Author Segal LLP

CRA Phone Scam Revs Up: 2016 Victims Already Outpace 2015

092316_thinkstock_183160134_lores_kkYou come home from work, hit your telephone voice mail button and hear the following: “Court proceedings have begun, a lien is being placed on your property and the cops are on their way to put you in jail, unless you pay immediately.”

That’s what people are basically hearing in a recently revved-up telephone tax scam. The chances that you’ll receive phone calls like this have made a quantum leap this year. Police agencies across the country are issuing warnings, and the Canadian Anti-Fraud Centre (CAFC) reportedly has said that more people and businesses were victims of this scam in the first half of 2016 (811 victims defrauded of $2.5 million) than in all of 2015.

No matter how law-abiding a citizen you are, if you hear these threats, odds are you’ll panic for at least a second or two. Even if your accountant completed your tax returns, when you hear threats of jail and liens or worse, you might wonder if a mistake was made somewhere along the line or there was some bureaucratic blunder.

Scams Are Often Threatening

These forms of extortion can become extremely sinister, too. Earlier this year, the Royal Canadian Mounted Police warned of a phone call where the scammer threatened to kill the person or blow up his home if he called the police (of course, if you’re contacted by a scammer, that’s exactly what you should do).

Scams are nothing new to the Canada Revenue Agency (CRA), but the scammers are ever more inventive in the ways they actually try and get the money. Earlier, scammers asked victims to pay with prepaid credit cards. Now they ask for iTunes gift cards.

One woman reportedly was defrauded of more than $20,000 in this adaptation of the scam script, after being told that if she didn’t pay she’d be imprisoned for 11 years. She was told to buy the cards and call the scammers back with the activation codes on the back of them.

The criminals often will demand Social Insurance Numbers or the numbers of credit cards, bank accounts or passports. A recent wrinkle in this scam urges recipients to visit a fake website that looks identical to the CRA site. There, taxpayers are asked to verify their identities by entering personal information.

Fight Back

So what can you do to fend off scammers? The CRA recommends that you set up an account on its secure website called My Account. The agency will email your registration to you and you can confirm it online. It will also send you an email when you have a message in your account.

You can also contact the CRA to confirm that you do, in fact, owe back taxes or are due a refund. In addition, don’t use any phone number that the caller provides or that’s listed on your call display. Look up the phone number yourself from a reliable source.

Be aware that the CRA will never:

  • Contact anyone for personal or financial information,
  • Request payments from prepaid credit cards or iTunes gift cards,
  • Give personal information to a third party,
  • Leave personal information on voicemail,
  • Send email with a link and ask for personal or financial information, or
  • Ask for personal information of any kind by email or text message.

If you call the CRA to request a form or a link for specific information, a CRA agent will forward the information you’re requesting to your email while you’re on the phone. This is the only circumstance in which the CRA will send an email containing links.

More Tactical Moves

If you’re contacted by an unknown person claiming to be from the CRA, step back and ask yourself:

  • Why would the CRA be asking for personal information over the phone or in an email (or text) that it likely already has on file for you as a taxpayer?
  • Why would the CRA want you to pay outstanding money with gift cards?
  • Did you sign up to receive online mail through My Account, My Business Account or Represent a Client?
  • Did you provide your email address on your income tax and benefit return so you could receive mail online?
  • Are you being asked for information you wouldn’t provide on your tax return?
  • Are you expecting more money from the CRA?
  • Does what the caller is saying sound too good to be true?

In addition, here are 12 more steps you can take to help protect yourself from tax scams or identity theft:

  1. Be suspicious if you’re ever asked to pay taxes on lottery or sweepstakes winnings — they generally aren’t taxable.
  2. Keep access codes, user IDs, passwords, and PINs secret.
  3. Be careful before you click on links in emails you receive.
  4. Never confirm an ID by the information displayed on Caller ID, whether it indicates an individual, company or government entity. These numbers can be manipulated.
  5. Don’t use your Social Insurance Number as a piece of identification and never reveal it to anyone unless you’re certain the person or organization asking for it is legally entitled to the information.
  6. Pay attention to your billing cycles and ask creditors about any missing account statements or suspicious transactions.
  7. Shred unwanted documents or store them in a secure place.
  8. Make sure documents with your name and Social Insurance Number are secure.
  9. Immediately report lost or stolen credit or debit cards.
  10. Carry only the ID you need.
  11. Don’t write down passwords and carry them with you.
  12. Ask a trusted neighbour to pick up your mail when you’re away or ask Canada Post to put a hold on deliveries.

You also can contact your accountant, who is well-versed in the ins and outs of tax scams. If you become a victim, or know someone who has, call the Canadian Anti-Fraud Centre toll free at: 1-888-495-8501.

Start Building Your Rainy Day Fund

Every person needs a fund to tide them and their families over in the event of an emergency. Unfortunately, about 45 per cent of the country doesn’t have one.


Where Do You Find the Money?

In theory, most people concede that a savings cushion is a great idea. In practice, however, many wonder where they are going to find the extra money to park in an account where it will simply sit waiting for a “what if” scenario to turn into reality.

The following eight suggestions can help you get a start on building a contingency fund relatively quickly and nearly painlessly:

1. Consider monthly savings as a bill that must be paid. To help, have the money automatically transferred from your chequing account or your paycheque.

2. Depending on the size of your family, skipping one meal in a restaurant each week could generate about $200 a month, or $2,400 a year. Look at your other spending habits. There are likely several “extras” you buy that you could do without for awhile.

3. Put at least half of your next pay raise, bonus or tax refund into your contingency fund. You won’t get used to the money so you won’t miss it.

4. When you pay off a car, a loan or your mortgage, redirect half the extra money to your savings.

5. Do you really need two cars? If you can live with just one, apply the monthly savings to the fund. You could also trade in your car for a smaller, less expensive model or a used vehicle and save the difference. Keep in mind, these actions can be temporary. Once you build your fund, you can regroup and reconsider your vehicle needs.

6. Round up to the nearest dollar each purchase you log into your financing software or your chequing account. If you spend $35.10, log it in as $36.00. You wind up thinking you have less to spend but in reality you are saving small amounts that add up.

7. Set a higher budget high for groceries than you actually spend. If you typically spend $350 to $375 on food, budget $400 and bank whatever you don’t spend of the amount you budgeted.

8. Save your coins and small bills. At the end of each day, dump into a jar the change in your pockets and the $1 bills in your wallet. At the end of the month you can bring a fair amount of savings to the bank.

Your adviser can help you come up with many other simple techniques to stop spending and start saving almost effortlessly.

Generally it is a smart precaution to have relatively liquid funds available that could cover from three to six months of budgetary expenses. The higher your net worth, the more you will need in your fund. Once you tap into the funds, be sure to replenish them.

So, why do you need this emergency fund? Because life is full of surprises. A contingency fund helps you to protect your most important assets during a crisis such as losing your job, becoming disabled for a time, needing a new roof, replacing your furnace when it gives out during a cold snap or being hit with a large tax bill just as your estimated quarterly payment is due.

Because contingency funds are meant for non-recurring expenses, you need to be able to access the money quickly. However, if you tend to be a spender, put the money into an account that requires a little effort to tap and don’t get a debit card attached to the account.

The challenge is how to invest the money in a way that it can be liquidated quickly without any major tax consequences. That means you shouldn’t expect to park your money in a high-yield account.

Contingency funds generally are not put into a long-term investment. You also want to ensure the money goes into a safe investment. The whole point of this fund is not to make a profit but to have it in a vehicle that can be cashed in within a day or two. So the best solution is likely to avoid any stock market or equity risk.

There are several places where you can put this money, none of which generates a high yield:

  • Savings accounts keep your money safe and generally are available the minute you need it. But they pay very little interest. Some online savings accounts do require a slight waiting period, a day or two, before you can access the money.
  • Money market mutual funds are relatively safe but also don’t offer much in the way of interest. When the money reaches a certain level, you could roll over all or some of it into a CD or Treasury bond. The money might not earn as much, but it is more difficult to access.
  • Cashable GICs and bonds can be liquidated quickly and are secure, but again, expect a low return.
  • A chequing account overdraft is a possibility, but it should be a last resort. The penalties are generally high, frequently $5 a day for each day the account is overdrawn.
  • A secure line of credit on your home is an alternative to a contingency fund. You can instantly access the cash at a relatively low cost and you don’t tie up money in a savings fund. However, you need to maintain discipline and not draw on the credit line for any other reason than a bona fide emergency. And as you soon as you can, start to pay it down to reduce the amount of interest you wind up paying.
  • Registered Retirement Savings Plans (RRSP) do not work well in emergency because if you take money out you pay taxes on it and cannot replace it.
  • Tax Free Savings Accounts (TFSA) on the other hand, do work. You earn tax-free investment money in these accounts and you could save the equivalent of three or six months’ salary within a TFSA in a secure investment such as a GIC. Then you could access the money quickly without paying tax on the interest income.

In addition, you can recontribute the money you withdraw beginning in the year after you take the money out, so you can replenish any funds you access in an emergency so they starting generating tax-free income again.

A margin account with your broker is another possibility. Many brokerage firms offer these accounts and allow you to borrow from them. There are no tax consequences as long as the money is taken simply as a loan. Taxes come into the picture only if you have a capital gain or loss from selling something to cover the loan. You still don’t incur tax until you sell assets in your portfolio.

Consult with your adviser to work out the best plan for setting up your contingency plan based on your financial situation.

Ramp Up Your Conversion Rates

thmb_computer_mouse_scroll_hand_ergonomic_bzLocation, Location, Location

Conversion rates may spark controversy over their definition and accuracy as indicators of success, but it seems here to stay. It is the figure that determines the bottom line of your e-commerce business. In fact, the actual conversion rate may be less important than the fact that it trends upward.

The conversion rate metric is defined as the percentage of Web site visitors who actually complete an action that you want. By measuring a percentage of traffic, you can gauge how well your site is doing regardless of traffic levels. But rates vary from site to site and there aren’t any standardized measurement techniques.

The Basic Tenets

Conversion is essentially driven by sound selling practices specific to each merchant’s business model. The study Merchant Secrets for Driving Conversion lists the following ten basic tenets that successful online retailers follow:

  1. Designing a well-branded catalogue.
  2. Stocking desired merchandise at a fair price.
  3. Offering consistent policies and convenience tools across all channels.
  4. Providing intuitive navigation throughout the site.
  5. Presenting key pages with well thought-out design and functionality.
  6. Deploying merchandising features that meet the needs of your primary shopper types.
  7. Testing suggestive selling strategies to increase the average order size.
  8. Maintaining a keen awareness of the competitive landscape and category benchmarks.
  9. Striving to deliver more personalized shopping experiences.
  10. Prioritizing responsiveness to customer actions and communication

For a retail Web site, the conversion rate is usually the percentage of visitors who actually make a purchase from the site.

The rates vary according to industry, target market, site quality and other factors, but generally range from 0.5 per cent to eight per cent, and even more than 10 per cent for the lucky few.

So, given that this metric appears here to stay and is used as a benchmark by many, what can you do to boost your conversion rate? Several things, according to a study entitled Merchant Secrets for Driving Conversion, conducted by Chicago consultancy the e-retailing group and based on interviews with 30 merchants

While many factors that drive conversion rates upward are situational, depending on the specific category or season, the study shows that several appear to work for everyone, including:

The Products

Right Product — It doesn’t really matter if you have a store or a site, or both, first and foremost shopping is about product. Having the right product is the number one tactic for driving conversion. So regardless of the season or the category of your product, you must have the winning goods on your site. If you don’t, your competitors will.

Right Price — You have to match the right price to the right product. Whether you are simply aware of what the competition is charging or you use webcrawling technology to determine your competitors’ pricing, you need to keep what you charge on a competitive level.

Freebies — Most people like to get something for nothing, so major drivers of conversion are enticements such as deep discounts, a free service with the product or the old standby, “buy one get one free.” And free shipping can go a long way toward boosting your conversion rate. There is anecdotal evidence that offering free shipping drives sales better than a 30 per cent discount and that conversion rates bump up a few percentage points whenever free or minimal-cost shipping is offered.

The Web Site

Search — You must have a search tool, it must work quickly and accurately and it must offer items relevant to the shopper’s keyword. Search results also help cinch sales if they bring up special offers, top sellers, cross-sellers and up-sells.

Streamlined checkout — The customer may have the cart full but if that consumer is confronted with complicated and time consuming steps before the sale is completed you run the risk of losing the sale. Optimize your shopping carts, keep everything in the upper half of the page and let the shoppers know where they are in the purchasing process. Of course abandoned carts aren’t always a major issue and that metric needs further study. Some shoppers return and complete their order within 30 days and use the cart as a placeholder.

Navigation — Speed and ease highlight a site’s performance and it is imperative that your navigation is easy, logical and intuitive. Ease of shopping encourages not only conversion but also more purchases. Good navigation includes quick access to key categories, customer service, cross-channel capabilities, as well as information that supports the company as a whole. A number of merchants mentioned the value of easy access to such subcategories as Men’s, Women’s, New, Gift Ideas, Top Sellers and Promotions.

Product page — Where the shopper lands on your site is often a product page, which in essence becomes your home page. That, then, needs to be complete and full of information that can answer every question or concern. Product descriptions should allow for a quick overview and provide in-depth information. If a single feature is missed, you risk losing the sale. Merchant guarantees can help boost conversion rates, as can product ratings, zoom photos, and colour change technology.

When selecting the location and nature of the items on the product page, consider:

  • The category and what works best.
  • The number of items you wish to promote (three or at most, four).
  • The most relevant tactics, such as cross-selling items, up-selling items or similar products.
  • Supporting messages so shoppers quickly scan recommendations, for example customer favourites or top sellers.

Entry and Exit: While you’re at it, take a close look at where your online shoppers land and where they leave. Exit pages could indicate a place where you need to add some encouragement to stay or to buy. And if you compare conversion rates based on where customers landed, you may find that some of those landing sites need improvement.

Predatory Loyalty Programs Are Not Welcomed

thmb_security_chain_bzConsider the Effects

Loyalty programs are important marketing tools that can help promote repeat business and deepen customer relationships.

And in general, they don’t create problems. That is, unless the Competition Bureau becomes concerned that a company’s loyalty program abuses a dominant market position and diminishes competition.

Predatory Acts and Other Factors

 While the Competition Tribunal does consider the effect that a business practice has on competition, two cases illustrate other factors the panel considers when the issue involves abuse of dominance.

In Canada (Director of Investigation and Research) v. NutraSweet, the Tribunal ruled that a “necessary ingredient” for determining anti-competitive behaviour is an “intended negative effect on a competitor that is predatory, exclusionary or disciplinary”.

In Canada (Director of Investigation and Research) v. Tele-Direct, the Tribunal concluded that it was impossible to set out a list of objective actions for dominant companies that would never attract scrutiny. Instead, the overall character of the action needs to be considered on a case-by-case basis, weighing any legitimate business justification with anti-competitive effects.

The Competition Act constrains dominant companies in ways that don’t affect other market participants. And of course, the Competition Bureau and the Competition Tribunal take steps to delineate those constraints and to distinguish healthy competition from anti-competitive behaviour.

Some insight can be gleaned from a Tribunal determination that Canada Pipe Co.’s loyalty rebate program didn’t abuse the company’s market dominance by promoting exclusivity and weakening competition. The company offers significant rebates to distributors that stock cast-iron pipes supplied only by Canada Pipe.

The Tribunal conceded the company’s dominance in the cast-iron plumbing pipes and fittings market but noted that the distributors were free at any time to stock similar plastic products made by other manufacturers. The Tribunal also noted that the plastic, or PVC, versions have been taking an increasing share of the overall market.

In another loyalty program decision, however, the Competition Bureau expressed concerns that IKO Industries abused its market dominance and was hurting competition in the supply of low-end asphalt roofing shingles. The case never went to the Tribunal because IKO agreed to modify its program by, among other changes, allowing customers to choose between loyalty and volume-based rebates.

Both cases illustrate the effect-based approach under which a business practice is considered anti-competitive when its effect is to harm competition. In making those determinations, the specific aspects of a program and the nature of the market are considered. In fact, there are regulations specific to industries, such as a ruling that airlines cannot strategically use frequent flier and other incentive programs to exclude or discipline competitors.

Based on the Canada Pipe case, a loyalty program should include at least two features in order to pass muster:

1. An opt out, where the consumer can decide to end participation and choose another supplier without significant penalty. Canada Pipe let distributors leave the program and buy other products, including imported cast iron, with no penalty other than the loss of the rebates.

2. A legitimate business reason for the program. This feature is a bit more complicated and the Tribunal reaffirmed an earlier ruling that a business justification must be a “credible efficiency or pro-competitive” reason. That alone, however, is not enough. All known factors are taken into account in assessing the nature and purpose of the acts alleged to be anti-competitive. In the Canada Pipe situation, the program not only benefited small and medium-sized companies, it also helped the division gain better efficiencies, lower production costs and continue to offer a full product line.

In Canada, the effect a business practice has on competition remains an important consideration in determining whether behaviour is valid competition or runs counter to the law. At the same time, there are other considerations (see box above).

Final Note: The Competition Bureau has Enforcement Guidelines on the Abuse of Dominance Provisions, which state that an action is considered anti-competitive if it falls into one or more of the following categories:

  • Acts that raise rivals’ costs (or reduce rivals’ revenues) or that foreclose existing or potential rivals from key inputs or facilities.
  • Predatory conduct (such as predatory pricing).
  • Acts intended to facilitate coordinated behaviour among companies.

Keep Employees Satisfied: Salary Gains Expected to Hit Record Low


Canadian businesses are taking a cautious stand as salary gains in 2017 are expected to be the slowest in two decades.

A national survey of 500 companies across industry sectors by consulting firm Mercer Canada found that employers are projecting record-low salary increases next year, driven by weakness in the energy sector. Mercer Canada said the normally high-paying energy sector will also offer lower salary increases than other major sectors of the economy, which is a reversal from the past.

Raises are projected to be 2.6% across all employee groups, down from 2.8% in 2016 and 3% in 2015. Taking into account expected payroll freezes by some companies, overall pay raises next year are expected to be even lower, at 2.3%, according to the study, which is titled 2016/2017 Canada Compensation Planning Survey.

(Companies in energy-rich Alberta are projecting salary increases below the national average, partly because 40% of energy companies plan to freeze salaries in 2017. Excluding salary freezes, increases in the energy sector are projected to be 2.4%, still below the 2.6% national average.)

Highest-Performing Employees

When it comes to top performers, however, the survey found that businesses intend to continue giving higher-than-average salary increases. The average salary increase for the top 7% of workers in 2017 is expected to be 4.3%.

The salary projections exclude unionized employees because their increases are predetermined by negotiated agreements and aren’t typically subject to annual modifications depending on the company’s spending plans.

“People are being very cautious and conservative with what they’re planning for salary adjustments next year, primarily as a result of the economic uncertainty in the marketplace,” said Mercer’s Gordon Frost.

Non-Financial Ways to Keep Staff Members Content

If your company is among those expecting to offer lower raises next year, you may want to creatively address the issue taking into account why people come to work in the first place.

So, what exactly makes an employee satisfied? Money, of course, helps, but many studies have shown that as long as employees feel they’re fairly paid, there are many other factors that come into play and determine whether or not they’ll quit or, if they stay, they’ll continue to work hard. Here are 10 approaches to consider that may help keep your staff members content if there’s little cash for raises:

1. Give them a sense of purpose. Employees who have a sense of purpose are more focused, creative and resilient, so managers should make a point of reminding employees how their work is improving people’s lives. Distributing client or customer testimonials and announcing when corporate profits are donated to charities are a couple of ways to do this.

2. Increase benefits. Look into the costs of boosting the fringe benefits you offer. Explore your policies for benefits such as maternity and paternity leave, childcare reimbursements, gym memberships and bonuses for extraordinary performances. You also could offer an extra week’s vacation or a few additional days off.

Generally, employees look for benefits tied to health, family, and financial stability. The good news: Within each of these three categories, there are many creative solutions that don’t necessarily hurt the bottom line.

For example, you could add voluntary supplementary insurance such as life, critical illness or cancer insurance to your existing benefits options. This’ll enhance your offerings with no direct cost to your company. Premiums for voluntary insurance coverage are paid by employees who choose to apply. Voluntary plans help protect employees’ financial security in the event of a covered illness or injury with cash benefits that can go toward copayments, deductibles or any other health-related cost not covered by major medical insurance.

3. Allow flex work. Flexibility is something that employees crave but don’t often get. At some point, most employees need to spend some quality time with their families but are unable to do so, often because of their work schedules..

Flex work can take many forms but it usually involves giving someone the right to change where or when they work to help balance other responsibilities. Reasons for a flexible schedule could include allowing someone to pick up or drop off a child at day care or school, care for a loved one, enroll in a training or education program or participate in traditional indigenous practices such as hunting or fishing.

4. Provide strong interaction. Good communication is vital for keeping employees happy and satisfied. When a situation arises, employees want to be able to contact quickly the best person to help them resolve the issue.

Direct interaction fosters trust, openness and mutual accountability. Those values, in turn, help to create an environment where employees feel empowered to solve problems and try new things without endless meetings and paperwork.

4. Offer training and courses. Tuition reimbursement is a huge perk for employees. You could cover single classes they’re taking, help in their efforts to go back to college to get their degrees, and subsidize courses they’re taking to improve their careers. Training may takes the shape of free online training courses or massive open online courses (MOOCs) such as Coursera or edX. The idea is to help employees work on their careers.

6. Show gratitude. Recognition is one of the biggest rewards employees can get from managers. When they feel appreciated for their work, they become motivated to do more. At their best, formal recognition programs may pay for themselves through reduced turnover — saving the money you’d have to spend to hire and train a replacement.

8. Involve them decision-making. There’s a direct correlation between how involved employees are in decision-making in their department or team and their overall morale, motivation and satisfaction. Including staff in decisions makes them feel like a valued part of the team, and they tend to focus more on problem solving than blaming their problems on management.

9. Ask around. If you really want to know about your employees and keep them satisfied, get their feedback. They can give you insights that you might not have considered before. You may even get feedback about your current reward system. This’ll let you optimise your tactics for keeping them happy.

10. Keep staff in the loop. When employees don’t know what’s going on in their own company, productive time can give way to duplicate or unnecessary efforts. Worse yet, when employees get only part of the story, they’re left to fill in the blanks with gossip, rumors, and worry.

The bottom line is that if you can’t give employees large salary increases, you may be able to compensate them in other ways. Being creative can help foster a positive environment and keep turnover down.