The Canada Revenue Agency (CRA) is targeting consultants & contractors in the oil patch.
A tax audit could cost you $6,000 per year or more in taxes and penalties. We have a solution to eliminate this concern. We will take care of all your tax compliance issues and provide all your bookkeeping in our solution. Check out SOS TAXMAN.com or PadgettAlberta.ca
For more information PH: 780 466 6747 FAX: 780 640 1246 email Les@PadgettAlberta.ca
If you are a contractor (especially in the oil patch) Canada Revenue Agency (CRA) may be looking at you closely. If you contract to only one company you are on their hit list. The problem is related to the employee contractor definitions used by CRA. To avoid getting caught in this trap most oil companies will insist their contractors incorporate. This is great for the employer since this absolves them of any responsibility for this issue. The responsibility is now placed squarely on the incorporated contractor.
CRA will look at this incorporated contractor and determine if the corporation is essentially an incorporated employee. If this is the case your corporation will be declared a Personal Services Business (PSB). Once considered a PSB the taxes are horrendous. You will lose tax deductions for a lot of expenses and almost all of the advantages of being incorporated. In addition the corporate profits will be taxed at a 38%.
If you are audited and CRA determines your company is a Personal Services Business, it will cost you thousands of dollars. It could easily cost you an additional $6,000 or more per year in taxes, penalties and interest. CRA will declare many of the expenses that your corporation deducted as wages to you that will then be taxed. In addition there will be penalties and interest for not paying CRA the source deductions on these expenses that were disallowed.
We have a solution. You will save some tax and avoid the hassle of getting an audit. In addition there are a number of attractive benefits. You can pay many expenses through this corporation and save money.
You will be paid in the form of wages and a dividend. The dividend can go directly to you or to your corporation. Your corporation will receive the dividend tax free. You can then invest this money inside your corporation.