Can the CRA use your social media accounts against you?

Social media is a great place to post pictures of your food or prove that you’re the only one with an opinion on Jay-Z’s failing Tidal music streaming service.

It is not, however, a good place to boast about your recent flirtation with tax evasion.

“You’re seeing some stock brokers bragging on social media about how successful they’ve been taking the $10,000 or whatever they’ve put into TFSAs and turning it into $100,000 based on speculative stock trades and I think to myself – you idiots!” says James Rhodes, a Waterloo-based tax lawyer. “If I was an auditor I’d be printing their comments out and using it to create an audit link and send an auditor on them.”

The catch is – the Canada Revenue Agency can do just that. After all, anything in the public record is fair play, CRA spokesperson Jelica Zdero told Yahoo Canada in an email response.

“The Canada Revenue Agency does not disclose the specific tools and methods used during an audit or criminal investigation,” she writes. “However, during the review or audit of a taxpayer, the CRA may use publicly available information to identify and address non-compliance.”

The point of poring over social media accounts is to build a case, adds Rhodes, who used to work with the Department of Justice representing the government against taxpayers.

“They have something called the ‘assumption of fact’ power so if they assume something to be true, it’s deemed to be true until you prove it otherwise,” says Rhodes. Which means if they find you’re posting about all the trips you’re taking or shooting Instagram videos puttering around in a Ferrari then reporting your business took a loss or your income is in the lowest bracket, they’re apt to dig in.

“They can print something off of social media and say well we think this is true and you’ve actually got the obligation to prove them wrong,” he adds.

Of course, technically and ethically, they should start by looking at your books and records to determine how much you’re making and spending, says Dale Barrett, a Toronto-based tax lawyer.

“Only if your books and records are lacking are they supposed to start looking at external sources of information,” says Barrett. If those don’t seem to be painting the full picture they can do what’s called a “Net worth assessment.”

“They’ll look at how much money it costs you to live, they’ll look at the type of vehicle you drive, the trips you go on and they’ll just make up what they think you earned over the three year period they’re auditing you for,” he says. “The danger in that is they’re not actually looking at your books and records – you could have gotten wedding gifts, you could have had inheritances given to you.”

Unfortunately, says Barrett, with the recent CRA cutbacks and reduced resources, net worth assessments are likely to become more commonplace.

“Is it fair game? Can they do it? Is it likely? Sure it can definitely happen,” says Barrett. “But I think most auditors aren’t that clever and don’t want to spend that kind of time.”

Rhodes, who’s sat on both sides of the system, toes a more cautious line.

“People think that social media just goes away and nobody catches it or it gets erased at some pint,” he says. “Don’t do something or say something on social media you don’t want to see down the road or have CRA get its hands on.”