The Digital World is Catching Up to Taxes

Tax filings going forward are moving through a significant transformation. The government at all levels has been instituting technology not just to process filings electronically, but to compare and matching filing information against known transactions and other comparable information available through different financial channels. For example, people who make their income as contractors are having their reported income checked against databases tracking payments made by businesses to contractors. Businesses are seeing filing information increase that can be compared to bank statements and similar. No surprise, all of these efforts are intended to close loopholes where unpaid taxes have been escaping for years, but it also increases a lot of concern for those who do file and maybe make an honest mistake.

Inherently Complicated

The Canadian tax code is a complex assortment of laws and levies on both individuals and businesses that in turn generate revenue for the government to operate on. As a result, not paying attention to what is going on with the technology development is only a recipe for being unpleasantly surprised come tax season.

For individuals, it is essential to have a good handle on all one’s paperwork from all sources of income, not just the payments that are made from employers through standard payroll statements and paycheck stubs. If an individual has also worked part-time in some kind of gig-economy work, sold high-value items online on a regular basis through online auctions, received awards or grants or scholarships, or received an inheritance from a relative who passed away, it all needs to be reported correctly every tax year. Anyone with the silly idea of hiding some extra income earned on a one-time job is going to be rudely surprised when tax agents come calling asking why income reported doesn’t match against a payment record by that business to the individual as a contractor.

Companies Have Additional Needs

For businesses, tax reporting and filing is a must and needs to be performed accurately. Payroll records alone are essential to show that proper withholding has been managed and applied throughout the year. Things only get more complicated with different levels of business structure and the various applications of taxes from the corporate level down the shareholder and owner. Again, foul-ups in these processes can produce painful results in audits, and there’s not makeover once found.

Think About Expertise Partners

Going forward, individuals and businesses can’t afford to make tax mistakes with regular filings, even once. Instead, one has to focus on accuracy, staying up to speed with tax law changes that apply and securing taxes Calgary resources that can help with expertise and digital knowledge. By putting in place a testing approach, a lot of preventable mistakes can be caught early before a filing is submitted, but only if applied in the first place. Those who take their chances and let the system find mistakes are asking for a painful penalty now.