Meet Mr. X. Don't judge him by his country of residence. It is not his fault. It wouldn't be fair. He was brought there as a child by his parents who were fleeing another country for a better life. They could never have predicted how the government of Mr. X's adopted country would treat him when he grew up.
In fact, the government has been using its immense resources to conduct an ongoing investigation into the activities of Mr. X., which culminated one night in them bursting into Mr. X's house without warning, bringing police with them and scaring his wife and children. That night the government took away all his computers and papers as well as some cash that his family had been saving for a vacation.
Apparently the investigation which had lasted two years had uncovered evidence that Mr. X had been breaking the law.
Armed with nothing more than circumstantial evidence at best, the government, in turn, advised Mr. X of the fact that they believed he had been breaking the law. They gave him a 30 day period to respond to their allegations, but they didn't so much as read his response before they forcefully and violently penalized him without so much as a trial. Mr. X was guilty.
Mr. X could not afford a lawyer, nor was a lawyer even offered to him. The government didn't seem the least bit concerned with Mr. X's ability to defend himself against the action. And from the moment the government decided that he was guilty and even before being afforded the opportunity to defend himself against the position of the state (with turned out to be incorrect), Mr. X found that the state had started to take away his possessions, freeze his bank accounts, and make it impossible for him to transfer anything to his family members or pay his employees. In turn, he lost his business, his home, his wife and his dog.
Since Mr. X was not able to and still is not able to afford the services of a lawyer, he has been forced to accept the government's punishment which ultimately cost him 25 years of his life. The 25 years it took to get to this point in the first place.
And no, Mr. X does not live in North Korea. And no, Mr. X does not live in a country without the rule of law. In fact, Mr. X lives in Canada. Just around the corner from you and me. And it is the Canada Revenue Agency who has been pursuing him.
Arguably there are two major circumstances where the government uses its limitless resources against a citizen in a forceful and meaningful way susceptible of crushing them. Those are during a criminal prosecution and during a CRA audit and tax reassessment.
Both the criminal prosecution and the tax audit are capable of destroying a person. The criminal justice system can lock a person away for years of their life, while the CRA audit and subsequent tax reassessment can destroy and undermine years of hard work and leave a taxpayer flat broke.
A key difference between the two lies in the fact that when the Canadian government comes calling on criminal charges, the taxpayer is innocent until proven guilty, and they have the right to legal representation. And when they cannot afford legal representation they have access to legal aid. In the tax context, however, the taxpayer is deemed to be guilty until they prove themselves innocent. They have to spend their own money to prove their innocence and do not qualify for any government assistance. In the case of HST and payroll deductions where amounts are still payable while in dispute, taxpayers still face the punishing task of servicing tax debts, which may turn out to be incorrect, while dealing with abusive CRA collections agents along the way.
If CRA auditors were actually always correct in their tax assessments (as they are deemed to be until proven otherwise), then there may be a way to justify and stomach a system where there is an assumption of guilt and an immediate assessment of penalties and need to service trust debts. But as has been shown by many a taxpayer and their tax lawyer, CRA auditors are not infallible. Their tax assessments are wrong. A lot. And the Canada Revenue Agency knows this.
Isn't it about time to either do a better job on tax audits or flip the system on its side?
At the end of the day, what many don't realize is that Mr. X is forced to shoulder the cost of a bad CRA audit or a bad system. Sometimes Mr. X has a large reassessment which he is incapable of challenging, and his life is ruined by the inability to fight, while other times Mr. X has a small reassessment and it is less expensive and troublesome to pay the tax bill rather than to challenge it. No matter what the reassessment, Mr. X's lack of access to justice and an unfair system make him ripe for the picking.
Originally published on The Lawyer's Daily.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.