One big reason to have an accounting firm take care of your business’ money is to keep you protected from wrongful prosecution.
Although the Canada Revenue Agency is usually good about only going after people who have broken the law, sometimes they make mistakes, such as in a case recently described in canadianaccountant.com.
The story is about Tony and Helen Samaroo, a hard-working immigrant couple who did not trust Canadian banks, so they kept their savings in cash for decades. Because the older Canadian $100 bill was due to be discontinued, they proceeded to deposit their cash savings in banks. The CRA took the position that large cash deposits are unreported income, with no allowance for any other explanation.
What is unusual in this case is the lengths to which the CRA investigator went to try to convict the Samaroos of tax evasion, and the extreme actions he took to create this outcome.
As noted in the article, “The recent ruling by the BC Supreme Court to award $1.7 million for malicious prosecution by the Canada Revenue Agency to a Vancouver Island couple was met with satisfaction by many Canadian tax accountants and lawyers.
“In 2008 they [the Samaroos] were charged with 21 counts of tax evasion for allegedly skimming $1.7 million from the business.”
They were found not guilty of these charges, and the CRA was subsequently found guilty of malicious prosecution in their pursuit of these defendants. In the judgement against the CRA, “Justice Punnett found that the conduct of the CRA “must be denounced. It affected the reputations of the plaintiffs, their professional lives and their family lives. It involved the concealment of exculpatory evidence. It involved the power imbalance of the State over the individual. It violated fundamental rights and was highly reprehensible.””
The Samaroos were not comfortable with doing their own accounting, and hired an accounting firm to do their bookkeeping, do their income taxes for them, and submit their GST and PST remittances.
Because they had professionals working for them, these professionals were able to prove that they had not evaded taxes and skimmed money from their businesses, and that the case created by the CRA was not accurate or valid. Indeed, not only were the CRA’s charges found to be unjustified, but the CRA employee was found to have acted unprofessionally in his pursuit of this couple.
This is of course an extreme case. It does, however, serve to highlight how important it is to have a professional accounting company like Shaw & Associates handling your books, finances, and taxes. Not only do they keep your business running smoothly day-to-day by taking care of your finances, but they are an invaluable resource in your corner should the CRA ever become interested in your business.
Contact Shaw & Associates Chartered Accountants to give you peace of mind about the accuracy of your books. One complimentary meeting with us will put you and your business on a more profitable and positive path.