The Goods and Services Tax (GST) is a multi-level value added tax introduced in Canada on January 1, 1991, by then Prime Minister Brian Mulroney and his finance minister Michael Wilson.

In reviewing your original post, it is quite possible that instead of registering for the Voluntary Disclosure Program that you just may be able to settle your problems with the CRA using a T1 Adjustment form. Monies advanced from a corporation to a shareholder could be charged on the corporation's books as an Advance to a Shareholder. This would eliminate having to report this receipt of monies as income on the personal tax return. However, the corporation's tax return would have to be amended to show this payment not as a Salary expense but as a Receivable, thereby showing an income for the corporation. A professional tax accountant should be well aware of these adjustments.

While there can be no harm done by seeking out the advice of a law firm or firms specializing in the Voluntary Disclosure Program, in my view, their services will be very expensive and unnecessary. I am of the opinion that both you and your husband did not deliberately falsify or under report income on either the personal or corporate tax returns but were simply a victim of unprofessional and incompetent tax return preparation. It could be argued that since these tax returns were signed by you or your husband and that you or your husband concurred with the accuracy of the tax return. However, given the complexity of a tax return, from my experience, very few people understand what they are signing when they affix a signature to a tax return. Usually, their only question is "How much is my refund" or "How much do I have to pay" They have no interest or "clue" as to how the final amount was determined. They rely solely on the expertise of the accountant or tax return preparer.

Keep us informed of your progress. I still believe that a good tax professional accountant will be able to resolve your situation with the CRA.

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Educating one Consumer at a time

Just wanted to thank Footloose for the reply. I will update on developments. I am just wondering what you think of all the lawyers that I have seen that offer voluntary disclose services etc. Is it worth approaching them for advice or should we go directly to an accountant?

A sad lesson to learn but when you form a corporation, whether it be Federal or Provincial, you should NEVER split the preparation of personal and corporate tax returns between two individuals. While H & R Block does an admirable job of preparing personal tax returns for individuals on low income, or whose income is relatively straight forward or anyone seeking cash back funds, they are not qualified to deal with corporate matters. I understand that they only prepared your personal tax returns, but when you are dealing with a corporation as well, the interplay between the preparation of a personal and corporate tax return can be very involved.

As a retired professional accountant ( C.G.A. ) having owned and operated a tax practice specializing in personal, corporate and U.S. tax returns in excess of 25 years together with being an adjunct ( part-time ) tax professor for the Certified General Accountant's Association lecturing extensively at community colleges and at Ryerson University, I feel qualified to give you some fatherly advice.

I want you to do two things. First, I want you to look in the yellow pages of your local telephone directory under the heading of both "Accountants" and "Tax Preparation". Try to find someone who holds a C.G.A. designation and also someone who specializes in taxation. Second, I want you to contact the Certified General Accountant's Association of Ontario and request a referral for an accountant who specializes in taxation and perhaps someone who practices in your residential area. Here is a link to the C.G.A. website for an accountant referral:

http://www.cga-ontario.org/applications/accountantreferral/default.aspx

Before engaging the services of an accountant, contact one or more accountants and request a free consultation. Arrange for a meeting, discuss your situation with them and ask them if they are prepared to engage you as a client to handle your tax problems. It is also very important that you feel comfortable working with this accountant. No matter how qualified and competent the accountant may be, if you are not comfortable with the accountant, it will turn into a very awkward situation. If you settle on an accountant that you will be happy with and you have also talked to other accountants, it is only "common courtesy" to contact the other accountants and inform them that you have decided on an accountant and thank them for their time. In your consultation with an accountant, be sure to ask them for an estimate of their fees. Most accountants will have an hourly rate.

Please keep in mind that this is going to cost you some "coin". Good accountants don't come cheap but if he/she can unravel your problems, and get you settled with the CRA, it will be well worth it. If your business had been properly set up from day one with a professional accountant, you would not be posting on this website today.

I wish you all the best of luck in the future. While the experience has been a "tough pill to swallow", I saw it dozens of times in my practice. When you are dealing with a business situation in which you have little or no knowledge or experience, always hire a professional. It will save you much grief in the future.

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Educating one Consumer at a time

Well I don't really know how to start, we have got ourselves in a terrible mess, that seems to get worse daily. My husband started his business in 2007. He incorporated it Federally. Probably not the best idea in retrospect. He had no income 2007 and only two invoices for about 22000 total in 2008. We hired an accountant who did told us that we did not have anything to pay any taxes that year. He also told my husband that he could charge GST/PST and only had to declare it if it was more than $30000. Luckily for those years(2007 &8) our clients were tax except. I have since learned that he was totally wrong, that if you charge GST/PST, you must pay it out or remitt it.

First problem comes in that for 2008 personal taxes we did not mention receiving income from the business. My husband thought he did inform HR block when they did his personal taxes. The last few days events caused me to go through all our tax files and noticed no income was declared. So that is problem number 1.

Major problem number 2 is as follows. We soon realized that our accountant was fishy and looked around for someone reputable. So this guy looked over 2007/8 files and said that our old accountant did some suspect things in our return. The new guy then did our 2009 taxes for us. My husband lost his job in 2009 and he did not qualify for e.i because he was considered self-employed even though the business does not make nearly enough to survive. So the accountant moved our earnings to 2010.

We did not have to pay any taxes corporally. We thought that we did not have to pay PST/GST as the earnings were moved to 2010.

For the year 2009 we did our personal taxes by HR block and our new accountant dealt with corporate taxes after we had filed our personal taxes. This was a mistake because we did not mention earnings from the business. I don't know what to do about this, as I guess we should have made an adjustment after the corporation was done and declared any income that we took from the business. We did not do this however.

Moving ahead our new accountant said that he had no idea that we did not do GST/PST payments for 2009. The fact is we could only manage to register for a GST/HST number 2011. We did try several times at the end of 2010 but because they did not have his social insurance number on file they ignored the application, only after attempting to do it online and receiving an error did we realize there was a problem, so we phoned them and they told us to fax through more information. So that is the reason why we registered so late.

In a nut shell.

* Did not declare earnings from our business in our personal taxes filed for 2008. (about $22000)
* Did not remit PST/GST for 2009 (about $900 for GST and $1400 for PST)
* Did not declare earnings from our business in our personal taxes filed for 2009. (about $35000 before expenses)
* We are late filing GST/HST for 2010

* We still need to file PST for 2010

How can be proceed here. Should we do Voluntary Disclosure for the personal taxes and GST/PST not remitted? Which would mean doing a voluntary disclosure through CRA and the Ontario Ministry of Revenue?

We feel totally unqualified to handle this corporation. We should have hired a professional bookkeeper from the get go. But it is too late for regrets.

What should our next steps be, we just want to sort this all out. I know that the CRA is very aggressive with late fees and penalties, I am sure once they let us know how much we owe with fines, and interest that we will not be able to pay it. My husband has just started a new job, now we are worried that they will sieze his wages. What are the chances of that. Our home is mortgaged to the hilt and we have no collateral in it. Is bankruptcy an option for us, could we lose our home? Sorry this is so long. Hopefully someone can point us in the right direction. Thanks for your help.