I’m preparing a file for part year tax return. The client comes in Spring and works till fall. Then he goes back to his home country. No guarantee that he’ll come back next summer again. He uses a friends mailing address and bank account. What’s the best approach to filing?
Examine a copy of his foreign tax returns.
Examine all of his personal circumstances.
Determine his tax treaty tax residency status.
Examine basis of (Non-resident?) tax withholdings
Consider referring person to a practice dealing in international taxation issues
“He uses a friends mailing address and bank account”
Consider referring him to police and/or CRA and/or CBSA.
@koby.wiebe, I would strongly agree with @joe.justjoe1 here. If you do that, you won’t have to follow any of his other suggestions. I would not take this on myself without being able to answer all of other concerns @joe.justjoe1 mentioned. I would not bother with the last consideration.
Building on JustJoe’s reply:
Is this employment or self-employment income? Does the client have a work permit or do they come on a visitor’s visa? Or do they possibly have a permanent resident visa where they can come and go? (You didn’t say that they were a Canadian citizen.)
I understand him staying at a friend’s place while here and using the friend’s mailing address.
If the client has a work permit, they also have a SIN and can open a bank account in their own name. So there must be more to look into.
Could your client be a foreign seasonal farm worker?
Using friends address is fine while using friends bank account makes the friends position questionable if he doesnt report that income in his returns and if he says he doesnt own that income then clearly thats a case of deceiving CRA.
Then the issuance of bills/receipts to the customers may decide the taxability, in whose name it needs to be taxed.
SO there are so many issues to be digged out.
“He uses a friends mailing address and bank account”
To those residents of Disneyland who may not notice the red colour of the flags flying in statements such as this one, I would caution against responding to emails and letters from multi-million dollar Nigerian princes, and perhaps also cross “Auditing” off the list of potential career choices…
@joe.justjoe1 Well, I for one don’t do auditing and have no intentions of ever going there. But I guess you weren’t referring to me either because it sure does not feel like Disneyland where I am.
This is so fun, I don’t even have to go to the comedy channel for entertainment
Thanks all for responding. This person is a Canadian citizen and worked the summer in construction. He has a T4 slip and regular taxes were withheld by the employer. Canada does not have a tax treaty with his country.
I’ll look a deeper look into this and see if it’s worth while. I know him personally a bit and his employer too. That’s how he was referred to me.
“is a Canadian citizen and worked the summer in construction. He has a T4 slip and regular taxes …”
So, he has told his employer that he is CANADIAN TAX-RESIDENT in Canada, and filing taxes IN CANADA, on his WORLD WIDE INCOME FOR THE WHOLE YEAR.
So what you say that he has told his employer is the OPPOSITE of what you say that he has been telling CRA.
So, in addition to compliance action that he may be subject to in his own right, if you personally choose to pick up anything to do with his affairs, I would suggest that you would be wise to re-read section 163; 163.2, et seq of the Income Tax Act, among others (“Failure to report income”, “Misrepresentation of a Tax Matter by a Third Party” etc) to see what exposures you could be involved in, if he does not want to apprise CRA of his whole proper entire situation and facts…
He should be encouraged to report properly to CRA.
I do part year returns, but I know that there are a number of questions that I have to ask in order to thoroughly understand the situation. That is to protect myself as well as my client. I do full discloses to my client about areas which I feel are unclear or which may cause later issues.
Overall, I would be cautious about polling for advice respecting a complex tax situation in a forum that does not operate with a credentials based admittance policy. That does mean this forum. (No offence intended to Trilogy. This forum is a marketing forum principally and the technical support is a secondary aspect. At no point does Trilogy guarantee accuracy and specifically does state, “you are solely responsible for your use of such Interactive Areas and use them at your own risk.”)
Having gone through all of the above, I do note that this particular instance does not identify if the taxpayer is resident or non-resident to Canada. As a Citizen, they do not require a work permit, but they may be non-resident or full year resident - the facts are not fully described yet. It may well be that the taxpayer is an unaware full year resident of Canada. It is equally possible that the employer has hired a non-resident of Canada and has incurred a tax liability to the government of Canada due to the non-disclosure by the taxpayer.
This can mean that there is a potential conflict of interest through the OP’s relationship with the employer and the employee.
I think that this is an interesting problem and am happy that I am not handling it!