The Certified General Accountants Association of Canada recently published the results of their survey concerning scams. Although scams exist all year round, they increase around tax time. Approximately 20 per cent of Canadians have been affected by tax season scams predominately phishing, identity theft, false charities and tax preparer fraud.
“Phishing” refers to scams trying to get or “phishing” (fishing) for your personal and other private information predominately via emails and telephone calls. To avoid being taken in do not provide your social insurance, credit card, bank account or passport numbers. Also watch for emails that contain malware and I encourage my friends to not forward emails with other people’s names either being sent with the email to me or from preceding senders. Use the “bcc” to list multiple recipients if you send or forward emails. Definitely ensure you have an up to date virus checker on your computer. I also recommend hanging up any phone call with a pause after you answer and don’t give any information or money to anyone with whom you are unfamiliar.
Identity Theft is a growing industry. I do not put anything out with names account numbers or any data in the garbage. All information in our office is securely shredded, hard drives and disks are cleaned and shredded. Even hard drives in the copier, printer and fax are cleaned and shredded. At home everything is shredded (or used for getting the fireplace started). Do not reveal any personal information unless you know how it will be used and make sure your computer and WiFi are password protected.
Also charities have been a huge scam over the past years. One of the best lines of defence are to remember “If it sounds too good to be true, it probably is.” I might even take the “probably” out of that statement. In these scams, the donation receipt was considerably larger than actual monies donated based on a rather thin premise, usually that eventual gift for which the receipt was issued had a higher market value than the money paid for it. This failed, in my opinion, on the simple concept that the price paid for the article would be the market price. In reality, it failed on many more levels as well including the illogical concept that I could donate $10,000 and receive a receipt for about three times that amount. It just sounds too good to be true.
Tax preparer fraud has been around forever. I have been involved in tax for over 40 years, the last thirty years in my own practice. I have never heard of anyone who can guarantee you a higher return or ensure you will receive a refund, so, if the offer is to prepare your tax and be paid based on the amount of the refund, go someplace else. There have been cases of false companies with losses being created to ensure refunds, false charity donations and inflated claims for a few examples. A reputable tax preparer with proper credentials is your safest bet to ensure a happy relationship with the Canada Revenue Agency. Another fairly recent scam has been trying to take advantage of the disability deduction. The requirements for the disability deduction are fairly clear and you have to be disabled. If you are being encouraged to make a claim, make sure, as you should in any case, that you read the requirements and qualify. Also make sure you use your own doctor or qualified professional to verify that you meet the definition. You can be disabled for purposes of the Canada Pension Plan for example and not meet the definition for the personal income tax claim.
In some of the examples above, such as having false companies included in your return, you can find yourself facing 100 or even 200 per cent penalties as well as interest and possibly incarceration.
In summation, there are people out there willing to take advantage of you.
Terry Robert B.A., C.M.A., C.G.A.
R. T. Robert Certified General Accountant
Please note that this column deals with details and circumstances in a general way and comments are meant solely as a guide. For your protection, a professional accountant is recommended and should be consulted before making any decisions regarding anything discussed in this column.