December 2008 Archives

International Financial Reporting Standards (IFRS)

The use of International Financial Reporting Standards (IFRS) will be required in 2011 for Canadian enterprises including public companies and other profit-orientated enterprises responsible to large or diverse groups of shareholders.

International Financial Reporting Standards are a series of standards and interpretations that have been adopted by the International Accounting Standards Board (IASB). Many of these standards that form FRS are known by the older name of International Accounting Standards (IAS) that were issued between 1973 and 2001 by the board of the International Accounting Standards Committee (IASC).

International Financial Reporting Standards comprise:

- International Financial Reporting Standards (IFRS) - standards issued after 2001
- International Accounting Standards (IAS) - standards issued before 2001
- Interpretations originated from the International Financial Reporting Interpretations Committee (IFRIC) - issued after 2001
- Standing Interpretations Committee (SIC) - issued before 2001

There is also a Framework for the Preparation and Presentation of Financial Statements which describes some of the principles underlying IFRS. The objective of financial statements is to provide information about the financial position, performance and changes in an enterprise, useful to a wide range of users in making economic decisions and to provide the current financial status of the entity to its shareholders and the general public.

For more information, see the IAS web site at http://www.iasb.org

CRA has denied over $2.5 billion in tax shelter gifting arrangement donations

According to the Canada Revenue Agency web site, despite numerous warnings and audit actions by the CRA, some taxpayers are still participating in tax shelter gifting schemes that are likely to result in reassessment and donation claims being outright denied.

"The CRA reminds taxpayers that tax shelter numbers are used for identification purposes only. A tax shelter with an identification number does not guarantee that taxpayers are entitled to receive the proposed tax benefits."

The CRA indicates that it plans to audit all tax shelter gifting arrangements and that to date well over $2.5 billion in claimed donations have been denied.

For more information, see:
http://www.cra-arc.gc.ca/nwsrm/lrts/2008/l081204-eng.html

Tax Alert: Tax cheating software?

The Canada Revenue Agency has released a Tax Alert warning businesses against using tax cheating software.

According to the CRA, electronic sales suppression software is currently being marketed and sold to Canadian businesses allowing business to hide income and evade taxes. CRA reminds Canadian businesses that tax evasion is against the law and could result in severe penalties.

"Electronic sales suppression software is designed to work with point-of-sale systems and electronic cash registers. Businesses use the software to delete a portion of sales from their computer records to evade payment of income and sales taxes. In some cases, restaurant owners who suppressed sales using this software have collected taxes from patrons and not remitted them to the CRA as required by law.

The CRA has over 5,000 employees dedicated to finding unreported business income and ensuring that the proper amount of taxes is paid, even when sales records are missing.

The CRA is working to identify those who develop, sell, or use the software. Businesses that have used electronic sales suppression software are suspected of having hidden thousands of transactions and millions of dollars in sales. Once caught, these tax cheaters will face penalties, court fines, and possibly even jail. They will also have to pay the taxes they tried to evade, plus interest.

Although customers may not notice if a business is using electronic sales suppression software, they can do their part to ensure tax compliance by always requesting a copy of their receipt. Businesses which evade taxes are placing an unfair burden on the individuals and other businesses that accurately report their income and pay the taxes they owe."

For more information on this CRA Tax Alert, please see:
http://www.cra-arc.gc.ca/nwsrm/lrts/2008/l081210-eng.html