$100K tax bill caused by error alleges family
Canada Revenue Agency trying to seize Ottawa family's home
An Ottawa family says it could lose its home after a series of alleged accounting blunders by the Canada Revenue Agency.
Zahid and Korasha Ali, who live in the Riverside Village area, were assessed for nearly $100,000 in income tax for three years when the couple said it had very little income.
"They’re asking for $93,000 … $93,290.14 and that’s accumulated with interest," said Zahid, while holding the bill he received from the CRA.
The Alis said attempts to reason with the revenue agency were largely ignored while the CRA proceeded with legal steps to seize their property.
Until 2007, Zahid Ali ran a computer training school that garnered federal government contracts but his business ground to a halt when those contracts disappeared. For the next three years, the family lived on its line of credit, borrowing to pay bills.
But documents from the CRA audit detail how money borrowed by the Alis was considered income, as were Zahid’s credit card purchases. Because Zahid settled his credit card debts using his line of credit, those funds were counted twice toward his income.
Steven Novoselac, head of tax dispute resolution with the law firm Gowlings, said borrowed money is not considered taxable income.
"In Canadian tax law, money borrowed by an individual from a personal line of credit is not taxable income," Novoselac told CBC News. "I can say that we have seen situations certainly where mistakes have been made by CRA auditors that were ultimately reversed."
The CRA's alleged error in assessing Zahid’s income was not the only mistake, according to tax documents. When adding up Zahid’s credit card spending, an $88.19 purchase at Canadian Tire turned into $8,819.
The revenue agency is also trying to recover child benefit payments made to Korasha Ali. According to the family, the CRA wants the Ali family to repay $11,000 in previous payments because the couple's supposed income over the three years is in question.
"It took a big toll on me health-wise," said Korasha. "Where am I going to come up with this money to give them? Basically, I don’t know what to do."
CBC News contacted the CRA for comment on tax policies but to date the agency has not responded to the requests.