he never saw.

What a hard-nosed lot you turn out to me. A big majority, nearly nine
to one, say the victims should pay.

Several note that what these guys lost wasn't just their own money, it
belonged to other taxpayers, too. Because money in an RRSP isn't tax-
exempt, it is tax deferred, and the government has a claim on a
portion of it when it's withdrawn, regardless of whether the
withdrawal is now or several years down the road.

Several readers also railed against the notion that they'd have to pay
for other people's greed and stupidity. And there were, of course,
some musings about the difficult precedents that would be set if this
tax debt was forgiven.

Only a handful said losing all of his retirement savings was penalty
enough. And only one noted that a lot of such debts will never be paid
anyway, so there's no sense dragging a family down in an effort to
collect.

Nobody seized on the point in Lewry's story that grabbed me the most.
It's that he was promised careful and prompt consideration when he
formally asked three years ago that the debt be forgiven. Yet he has
never had a straight answer.

I'm with the majority on the broad question -- I don't think these
kinds of debts should be forgiven, mainly because of the precedent it
would set.

But I do think it is beyond the pale for CRA to ratchet up the
interest while keeping him on tenterhooks, denying him the conclusive
response they promised three years ago. So I think CRA honchos should
tell him now, sorry you must pay up. But I think they should also
waive the interest that accumulated while they let him dangle.

dcayo@png.canwest.com
© The Vancouver Sun 2008
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