Out of status Tax Return

[Jsimone86]

Hi, I've been out of status for 9yrs unbeknownst to me until now. I was defrauded by someone claiming to be an immigration consultant.
During that 9yr period I worked, which I've now come to find out illegally. I was working on my legitimate SIN number. It's expired (I now know,). I've never filed a tax return as the consultant told me I had to be pay into taxes but wasn't eligible for the benefits of a return as someone on a work permit.
During this time I've cohabitated with my boyfriend and we've had a son. Since as far as we knew I couldn't do anything tax wise he's filed as single, and has claimed the child tax benefit for our son and subsidized daycare. He technically has been financially responsible for my son as all payments/registrationd for his care has been in my bfs name and paid by him.

Now that we are aware of the situation we applying to get back in status via an inland spousal/common law PR application.
It has been recommended that I file my taxes and he voluntarily adjusts his tax returns to common law for the years we've lived together.

Can any of you tax experts 1) indicate if this is the right way to go about it, and 2) indicate and concequences/penalties we may experience? Any advice appreciated.

 

[mad_hatter]

Since you want to make Canada your home, it is the best to clean up the tax mess. If CRA comes after you, there will be no penalty relief. Do as others have advised, file your missing tax returns under the VDP. Use a tax professional to do the filings, you do not want to make a mistake or have omissions. Furthermore, you will have trouble obtaining tax software for previous tax years.

How bad is your financial hit will depend on whether your employer(s) had deducted tax from your salary. If they had, then you will be fine. Most of the time, the tax deducted is more than your tax payable. You may even get a refund. If your employer(s) had never deducted tax, then you could be looking at a rather large bill. Not only you have to pay the outstanding tax, you also have to pay interest on the balance owing. The interest rate is about 2 to 3 % above prime and is compounded daily.

The upside on filing your past tax returns is the previous unused RRSP contribution room can now be used to reduce your future tax. Your accumulated RRSP deduction limit could be substantial, it is 18% of the earned income for the past 9 years.

 

[canuck78]

You’re also going to have to be honest with whatever agency gave you subsidized daycare based on an incorrect income unless you were honest and reported both your incomes. If you thought you were working legally you should have been reporting your income. Same issue with whether you have OHIP or not and have not been entitled.

 

[Copingwithlife]

You’re also going to have to be honest with whatever agency gave you subsidized daycare based on an incorrect income unless you were honest and reported both your incomes. If you thought you were working legally you should have been reporting your income. Same issue with whether you have OHIP or not and have not been entitled.

As I had mentioned in other post, the CRA does not care if the money you earned was made while you were working without authorization in the slightest It is NOT their mandate. They are the Revenue Agency. Example, lets someone made money off an illegal activity, not you of course, just an example. The CRA expects that person to declare that money and pay any applicable taxes on it. If you are not declaring it, it is known as tax evasion, and that you do not want to do. If you think you have issues now, throw the CRA into the mix with tax evasion