Markham businessman charged for not maintaining proper books
Anthony Ho Shue of Markham Ontario pleaded guilty in the Ontario Court of Justice in Newmarket on September 22, 2009 on one charge of failing to keep proper books and records as required by the Income Tax Act. He was fined $16,000 and paid the amount immediately.
The Income tax Act requires that business owners keep proper books and records in order for CRA to properly calculate the taxes payable. CRA takes sloppy bookkeeping really serious. When an auditor reviews the books and records of a Company it is imperative that the books be in proper order.
If the books are a mess, the auditor will have no choice but to expand his work and look much further into the business. Inevitably, this causes a much higher reassessment. If the books are a complete disaster and the auditor cannot rely upon them, then CRA will do a net worth assessment based on the lifestyle of the tax payer.
The auditor will review personal bank accounts, credit card, mortgage payment etc. What the auditor cannot find in personal expenses, they will use statistics Canada numbers to estimate what certain items costs. For example, if CRA performs a net worth audit and cannot determine what a family consumes in groceries for a year, they will then use statistics Canada numbers to estimate what a family of a particular size consumes in food for a year. The onus will be on the taxpayer to prove CRA wrong.
