More CRA Tax Evasion Convictions

by Tax Guy - Burlington Accountant on December 24, 2009 Print This Post Print This Post

My last post on Tax Evasion, fraud and failing to file convictions was rather popular with visitors to Canadian Tax Resource. The CRA has continued to release the details of it’s 2009 convictions.

Here are the next round of CRA convictions:

Tax Evasion

Kelowna area drywaller fined $15,000 for tax evasion. The taxpayer filed income tax returns that did not disclose all business income.  The discovered the income in an audit and found that some of that unreported income was used to support personal expenses that included vacations, furniture, exercise equipment and a hot tub. In all, the investigation showed that the taxpayer failed to report net income of $128,779.

Vancouver businessman sentenced 2 years and fined $157,190 for tax evasion. The taxpayer used a complex scheme involving foreign corporations in an attempt to evade Canadian income tax. The fine represents 75 percent of the income tax evaded.

Newfoundland business owner convicted and fined $46,911 for tax evasion. The taxpayer was convicted of making false statements and inflating input tax credits for the HST, as well as overstating business expenses. The Court’s fine represents 100% of the tax the taxpayer tried to evade.

Quebec businessman fined $28,143 for tax evasion. The fine represents 100% of the tax evaded and is payable in addition to the tax owed. The scheme involved a factoring business used to avoid accounting certain revenues.

Tax Fraud

Fraudulently obtaining Government of Canada cheques totalling $226,735 leads to house arrest. The accused was employed by the CRA. The accused inappropriately accessed and used information in the CRA’s computer systems pertaining to 34 individuals.

Quebec Company & it’s administrator found guilty of tax evasion. The company willingly failed to report income and claimed false expenses from 1997 through 2007 and was fined $28,000. The administrator failed to report dividend income for those same years.

Tax Preparers

New Brunswick resident pleads guilty to tax evasion. This is the second conviction for this taxpayer. The taxpayer prepared fictitious T4 information slips that were used by another tax preparer to file fraudulent 2006 income tax returns. That tax preparer and another individual are also facing related tax evasion charges. The prior conviction resulted in a fine of $32,093 and sentenced to 16 months of house arrest. Sentencing for this conviction is scheduled for January 13, 2010.

NB tax preparer fined $275,186 and sentenced to house arrest on tax fraud charges. The taxpayer had pleaded guilty to 86 charges of tax evasion under the Income Tax Act and 46 charges under the Tax Rebate Discounting Act for claiming or obtaining $252,196 in false income tax refunds. He originally faced 258 counts; 162 under the Income Tax Act and 96 under the Tax Rebate Discounting Act.

Proceeds of Crime

Executor fined $61,460 for tax fraud relating to mother’s estate. A New Brunswick executor was found to have appropriated $199,000 from the estate for his own personal use. He failed to report this amount on his income tax return for that year and like legitimate income, the proceeds of crime are taxable!

Failing To File A Tax Return

Fernie, B.C. resident fined $4,000 for not filing tax returns.

Director and corporation fined $6,000 for not filing tax returns. The individuals and  corporations convicted, are still obligated to file the tax returns and pay the full amount of taxes owing, plus interest, as well as any civil penalties that may be assessed by the Canada Revenue Agency (CRA).

Ontario set designer gets house arrest and $8,000 fine for failing to file tax returns. The case involved not filing 2005 to 2007 personal income tax returns and GST returns.

Ontario resident fined $3,000 for failing to file. The taxpayer was a self-employed carpenter and failed to file 2005 through 2007 personal tax returns.

Goods And Services Tax (GST) Evasion

Winnipeg businessman fined $63,200 for income tax and GST evasion. The fines represent 75% of the income tax and 50% of the GST evaded. The taxpayer failed to report more than $196,000 of business income and $19,600 of GST.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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{ 8 comments }

Jordan December 27, 2009 at 7:27 am

As a question of curiosity from your general knowledge or stories you’ve heard of the CRA, I’m wondering if someone owes the CRA a lot of money and they have assets (like a house) which they hide by selling and “giving” the money to a family member or friend does that really offer them any protection? The CRA seems like they have a lot of power and are pretty aggressive to re-coup what’s owed to them, so couldn’t they simply undo any non arms-length transaction to get it back? I would think even trying to hide assets is just additional fraud right?

I’d enjoy reading more articles/posts about the extent to which the CRA gets the people who screw the rest of us tax payers.

Tax Guy December 27, 2009 at 12:19 pm

Honestly I’ve not come across situations where someone has gifted assets to others to avoid seizure of assets by the CRA. However, I would think that this could be undone if the CRA could prove the transfer was to avoid seizure.

Lionel January 9, 2010 at 12:21 am

Do Canadian tax-residents have to disclose and report any and all foreign financial account(s) at a foreign bank(s) no matter how large or small the amount in the account(s) is/are?

Or so long as the account balance/aggregate values of the accounts never reaches a certain figure, say for example $10,000, under which it Is safely non-reportable to the CRA?

Tax Guy January 9, 2010 at 12:25 am

Residents of Canada must report and pay tax on their worldwide income regardless of the amount and location.

If you have foreign property in excess of $120,000 you must report that you own such property.

Sam December 23, 2010 at 1:36 pm

I may be assessed fees against a company I operated in 5 years ago, and not since. Basically I am be challanged as a de facto director, despite me having nothing to do with the business for 5 years. GST etc claims from the government. If I lose the case, would I am be able to deduct the losses as a director on my personal taxes?

Thanks!

Tax Guy December 23, 2010 at 9:25 pm

Sam,
What do you mean by “fees”? Are these government penalties or back taxes? Back taxes cannot be deducted as they are not an expense. Fines cannot be deducted by an individual or business as per s. 67.6 of the Act:

In computing income, no deduction shall be made in respect of any amount that is a fine or penalty (other than a prescribed fine or penalty) imposed under a law of a country or of a political subdivision of a country (including a state, province or territory) by any person or public body that has authority to impose the fine or penalty.

Ben February 26, 2012 at 10:11 am

What are the odds of getting caught in tax fraud?

Tax Guy February 27, 2012 at 10:36 pm

Ben,
I don’t know but do you want to risk a crimnal record? Tax evation is a crime, Criminal Code offence. It’s not a joke.

I can tell you that the CRA can easily figure out most schemes. Securities transactions, payments from employers, interest, dividends etc. Are all reported. The CRA goes on fishing trips with certain groups: Commission sales people, business owners and those who have the opportunity.

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