Unreported Business Income: How CRA Rebuilt Income and Won in Tax Court скачать в хорошем качестве

Unreported Business Income: How CRA Rebuilt Income and Won in Tax Court

Unreported business income can lead to serious consequences when the Canada Revenue Agency reviews your financial records. In this video, I break down a real Tax Court of Canada case where the CRA used the net worth method to reconstruct income based on bank deposits, asset growth, and personal spending. In Edward Demchynski v. The King (2024 TCC 18), the Court reviewed how a contractor reported relatively low income while building rental properties and managing significant cash flow. The CRA analyzed missing invoice sequences, bank deposits, and personal expenditures to determine that the reported income did not reflect the actual business activity. The judge accepted the CRA’s approach, with only minor adjustments, and upheld penalties under section 163 of the Income Tax Act. The evidence showed that the taxpayer operated a much larger business than what was reported. Key takeaways for business owners: Keep complete records for all income and expenses Ensure invoices match deposits and follow a clear sequence Maintain documentation for funding major assets like rental properties Separate business and personal transactions clearly Stay prepared for CRA audits with organized financial data Case law reference: https://decision.tcc-cci.gc.ca/tcc-cc... Income Tax Act – Section 163 (Penalties): https://laws-lois.justice.gc.ca/eng/a... At Cloudiverse CPAs Inc., we help business owners stay compliant and audit-ready through structured bookkeeping, tax planning, and financial systems. If you would like support with your accounting or tax planning: Email: aman@cloudiverse.ca Phone: 604-200-4027 This video summarizes information from a publicly available Tax Court of Canada decision. It is for educational purposes only and does not express any personal opinions about the individuals or businesses involved.