Just as tax season gets into full swing, an old scam is back, but with a new twist. According to Canadian Anti-Fraud Centre stats and Better Business Bureau (BBB) Scam Tracker reports, Canadians continue to lose money to the Canada Revenue Agency (CRA) scam.
More than $5 million was lost to it in 2017, which is likely a very low estimate, as it’s widely understood that only five per cent of victims actually report the crime.
“This one never goes away,” says Evan Kelly, senior communications advisor for BBB serving Mainland BC. “However, we have noticed a new twist in the years-old scam. Crooks now call up unsuspecting victims, threaten them with arrest if they don’t pay their taxes, and then demand payment in Bitcoin. No government agency in Canada accepts cryptocurrency as payment.”
Victims are instructed to go to the nearest Bitcoin ATM, are told how to deposit money or credit card information, and the money is then transferred out.
“The problem with cryptocurrency is it’s virtually impossible to track,” adds Kelly. “Once your money is gone, it’s gone for good.”
In January a North Vancouver resident learned this the hard way, when he lost $3,000 to the CRA scam. The victim received a phone call from an alleged employee of the CRA and was told he owed $8,000 in unpaid taxes. If this was not paid immediately, he was told that he would go to jail, and was also informed that if he hung up or did not pay, the police would show up at his residence.
The victim was told to make the largest payment he could afford on that day by using a Bitcoin terminal. A transfer of $3,000 was made by the victim to the Bitcoin reference code number supplied by the caller. It was not until after the transfer had been made that the victim realized he had been scammed.
“Tax time is upon us, and scam artists will use creative, criminal means to defraud you of your hard-earned money,” cautions Cpl. Richard de Jong of the North Vancouver RCMP. “The CRA will not contact you by phone and threaten or coerce you into paying a tax bill. Also, the CRA does not accept Bitcoin as a method of payment.”
In 2017, Canadians were swindled of $1.7 million involving cryptocurrencies; almost double the numbers from 2016.
“This is a new vehicle for scammers to use because, like a prepaid Visa transfer or a money transfer, it’s next to impossible to track where the money goes once put into a Bitcoin ATM,” says Kelly. “When you have an unregulated currency like this, it can certainly become attractive to the criminal element.”
To identify, and avoid, the CRA and other scams, be aware that government agencies will not insist you keep conversations secret from your spouse or partner, and that law enforcement and other government organizations do not accept Bitcoin as payment.
The CRA does not make threatening phone calls demanding payment of taxes. If you do receive a legitimate call from the CRA, the employee will typically introduce him- or herself in both official languages and give their ID number. The employee will not solicit for personal or financial information over the phone or online (at this time of year, plenty of fake CRA emails make the rounds as well). If, once you file your tax return, there is a problem with it, the CRA will contact you via mail.
In order to make tax time a smooth ride, don’t procrastinate: get it done, since filing late comes with financial penalties. This year’s tax filing deadline is April 30, but online filing is now open.
If your return is relatively simple, and you qualify for the service, consider the free Community Volunteer Income Tax Program available in Ashcroft, Cache Creek, Clinton, and surrounding communities. For more information, contact Ashcroft program coordinator Vivian Edwards at (250) 453-9077.
If your return is big and complex, research tax specialists at BBB.org for reviews, accreditation status, and complaints. You can also use an online tax preparation app. These have come a long way over the years in simplifying the process for consumers. Many offer suggestions along the way, so you don’t miss anything in terms of deductions.
If you have children, keep track of everything you spent on them, particularly educational, sporting, or health-care expenses. The same goes for health-care expenses—such as glasses, or travel for out of town appointments or procedures—for other members of the family. You may also be able to claim for some expenses incurred as a result of your job.
If you moved last year, you can claim some of your moving expenses (make sure you have the receipts), and if you work in a union you can claim your union dues. Don’t forget to claim any RRSP contributions you made.
If you’re having trouble finding some of 2017’s receipts or paperwork, or forgot to keep track of medical travel and related expenses, now is a good time to start preparing for next year’s taxes. Create a folder or place in your home where you can collect receipts and other tax-related forms, and keep a log of your medical travel, including receipts for meals and accommodation (or keep track of them on a spreadsheet).