Need some advice.. Made > $700,000 but still havent paid taxes (Canadian)

[thebigmook]

The interweb has been good to me. I have been working on websites trying to make coin before I was even legally able to drink or buy a pack of smokes. Living in Canada I never had a real job with monthly earnings that would take care of my taxes for me automatically.

Now, 5 years since I first started experimenting with HTML, I have made over $700,000 - mostly from adult. But all this time I keep receiving wires and checks and never bothered to do my taxes. All was well when I was still a minor but now I think I have dug myself quite the hole.

If I were to pay all my taxes for the last 5 years I will get absolutely raped by the Canadian tax system, and close to half (yes half) my earnings will be forfeited.

I want to make a corporation and pay the low 20% tax rate.. but I dont know how that works exactly. I do not want to avoid paying taxes, I just dont want to pay an unfair amount of tax.

Please help me.. what are my options? I dont want to go to a lawyer/accountant right away in fear they will fuck me over. All my wires go directly to my bank, and I currently have some investments (GICs) with that bank that are about to mature soon. I earned about 280k last year, 150k the year before and I will probably earn around 400k this year.

Any help at all is highly appreciated.. what should I do??

[beemk]

you need to talk to an accountant, they do this stuff for a living, we make porn sites for a living so the best advice anyone on gfy could give you would be to find the best accountant in your area.

[L0stMind]

you can't sneak past earnings into a corporation.

you _NEED_ an accountant.

you need to incorporate asap and move assets into the corp and start reporting income and such properly.

Good Luck. Paying this off is going to hurt.

[tranza]

Bottom line: you are fucked.

I'm serious.

[Pipecrew]

You are soo fucked, you cant just go back and dump money into a corpo, you are pay 49% on 700k, when you start your corp you can pay the first 400k CDN at 20%, then the rest will be high.

Actually keep in mind, the penalties alone for not declaring and basically hiding, is going to be pretty bad as well, Interest etc.

[fuzebox]

I may be opening myself up for flaming here, but you do have options. Most of them are grey-area and involve moving your money out of the country as quickly as possible... but you should really talk to a professional.

[polish_aristocrat]

Originally Posted by thebigmook

I have made over $700,000 - mostly from adult. But all this time I keep receiving wires and checks and never bothered to do my taxes.

All my wires go directly to my bank, and I currently have some investments (GICs) with that bank that are about to mature soon.

you should have opened a bank account in some good offshore jurisdiction

you would be still doing illegal tax evasion, but at least there would be a very huge chance, that no one would know about it

[polish_aristocrat]

btw one GFY'er (an American!) was also not doing his taxes for 3 years or so, and he was bragging here about buying new BMW's....

so perhaps you'll get lucky and it won't be so bad for you after all

[Ross]

Making that amount of money and not paying tax you are a silly boy! Its not like you can't afford it.

[Pipecrew]

Originally Posted by fuzebox

I may be opening myself up for flaming here, but you do have options. Most of them are grey-area and involve moving your money out of the country as quickly as possible... but you should really talk to a professional.

Yeah and leaving canada for the rest of his life.

[Flynn]

yeah, good luck to you.

[polish_aristocrat]

shit, this guy is from Canada and is 5 years in adult.. and it looks like this is just a fake nick, he must be a regular GFY'er...

i hope his nickname doesnt start with 'b' and ends with 'f'

[Brad Mitchell]

Go see a GOOD accountant, someone pricey. You might be surprised what they can negotiate for you.

Brad

[jonesonyou]

Originally Posted by L0stMind

you can't sneak past earnings into a corporation.

you _NEED_ an accountant.

you need to incorporate asap and move assets into the corp and start reporting income and such properly.

Good Luck. Paying this off is going to hurt.

And I hope you didnt spend all of your earnings already.. . .. .

[Mutt]

plead insanity.

[JFK]

Originally Posted by polish_aristocrat

shit, this guy is from Canada and is 5 years in adult.. and it looks like this is just a fake nick, he must be a regular GFY'er...

i hope his nickname doesnt start with 'b' and ends with 'f'

wonder who that be ?

[rowan]

Talk to an accountant ASAP, if you voluntarily submit your prior tax returns they govt may make some concessions on what you owe.

[thebigmook]

haha im not bdjuf
im sure that guy has made well over $700,000.. besides hes located in Quebec from what I can remember (Im in Alberta)

[Pornopat]

Originally Posted by thebigmook

Please help me.. what are my options? I dont want to go to a lawyer/accountant right away in fear they will fuck me over. All my wires go directly to my bank, and I currently have some investments (GICs) with that bank that are about to mature soon. I earned about 280k last year, 150k the year before and I will probably earn around 400k this year.

Any help at all is highly appreciated.. what should I do??

Go to a few accountants and compare options. Play them out against each other and end up with the best one. Accountants are not out to fuck you over. Especially when you mention from the start that you will be comparing.

If you are afraid to give your name go together with a friend and pay him cash to pay the bill for the visit.

[Holly]

I'd go out and buy a really expensive car. Something that the doors will lift up. The ladies like that sort of thing. And get a loud stereo for it.

[Axeman]

See an accountant and it soon. Your going to pay a lot, but better now then to keep prolonging it and waiting for the interest and penalties and other issues to keep piling on you.

[thebigmook]

What do you guys think I will have to end up paying?
The tax bracket for the highest income earners in Alberta is 39%

[webgurl]

Leaving canda is an option but it may haunt u when u come back .
You are lucky we don't have the IRS , they are a tad bit more
hardcore then CR

[thebigmook]

Originally Posted by webgurl

Leaving canda is an option but it may haunt u when u come back .
You are lucky we don't have the IRS , they are a tad bit more
hardcore then CR

Actually I really dont mind leaving Canada.. I want to move to the States soon anyway

[flashfire]

so you are making 140,000 a year and not paying any taxes...at all? you would be in the highest personal tax bracket

[WiredGuy]

You may be able to shelter this years earnings (or a portion thereof) within a new corporation but very little chance you can legally do it for past years. No matter what, you need to talk to an accountant asap, and especially before the feds catch on, then you'll be really screwed. No matter what, expect to forfeit nearly half your earnings.
WG

[tony286]

Talk to a accountant.

[webgurl]

Originally Posted by Ross

Making that amount of money and not paying tax you are a silly boy! Its not like you can't afford it.

Well he made that over the years . You can blow that kinda money
fast , in Canada nice cars , housing everything is more then
the U.S . {Plus he has to pay back all those years he missed out on
that's a good chunk of change taxes here is a nightmare , when u make
a certain % bracket u pay ALOT i mean depending how much 40% + is nuts
Its easy to spend that $$$ and have nothing left over
to pay the govt' . If you are planning to do it legit , u better find a shit load of stuff
to write off and have proof of it too

[WiredGuy]

Originally Posted by thebigmook

Actually I really dont mind leaving Canada.. I want to move to the States soon anyway

The IRS will cooperate with CCRA to seize back taxes. Seriously, its a hard hit but would you rather be on the run the rest of your life? You are making good money so you may as well legally keep it. It's a one time hit and you'll be fine within a year.
WG

[Pornopat]

Did I mention that I only pay 2% tax on profit here on the island?

For the right price I can help you people set up tha same legal construction.

[webgurl]

Originally Posted by WiredGuy

The IRS will cooperate with CCRA to seize back taxes. Seriously, its a hard hit but would you rather be on the run the rest of your life? You are making good money so you may as well legally keep it. It's a one time hit and you'll be fine within a year.
WG

lol , not only that but if you plan on staying in this industry
wtf would u go to Bush's territory . IMO , insane .

[Pipecrew]

Originally Posted by WiredGuy

The IRS will cooperate with CCRA to seize back taxes. Seriously, its a hard hit but would you rather be on the run the rest of your life? You are making good money so you may as well legally keep it. It's a one time hit and you'll be fine within a year.
WG

I also wonder if this is in USD or CDN. I am not a tax expert, i wonder if they go back 5 years and nail him at a 1.5 exchange rate.

[thebigmook]

Originally Posted by Pornopat

Did I mention that I only pay 2% tax on profit here on the island?

For the right price I can help you people set up tha same legal construction.

do you get to keep the luxuries of a canadian/american citizenship?

[webgurl]

Originally Posted by Pipecrew

I also wonder if this is in USD or CDN. I am not a tax expert, i wonder if they go back 5 years and nail him at a 1.5 exchange rate.

interesting , but i know the answer to this they will find the average
for every year since he missed on . I remember asking my accountant
few years ago this exact question
So yep

[Brad Gosse]

You don't need an accountant you need a tax attorney ;)

[Pipecrew]

Originally Posted by webgurl

interesting , but i know the answer to this they will find the average
for every year since he missed on . I remember asking my accountant
few years ago this exact question
So yep

Probably ends up around 1.3, and assuming you have been partying like a rockstar, it could leave some people in a bad position.

[fuzebox]

Originally Posted by Pipecrew

Yeah and leaving canada for the rest of his life.

And that's a bad thing?

[WiredGuy]

Originally Posted by Pipecrew

I also wonder if this is in USD or CDN. I am not a tax expert, i wonder if they go back 5 years and nail him at a 1.5 exchange rate.

I know for a fact they will and they'll use these exchange rates on a month to month floating basis to figure out your exact net value: http://www.bankofcanada.ca/en/rates/...e_avg_pdf.html

WG

[webgurl]

Originally Posted by Pipecrew

and assuming you have been partying like a rockstar,

rofl , pipecrew u rock .
He wasn't making enough to be partying like a rockstar .

[webgurl]

Originally Posted by WiredGuy

I know for a fact they will and they'll use these exchange rates on a month to month floating basis to figure out your exact net value: http://www.bankofcanada.ca/en/rates/...e_avg_pdf.html

WG

My accountant says they will do the annual average
Not Monthly Maybe he is wrong i dunno . Thank Goodness
i am not in that position what a nightmare .

[thebigmook]

Originally Posted by Pipecrew

I also wonder if this is in USD or CDN. I am not a tax expert, i wonder if they go back 5 years and nail him at a 1.5 exchange rate.

Well thankfully almost all funds (98%) are in USD

[Pornopat]

Originally Posted by thebigmook

do you get to keep the luxuries of a canadian/american citizenship?

Yes. You can even stay and live there.
Also with this construction though it does not cover money you have made in the past.
Just from the time you have the construction.

[webgurl]

Originally Posted by fuzebox

And that's a bad thing?

<sigh> u can be a real idiot u know that .

[AlienQ - BANNED FOR LIFE]

Hope ya got all 700K right now cuz if not yer fucked and after its all said and done ya gonne end up with about 300K.

[WiredGuy]

Originally Posted by webgurl

My accountant says they will do the annual average
Not Monthly Maybe he is wrong i dunno . Thank Goodness
i am not in that position what a nightmare .

During my audit we took the monthly's, although at the time (2002/2003) i think it worked in my favour to doing monthly's over yearly's which is why we did it.

But going forward since 2003, I was told to do it with monthly's, I think that was part of the agreement with the CCRA after the audit.
WG

[Axeman]

Originally Posted by WiredGuy

I know for a fact they will and they'll use these exchange rates on a month to month floating basis to figure out your exact net value: http://www.bankofcanada.ca/en/rates/...e_avg_pdf.html

WG

Yep so if the $700K is in US funds he is in a world of hurt to get things straightened out, but worth it in the end. Better than running for life and never wanting to come back to Canada to visit friends or family due to risking being caught.

[magicmike]

just spend it all real quick and settle with CCRA they'll charge you like $10,000 or something stupid.

Seriously its insane on what i've heard people settle with them once they are broke.

Nothing at all like the US system.

[_Richard_]

wow, good luck man. I'd hire an accountant and a lawyer.. now

[Axeman]

Originally Posted by thebigmook

Well thankfully almost all funds (98%) are in USD

Well this doesn't much matter to them. You are Canadian so they will take your earning in US dollars and convert them to CDN with the exchange rate for each of those years to get your true income in CDN Dollars for the year and then tax you.

If you left most of your cash flow in USD and now gotta pay with the old exchange rate you are getting hit again. If you converted that cash to Canadian when the rates were $1.3 say then at least for the year your paying at $1.3 your even. If they ding you at $1.3 and your having to exchange your USD to pay it now at 1.04 thats a big difference.

[magicmike]

I'd say hypothetically of course you other options are.

a) start paying now and hope they don't back audit you
b) talk to an accountant and lawyer

option b is the safe plan, a is the risky one, but I also know a lot of people that who do pay taxes in forms of deductions off their pay check but then don't bother to file tax returns.