Friday, July 25, 2014

Rental Increases, Canada Revenue Agency Audits, Fernbrook Resort, Linwood Parks & Bullying a Chicken

Rental Increases, Canada Revenue Agency Audits, Fernbrook Resort, Linwood Parks & Bullying a Chicken

Well, rental increases are coming to Fernbrook Resort residents.

Not all residents though, just some of the residents... perhaps? some employees have escaped the increase.

Which could be an incredibly expensive mistake for both employees (whether full or part time) who physically reside at Fernbrook Resort but also for their employer.

Why?

Here are the facts…

Clearly a rent can be increased for any tenant as long as it is in accordance with the laws and practices of Ontario.

HOWEVER, if a rent is increased for a resident BUT NOT for a resident who is also an employee (whether full or part time) of Fernbrook Resort that means that the employee’s rent may be below the Fair Market Value (FMV). If an employee receives any benefit from their employer – the benefit in this instance being the difference between the rent they pay and the actual FMV – under Canadian tax law that benefit must be declared by both employer and employee AND the appropriate amounts of tax paid.  

It is estimated that neither the employer or the employees are declaring this benefit or paying the correct amounts of tax as mandated by the laws of Canada. Clearly the Canada Revenue Agency is not aware of this discrepancy. But if they were somehow to become informed of this oversight, here are the expensive problems the employer and their employees are going to face:

- the payroll for Fern Brook Resort Inc. would undergo audit
- Fern Brook Resort Inc. would receive fines, penalties and interest based on their failure to correctly declare employee earnings/benefits on  their T4’s.
- Fernbrook Resort is part of the Linwood Parks chain, Ruth Victor and Associates (etc. etc.) which means that all of the many many parks, the associated companies (etc. etc.) could ALSO undergo payroll audits,
- When a companies payroll is in disarray this is an indication that other tax discrepancies may exist so a general corporate audit is also very likely to be conducted.
- Also, audits can be a very expensive and time consuming process for those targeted by the Canada Revenue Agency. Costing companies a lot of money and valuable employee time.
- any employees who received an untaxed benefit will be reassessed and be forced to pay tax not only on that benefit but also penalties and interest on those undeclared benefits.
- any individual (a corporation is also an individual in this sense) who fails to properly declare income can be subjected not only to regular fines but also to negligence, gross negligence penalties and tax evasion.
- Individuals who are accused of criminal matters (such as tax matters) may not be allowed access to certain countries – like the USA as an example – by nations who don’t want people accused of criminal wrongdoing (let alone actually convicted) walking their streets.  

The CRA could go back and check many years of tax filings meaning a lot of money could possibly be owed both individually by current and former employees (whether full or part time).

But the only way the CRA could find out about these tax discrepancies would be if they were to read this unknown blog. Or if a concerned Canadian were to bring these incidents to their attention.

Now I certainly haven’t mentioned these suspicions to the Canada Revenue Agency. But if someone were to let the CRA know – it would be kind of like bullying the Fernbrook Resort chickens. A little bit of justice for all the folks whom are targeted by bullying chickens.

For Fern Brook Resort Inc. (and its many associated companies) it looks like letting the chickens run the henhouse could turn into an expensive proposition. Quite an expensive proposition indeed.

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