Description: A group of companies with no employees operating out of a house in rural Nova Scotia reported sales of $56 million. That might have been the first clue that something was wrong. But by claiming that one of its suppliers was “Vandalee Industries” the scheme may have come totally unravelled. A Canada Revenue Agency (CRA) staffer was reminded of George Costanza’s fictional company Vandelay Industries and included this coincidence in the support for a search warrant on a Nova Scotia company that had claimed over $3 million in sales tax refunds. CRA had paid out refunds of $276,000 to the alleged fraudsters before auditors became suspicious and put a hold on further payments.
Date: March 1 , 2019
1) What do you think was the biggest mistake the perpetrators of this sales tax refund scheme made?
2) Would you consider a career as a sales tax auditor? What do you think would be some of the key skills a sales tax auditor would need?
3) In chapter ten of Wiley’s Financial Accounting: Tools for Business Decision-Making you can read about accounting for sales taxes. What journal entry would a company record when it collects goods and services tax on a sale of merchandise?