In this case, our client’s father had died and left her a residential property, which she rented out for 19 years without reporting the income. Now she had an offer of purchase on the house, and she knew that, as an income property, it would be subject to capital gains tax.
Suddenly, the unreported rental income became an issue. If she sold the house, the Agency would ask how she had acquired the property in the first place, and how she had used it. We successfully negotiated a settlement for our client to pay tax on only eight years of rental earnings, with no civil or criminal penalties, and a reduction of interest on the tax payable of 4% in the first two years of the period. She was now free to sell her property with a clear conscience.
In a separate case, non-residents who owned rental property in Canada had failed to report that income for many years. They wanted to sell the property, and knew that questions would be asked. In order to avoid the large penalties that would have been levied for non-reporting and tax evasion, we negotiated a settlement, which waived all penalties. Our clients were relieved to be able to declare the income and pay the tax owed without the added burden of penalties, or the threat of prosecution.
The foregoing provides only an overview and does not constitute legal advice. You are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained in the context of your own particular circumstances.