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J5 Advisory: Risk Indicators Tied to Cryptocurrency Assets

Overview

The Joint Chiefs of Global Tax Enforcement (J5) have issued an advisory note to financial institutions, highlighting five critical risk indicators associated with cryptocurrency assets. These indicators serve as early warning signs for potential illicit activities, including money laundering, cybercrime, and tax evasion.

Key Risk Indicators

1. Cryptocurrency Asset Layering: Be vigilant about complex transactions designed to obscure the origin of funds.

2. Geographic Locations: Exercise caution when dealing with crypto transactions involving jurisdictions known for weak regulatory oversight, inadequate anti-money laundering (AML) controls, or high corruption risk.

3. High-Risk Counterparties: Monitor counterparties with ties to darknet marketplaces or mixing services.

4. Unknown or Obscured Transaction Recipients: Investigate transactions where recipient identities remain unclear.

5. Ransomware-Related Flows: Detect and report financial movements related to ransomware attacks.

Recommendations for Financial Institutions

1. Layering Detection: Prioritize identifying layering involving crypto assets across customer relationships.

2. Jurisdictional Awareness: Scrutinize crypto transactions tied to high-risk jurisdictions.

3. Enhanced KYC: Implement robust Know Your Customer (KYC) procedures to identify potential risks.

4. Prompt Reporting: Report ransomware-related financial flows promptly to aid law enforcement efforts.

By sharing these risk indicators, J5 aims to enhance collaboration with the financial sector, contributing to overall system integrity and compliance with AML regulations..

Read more on this topic on the CRA’s website, here.

The #1 Mistake People Make When It Comes To Making Money- By GaryVee

GaryVee- Morris asks me some important questions about making money, college, hopes and dreams, and much more!

In a candid and motivational conversation, GaryVee advises a young man not to give up on his hopes and dreams, emphasizing the importance of perseverance and self-awareness. Gary discusses the value of education, expressing skepticism about the practical benefits of a community college diploma in today’s job market. Instead, he encourages the young man to focus on developing his skills and self-awareness to succeed. The conversation also delves into the concept of financial success, highlighting the importance of managing money wisely and not letting it control one’s life. Gary’s advice, grounded in personal experience, aims to inspire the young man to pursue his passions and make informed decisions about his future. 

Click here to see the full podcast on youtube.

Team Spotlight: Jason Bui

Jason: Our Multitalented Financial Wizard

Meet Jason, our go-to expert for all things financial. From T1 personal taxes to T2 Corporation Income Tax Returns, Jason handles it all with precision and finesse. His attention to detail ensures accurate filings, while his stylish flair adds a touch of sophistication to our team.

But that’s not all! Jason, our Junior Accountant, also keeps our financial records in impeccable order. His Bookkeeping skills are second to none, making sure every dollar is accounted for. Whether it’s crunching numbers or staying up-to-date with tax regulations, Jason is the backbone of our financial operations.

We’re fortunate to have Jason on board, and his contributions play a vital role in our success. So, here’s to Jason – our financial maestro!

7 CRA Audit Triggers and How To Avoid Them

1. Forgetting to Report Income

Failing to report income from T-slips can lead to significant issues. Employers issue T4 slips and send copies to the Canada Revenue Agency (CRA). If you neglect to report all your T4 income, the CRA will notice. To avoid this mistake, maintain a record of all transactions involving cash payments and ensure you claim them when filing your taxes.

2. Claiming Unusually High Credits or Deductions

The CRA expects consistency in your tax returns, even if you are self-employed or running a small business. A sudden and dramatic increase in income, credits, or deductions in a given year may flag your return for review.

3. Refusing (or Forgetting) to Provide More Information

If the CRA has questions or concerns about your tax return, they will issue a Request for Information. Ignoring or resisting this request is not advisable. Promptly and politely providing the requested information is the best way to address their concerns and prevent the situation from escalating into an audit.

4. Home Office Deductions That Are Through the Roof

Claiming a home office that occupies 10% of your home’s floor space is generally reasonable. However, claiming that half of your six-bedroom home is used as a home office may seem unrealistic and could trigger an audit. When calculating the percentage of your home used for business or work-from-home office space, be precise, reasonable, and adhere to the CRA’s guidelines for home office deductions.

5. Writing Off 100% of Your Vehicle

If you own a parking garage and purchase a snowplow, the CRA may not question writing off the entire purchase as a business expense. However, attempting to write off 100% of a family sedan may raise suspicions, as it is unlikely the vehicle is used solely for business purposes. The same logic applies to vehicle-related expenses: be precise, be reasonable, and follow the guidelines.

6. Overusing Tax Shelters

Legitimate tax shelters like RRSPs or TFSAs are perfectly acceptable and generally do not raise concerns with the CRA. However, warning bells go off when the CRA encounters a non-profit they are unfamiliar with. Thousands of audits are triggered each year by fake non-profit organizations and their dubious receipts, which often inflate donation amounts. Before donating to your favorite cause, ensure it is on the official CRA list of charities, especially if you intend to claim your donation against your taxable income.

7. A Rental Property That Keeps Losing Money

If you own a rental property, such as a condo or a basement apartment, it is possible that your expenses may exceed your rental income. In a year of extensive repairs or prolonged vacancy, claiming a loss is acceptable. However, if losses occur for consecutive years, the CRA is likely to take notice. Be prepared to justify your claim with a well-documented account of your expenses.

Click to read more on this article.

Overwhelmed by Unfiled Taxes? See How Fraser and His Team Helped a Client Secure a $363,000 Refund!

Despite the ongoing dispute, there was a major win. After years of exhaustive assessments, the CRA returned a substantial refund of $363,000.

Are you burdened by years of unfiled tax returns? A client was in the same situation. With a decade’s worth of unfiled taxes hanging over them from 2013 to 2022. they felt overwhelmed and unsure of where to begin. But when they reached out to Fraser and his expert team, they discovered that no tax challenge is too big when you have the right professionals on your side.

The process began with filing all ten years of the client’s returns. It was a monumental task, requiring detailed attention to every deduction and expense, particularly the spousal support payments they had made and the carrying charges and interest paid to earn income from investments.

Unexpectedly, the CRA took their time, and over the next three years, they worked through the assessments for each of the client’s returns. Along the way, the CRA sent multiple letters questioning the legitimacy of the deductions claimed. They demanded extensive documentation to justify the spousal support payments and the investment-related carrying charges.

Fraser and his team’s relentless efforts bore fruit when the CRA allowed one of the claims in full.

Passive Income In Canada # Investments

“Worth it to incorporate your business ? Canadian-Controlled Private Corporation (CCPC)

Fraser explains about Canadian-Controlled Private Corporation A Canadian-Controlled Private Corporation (CCPC) is a type of corporation in Canada that meets the following criteria at the end of the tax year:

• It is a private corporation.

• It was either incorporated in Canada or resident in Canada from June 18, 1971, to the end of the tax year.

• It is not controlled directly or indirectly by non-resident persons or public corporations (except for prescribed venture capital corporations).
   Click here and watch my TikTok video to find out the rest!

Tax Mechanic and team also help people to gain Knowledge on Social Media too. Make sure, you follow Tax Mechanic to get the information you need.

This video was edited using CapCut with Masking of elements, KeyFraming and animations, the team put all the efforts to explain the content.

Was this meant to scare you? Well, yes and no. We all know that if you get flagged, the CRA can cause you some serious headaches. But the Tax Mechanic is there to watch your back…

Here's the Deal:

When you choose Tax Mechanic to handle your corporate tax filings for multiple years, we'll file one year completely free of charge! Yes, you read that right – we'll take care of one year's return at no cost when you trust us with your multi-year filings.

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- Customer-Oriented Service: At Tax Mechanic, our clients are our top priority. We're dedicated to providing personalized service tailored to your unique needs.

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That concludes our updates for this Friday. Wishing you a safe and enjoyable weekend! If you find yourself facing tax issues, remember that help is just a phone call away. Contact us today to start resolving your tax concerns.