When I first became an accountant in 1994, CRA was concerned with collecting the tax revenues that were legitimately owed to it by Canadians. Although we operate on a self assessment and honour system in this country, spot audits were considered to be an important aspect to enforcement. But CRA was a cost centre of the government. Auditors at that time had a big picture focus. You could reason with them. If a client did not have all his or her receipts, you could have a discussion centered around what support had been provided and extrapolate based on that. You could negotiate a reasonable position based on the facts and common sense. If it became clear that making adjustments was just going to create a lot of extra work for everyone and not result in any significant tax change then auditors would let these matters go, as they recognized that they just weren't worth pursuing. They had bigger fish to fry, like people hiding their assets offshore and stuff like that.
Oh how things have changed....CRA is now a profit centre of the government. What does this mean? Well for one thing, it is now the job of the auditor to disallow as many expenses as possible and characterize as many bank deposits as income as possible. How do they do this when common sense and the generally apparent facts support the taxpayer's position? They ignore them. It no longer matters what you can explain, it only matters what you can prove. It used to be that if there was something of relevance outside the period under audit that supported your position, the auditor would consider it. Not anymore - they will only consider facts and support that arose during the specific period they are looking at. What if their adjustments result in no net tax change, but create a lot of unnecessary work for everyone? That's fine. You see in their mind now, there could be a tax change, even if it is small. In addition, it used to be that if you supplied receipts for an expense that CRA would accept it as adequate support, without too much scrutiny. This is no longer the case. When you supply evidence to CRA of a business expense, they will often disallow it on the basis that they don't think that it was incurred to earn income. They will do this even when it is obviously not incurred for any other reason. How do you prove that an expense was incurred to produce income in cases where things didn't work out as planned (which is nearly all the time!) and no money was made? It is just outrageous.
The result now for many good, honest tax paying clients is that they get a nasty surprise in the form of a tax reassessment, often to the tune of $100,000 or more. This can effectively wipe them out - everything they have worked their lives for - gone. The most disturbing part of all this is that most CRA auditors I have dealt with in the past five years or so are incredibly callous and insensitive to the fact that they hold these people's lives in their hands. Indeed they behave as though the clients can easily pay these assessments, or as through "hey look bud, I'm just doing my job". I don't know how they can live with themselves much of the time. I had clients who were nearly driven to suicide by CRA. I had a client in his 80's who had to discharge himself from hospital because some CRA auditor wouldn't wait until he got out of hospital for some documents he wanted. Just unreal.
As a professional, I am powerless to help them without charging them a lot of money. I can't work for free because most of these issues are very time consuming and take up weeks and weeks of professional time. But then at the same time, I am cognizant of the fact that I'm not really helping them that much. It is very difficult to watch your clients go thorough this and not be able to help them in the way that you would like to. That is one of the reasons why for me, this profession just wasn't fun anymore. Well actually I never expected it to be fun, but at least under the old system, I could actually help a client without breaking their budget. Now, I'm not so sure - even if the client wins, they lose big. I can't live with that anymore.
The only way this will ever change if if Canadians in general become aware of just how bad the situation is, and demand change. Of course what really needs to happen in my view is that taxation should no longer be based on the income of Canadians, but should be based on a zero-based budget formulated by the government. What is a zero based budget? One where every thing has to be justified - the government figures out how much money it needs and then a voters list is consulted, or a list of SIN numbers and the figure is divided by the total number of taxpayers. You pay your share. It's very simple - a central computer could figure this out in seconds. No more system where the government raises the money first and then figures out ways to waste it and demand more. The budget would have to be put to the public in a national referendum every 5 years and the elected officials would be held accountable if there was significant mismanagement over what was agreed to. Impossible? I don't think so. But Canadians would have to insist on it. As long as there are enough people willing to support the current system there is no reason for it to change. If taxation were based on need like this, there would be no need for auditors, since the only question would be whether or not you paid your share of the tax and what to do if you couldn't afford it.
Anyway, end of rant.
It occurred to me the other day that I'm posting all dinner recipes and no breakfast or brunch ones. It turns out that I do have some, and I will be posting these this week, as I do not have any new dinner ones, except for a new version of beef stew that I tried last night. This one is an Italian inspired version that departs from the meat-potatoes-carrots one that most people are used to. This one uses a tomato sauce made from fresh onions, garlic and tomatoes, as well as celery, raisins and pine nuts:
1.5-2lb stewing beef - basically 1 large pack.
two large onions
2 cloves garlic
6 large tomatoes or 12 small ones
1 handful of raisins
1 handful of pine nuts
1/2 teaspoon allspice
1 handful of fresh basil
1 celery stalk sliced into 1/4 inch pieces.
1 cup of beef stock
You start by chopping the first onion fine fine and slicing the celery. Heat some olive oil in a skillet and brown the onion, celery and the meat together. When the onion is soft and the meat is browned, take it off the heat and add it to the stoneware insert of your slow cooker.
Then add the allspice, raisins, pine nuts and beef stock. The next step is to make the tomato sauce. You want it to have a consistency that is like thick soup - just a little less dry than tomato paste. Yiou want it to be thick because you are making the stew in the slow cooker and you are already adding 1 cup of liquid and you don't want too much liquid. You start by pureeing the second onion and the garlic and then in a separate batch, roughly chop the tomatoes by pulsing the food processor a few times (maybe 6-8 2 second pulses). Heat some more olive oil in a skillet and when it is very hot, add the onion and garlic. Fry for about 5 min or so until the onion is no longer bitter. Add in the roughly chopped tomato and boil over high heat until nearly all the water is gone and the tomatoes taste somewhat sweet rather than acidic. Take it off the heat, add salt to taste and then blend in the food processor until smooth with the fresh basil. It should have the perfect sweet-salty balance and be sweet from the basil. Add this to the slow cooker and stir to combine. Put the slow cooker on low for 6-8 hours or high for 3-5 hours. It is done when you can cut the meat chunks easily with a fork.
Over the weekend, we went to the Toronto Humane Society and adopted the newest member of our family - litte 3 month old Victor:
This was the world's first Christmas stamp and a somewhat politically incorrect message in this day and age. But it reflected the immense pride in the empire that was prevalent at the time, back on December 25, 1898. I am preparing a post for this issue in my Canadian stamp blog, which can be accessed here: