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Canada’s Tax Agency Faces a Crisis of Accuracy

Only 17% of tax questions were answered correctly, according to the Auditor General’s latest report.

The Canada Revenue Agency (CRA) is facing intense criticism after a national audit exposed widespread failings in accuracy and service quality. Between February and May 2025, the CRA’s call centres gave correct answers to only 17% of individual tax questions, while business and benefit inquiries were accurate just over half the time.

By the Numbers

Government and Industry Reaction

Following the report, the federal government launched a 100-day improvement plan, extending 850 agent contracts, rehiring staff, and expanding AI chatbot services for taxpayers. Finance Minister François-Philippe Champagne said the government is “ahead of the curve,” while Auditor General Karen Hogan warned that Canadians “are not getting the service they deserve.”

Industry groups, including the Canadian Taxpayers Federation, said the findings highlight a tax system that has become “impossibly complex,” arguing that no number of new hires will solve the issue without serious simplification.

Sources: Global News | CBC News

Are We Building AI for Progress or Power?

MIT economist Daron Acemoglu warns that artificial intelligence may be concentrating wealth instead of expanding opportunity.

In this week’s episode of Prof G Markets, hosts Scott Galloway and Ed Elson speak with Daron Acemoglu, Nobel Prize–winning economist and MIT professor, about the economic and political consequences of AI.

Acemoglu, co-author of Why Nations Fail, argues that the current AI boom is being shaped by a handful of dominant companies whose incentives favor automation and control rather than broad-based prosperity. He cautions that without deliberate policy choices, AI could replicate past technological revolutions that widened inequality instead of reducing it.

Key Insights

Acemoglu urges policymakers, technologists, and educators to align AI with human progress, warning that unchecked development risks deepening existing divides.

Watch here: The Prof G Pod – Scott Galloway

The Hidden Cost of Low Mortgage Rates

A lower rate can look smart on paper but risky in practice.

In a housing market defined by competition and volatility, homeowners are increasingly focused on chasing the lowest possible mortgage rate. The logic seems sound: a lower rate should mean lower costs. Yet, as many borrowers discover, the pursuit of the “best deal” can mask a far greater financial risk - one rooted in structure, not percentage points.

At first glance, Scenario A appears more attractive. The borrower secures a lower interest rate and a smaller mortgage. Yet once the $50,000 in high-interest credit card debt is added, the true monthly burden exceeds $4,200. The borrower is left with little cash flow, constant repayment stress, and almost no ability to build savings.

Scenario B presents a smarter alternative. By consolidating both mortgage and credit card debt into a single $550,000 mortgage at 4.99%, the borrower reduces total monthly costs by more than $1,100 and gains critical financial flexibility. The slightly higher rate becomes irrelevant compared to the improvement in liquidity, mental bandwidth, and long-term stability.

The key insight is simple: financial success is rarely about securing the lowest rate. It is about optimizing structure, protecting cash flow, and making disciplined choices that preserve freedom and peace of mind. A well-designed mortgage strategy often outperforms a marginally cheaper one - not in theory, but in real life.

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Tax Court Rejects RRSP Deduction Linked to Fraudulent Timeshare Scheme

A taxpayer’s claim tied to the WayPoint Vacation Program was dismissed after the court found the investment worthless from the start.

In a recent decision, the Tax Court of Canada ruled against Muneshwar Deoram in his appeal of a 2018 tax reassessment. Justice David E. Graham concluded that Deoram’s participation in the WayPoint Vacation Program constituted a misrepresentation that allowed the Minister of National Revenue to reassess his return beyond the normal limitation period.

Case Summary

What the Court Decided

Deoram invested $20,390 in what he believed was a legitimate vacation and investment program that would qualify for an RRSP deduction. The court determined that the WayPoint Vacation Program fabricated much of the paperwork, including false patronage dividends, T4A slips, and worthless preferred shares that were later contributed to an RRSP.

Justice David E. Graham found that the shares had no value from the beginning, meaning Deoram’s RRSP contribution was entirely fictitious. He noted that Deoram acted carelessly by failing to read the contracts he signed, seek independent tax advice, or question the unusually generous claims made by the promoters.

The Minister of National Revenue was justified in reopening the 2018 tax year under subparagraph 152(4)(a)(i) of the Income Tax Act, which allows reassessment when a taxpayer’s misrepresentation results from carelessness or neglect.

Source: Tax Court of Canada Judgment – Deoram v. The King, 2025 TCC 151

7 Deadly Tax Sins: How the CRA Is Watching You

In our latest video, Fraser exposes the surprising ways the Canada Revenue Agency monitors taxpayers - often without them realizing it.

From social media photos to digital footprints, the CRA now uses advanced tools to detect inconsistencies between lifestyle and reported income. In “7 Deadly Tax Sins,” Fraser explains how online activity, casual conversations, and spending patterns can all raise red flags.

@taxmechanic

The 7 Deadly Tax Sins the CRA is watching you for You might think the taxman only targets the big fish. But truth is: everyone is under th... See more

Contrary to popular belief, it is not just the wealthy under the microscope. The CRA often focuses on everyday Canadians whose online presence tells a different financial story.

Fraser’s message is clear: in the digital age, financial transparency matters more than ever.

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