7 ways the CRA is watching you

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By Julie Cazzin on February 16, 2017
Estimated Reading Time: 4 minutes

CRA is scouring your social media & donning disguises

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Whether it’s through a photo on social media or a casual conversation with a friend, the Canada Revenue Agency is always watching and listening. And their investigators will pursue you tirelessly if they think you’ve been lying on your tax return. Their subject of choice? These days, it’s anyone and everyone. “We always think it’s only the rich who the tax man is interested in but it’s the little fish they like the best,” says Paul DioGuardi, a senior tax lawyer and author of The Taxman is Watching. “The Internet is becoming a favoured weapon for the CRA to find and analyze all kinds of data so they can watch people they think are cheating on their taxes.”

Here’s five ways the CRA may be watching you that you probably weren’t aware of.

1. Your social media

Any of your open social media accounts are publicly accessible and some posts could prompta CRA investigation into your financial life. From the CRA’s point of view this is a legitimate practice on their part because posts on social media really aren’t private. How does this work? Say you just bought a new $85,000 sail boat and are boasting about it by posting a photo of it on Facebook. The CRA could see this and then check it against what you declared as income last year. “If you declared $40,000 in annual income, or a modest amount, they’re going to be suspicious and come calling,” says DioGuardi.

2. Your sales and purchases on Kijiji, Etsy and Ebay

Is your passion for vintage furniture really a hobby? Or are you running a small business from your living room and not declaring the profits on your tax return? “To compare this data would take years in the old days,” says DioGuardi. “Now the CRA can data-mine these non-traditional sources of info in a heartbeat pretty much whenever they like. They are a collection agency with police-like powers.”

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3. Your small business’s sales data

Cheating on your company sales numbers by declaring lower revenue than is actually the case? Don’t. The CRA is able to use data to plow through years’ worth of your credit card transactions with the aim of matching your stated sales with electronic data they’re able to access.

4. Bank accounts and investments

To spot undeclared, taxable interest, dividend and capital gains income, the CRA has access to info from all Canadian financial institutions. They can also determine if you’ve exceeded your TFSA and RRSP contributions and penalize you accordingly.

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5. Capital gains from condo and real estate sales

“In the old days I had to go to the registry office to find out when a piece of real estate had been bought and sold,” says DioGuardi. “Not anymore. The Internet changes the game.” Now, the CRA can look at all real estate transactions and easily flag suspicious transactions. What are they looking for? Condo flippers and real estate sales where the owner hasn’t declared capital gains and paid the appropriate taxes. Multiple property ownership where the taxpayer isn’t also declaring rental income is another trigger for investigation.

A quick and easy primer on capital gains tax »

6. Your income and pensions

The CRA is hunting for disparities in retirement income. It can access info on your bank account balances and income and match it with previous tax returns. If there’s a wide discrepancy, be prepared to answer more questions.

7.Mystery shopping

Don’t be surprised if CRA agents show up at your restaurant or other small business, in disguise to eat a meal with the intention of rooting out suspicious financial behaviour. The agents could pose as a couple out for a meal to see how your business works and what the count is for people frequenting your business to ensure it is aligned with what you have reported in previous tax returns. “It’s a big job and I think they will sub-contract a lot of this out in future,” says DioGuardi.

What does all of this mean? That the shift of responsibility is really shifting to the taxpayer and not the tax collector. In the past, the tax man simply told you what you owed. These days it’s completely up to you to declare what you should be paying, and they have the means to check that what you’re saying is absolutely accurate. “Remember, they can search anything, put liens on your property and slap you with penalties and late fees,” says DioGuardi. “My suggestion is to always give full and complete disclosure on your annual tax return. With data mining the way it is today, if you don’t, then believe me, they will find you.”

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Comments

do canadaian citizen living in usa ( GREEN CARD HOLDER) have to claim Canadian income in on income taxes in the usa? If not claimed then what?
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This is absolute nonsense, the CRA watching kijiji or social media lmao. How the hell would they know you sold anything on kijiji if you don’t use your main email address and a different name lol
Ridiculous article.
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See Also
When does CRA conduct audits or investigations? - FREE Legal Information | Legal Line Should the IRS Monitor your Bank Account?Here are the Canadians most likely to get a tax audit this year - National | Globalnews.ca
Bonni
As long as CRA considers you a non-resident and you do not receive any Canadian based income than you are not required to file a Canadian tax return.
I assume since you have a green card and reside in the US it’s safe to say you do not have any residential ties to Canada such as a spouse here, property of any kind, a Canadian driver’s license, bank account etc. that would possibly deem you a Canadian resident for tax purposes.
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I’m not sure about Kijiji and ebay etc…. however, having worked in Canadian Embassies I can assure you that if suspected of dealings that remotely show a possibility of tax fraud, they will snoop. Even if you are a Canadian overseas on holiday or for an extended period of time they ask you to register with them. This is asked to be done for your security, which is true. At the same time, can see financial capabilities as well as possible investments that may just interest them. Without getting into detail, most would be surprised as to what we are trained and how to find out what we want in a very short period of time. Now understand that the gentleman or lady traveler who spends 4 months in a grass hut may not be given a second thought. Its the individual living the lifestyle in a villa with 6 bedrooms who will be invited to Embassy events and given the VIP treatment so they feel important and end up giving out all the infos the government wants, themselves. And this all occurring during casual discussion at a picnic fundraising event for example. Just a guess ……….
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Bs i sell for 20 years on Ebay and have never reported anything and i never got into trouble. Same goes for Kijiji, they cannot trace that. As for Banks, that is a a different story..although they can see TFSA and so forth, they cannot access you personal savings account unless it is over a certain amount and declared by the banks which is about 50 k usd.
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Hi there,
So I currently do not have any bank accounts. I am a low income single mother of three Children which one of the then is disabled.
My bank accounts all currently were just locked and they will not tell me why they are frozen.
My father has been a tax man with the CRA and the government for over 30 years he has always done my taxes and they’re always done properly! I’ve never had any assets, a mortgage, a bank loan, I have financed a vehicle and paid it off and I rent a home and that is it.
BUT MY MAIN QUESTION AND CONCERN IS, I have over $100,000 in RRSP‘S that show up in my CRA account. From when I worked a 72 hour job for many years. I am going through an extreme time of struggling especially with a disabled child. I do not have a financial institution at the moment I am nowhere near 71 years of age. And I have no idea how to take my RRSP’S out! Or if I even can?
How would I start this process I would like to take maybe 20 to 40,000 out as I have to pay my son‘s medical bills. I owe $10,000 to my power company, my vehicles motor just blew I need to take care of my home and my children!
Or just take all of it out if I can I know nothing about anything about RRSP’S.
I need help on how to take them out easily if there’s a way to take them out with no penalty, I currently don’t work as I have to stay home with my disabled child as he can’t go to daycare or anything like that. The only income I have right now is Canada child tax I am extremely stressed out and knowing that I do have RRSP’S but am I even able to take them out how do I do it I have so many questions I am so confused Google doesn’t give me much!
I’m really hoping somebody can give me some answers here because I’m completely lost! Also thank you in advance!!!
Kindly regards, Ashley
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1. Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [emailprotected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.
  Reply
The CRA has trust issues. I don’t have any social media. I don’t have a phone. I don’t work. I don’t buy anything.
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Ya never know
I heard they also go to supermarkets and scrutinize the community billboard for high priced items for sale.
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