Home Depot Letter – CRA Going After Corporate Accounts – Fishing Expedition? September 26, 2019 11:41 pm Published by colleen Leave your thoughts Over the last couple of weeks corporate clients at Home Depot have been receiving notices from CRA that read in part “ Notice to Commercial and Revolving Charge Account Holders To: Our Valued Home Depot Commercial Credit Card Customers We are writing to inform you that The Home Depot Canada is being compelled by a Federal Court Order issues on July 25, 2019 to disclose the following information to the Canada Revenue Agency about the Home Depot Canada commercial customers’ purchases: business name, business address, and total annual amount of transactions charged to the account of each commercial account holder between January 1, 2013 and December 31, 2016. The Home Depot Canada must comply with the Court Order by September 13, 2019……” Reading between the lines here it seems that CRA is targeting the construction industry – once again. As a licensed insolvency trustee we often assist debtors in the construction industry with tax issues. From the CRA’s point of view, the construction industry is rife with cash transactions that go unreported or under reported. What can be gathered from this fishing expedition? It seems reasonable that by looking into the purchasing history of corporate accounts, the CRA will be able to very quickly draw a line between what the business actually purchased versus what was declared as income on their tax returns. The theory being that if a contractor bought, say $100 000 in items at Home Depot, they must have at least that same corresponding amount as income or sales, or further, applying a “industry norm” margin, say 50%, quickly come up with what the estimated overall estimate of gross sales revenue. So if a contractor bought $100 000 of product, CRA would expect of $200 000 in declared revenue. Those business that don’t pass this first test could then possibly be flagged for audit or review. Reasonable approach or overreach? I think that most people would say that everyone should pay their fair share of taxes, but in this time of privacy concerns, government oversight and security breaches, where is the line between legitimate tax enforcement and government overreach? Certainly, the tone from the Home Depot memo indicates that they were not pleased with having to comply with the terms of the CRA request resulting in a federal Court Order. Further, they decided to take a further step in informing their clients of the requirements to comply with the Order, and the dates in question to possibly give a “heads up notice” to those affected. The result of the court order is that the government going to have access to records of thousands of innocent law abiding, tax paying people. Is there or should there be expectation of privacy for such purchases? Is it reasonable that this private data be made available to CRA to that may turn up a few small-scale tax cheats? It’s always easy to say “who cares, it doesn’t affect me” – but one day, it just might. I have not read the court order, but It would be interesting to see what the legal argument were made and whether privacy and government powers were considered. Maybe they justified it on the basis that the government can already request all your banking records for tax purposes, but remember the fuss when StatsCan wanted those records? That process was stalled in December 2018 after a public outcry and concerns over privacy. “Statistics Canada has put this project on pause. We take the privacy and confidentiality of Canadians’ information very seriously,” said spokesperson Erin Smith-Young in an email. I guess that same is not true for the CRA. Recent Posts Canadian Consumer Debt: at an All-Time High Canadian Insolvencies Have Hit a 20-year Low Bankruptcy Discharge Handbook The Great Deferral – Effects of Covid-19 on Personal and Business Bankruptcy Covid19 – Debt Crisis – Help Available.