Member of Nova Scotia First Nation charged with evading $2.2 million in taxes

The Canada Revenue Agency have announced that they have charged a member of Nova Scotia’s Millbrook First Nation with evading $2.2 million in GST/HST.

The CRA charged Lisa L. Marshall who was the operator of the Traditional Trading Post, a convenience store, located on the Cole Harbour reserve of the Millbrook First Nation using the Excise Tax Act with wilfully evading or attempting to evade compliance with that Act.

The CRA alleges that between July 1, 2010, and June 30, 2015, the store failed to collect or remit $2,284,144.72 in Goods and Services Tax (GST) and Harmonized Sales Tax (HST) related to the sale of tobacco products to non-Aboriginals.

The agency says people who fail to remit tax owing are liable not only for the full amount, but also to penalties and interest, and if convicted, the court can levy a fine of up to 200% of the tax evaded and also impose a prison term of up to 5 years.

The moral of the story here, is that if you are required to charge, collect and remit GST or HST, you should.  The CRA treats Trust Funds – money taken by registrants and held in trust until they are remitted to the Crown – very seriously, and those who misuse Trust Funds are dealt with swiftly and to the full extent of the law allowed to be used by the CRA.

 

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Fired CRA Employee Denied Access to Tax Records… Duh!

A Superior Court judge has dismissed the application of a former Canada Revenue Agency (CRA) employee requesting the CRA produce various third-party records for use in his defence.

Christopher Casola of Sudbury faces charges including breach of trust by accessing taxpayer information other than for the public good, fraudulently accessing a CRA computer, as well as two counts that allege that the breach of trust and unauthorized use of a computer were done for the benefit of The Bacchus Motorcycle Club, and he faces eight counts involving several weapons offences, including possession of an SKS assault rifle, alleged to have occurred in 2016.

The CRA will fire, and prosecute those who access information which they are not entitled to, and because the CRA’s computer system tracks all accesses (including date, time, and how long they were there) it can be a very easy case to make.

Oddly, in his defense, the accused requested access to various CRA records, including the mainframe computer that contains the records of all individuals who have filed a tax return; the CRA Matching Action Review System (MARS) database accessible on servers between March 26, 2014, and Jan. 7, 2015; a data dump of the entire Notepad option in the MARS database; as well as what is referred to as the “entire CRA workload audit trail” in connection with the review of the accused’s work that was undertaken by the CRA after security concerns became known.

In a decision delivered July 11, Justice Dan Cornell wrote that the applicant had stated the records were necessary to duplicate the CRA’s internal review, which allegedly indicated Casola, a former assessment processing clerk in the electronic processing and records division at the Sudbury Tax Centre, had accessed the files of several individuals with alleged connections to another motorcycle club, thereby contravening the agency’s code of ethics and conduct.

Justice Cornell accepted the Crown’s argument, however, that the applicant did not articulate why they required entries for dates other that those when the alleged unauthorized access occurred.

“Despite being asked on more than one occasion to provide a reason for the requests that have been made, the only answer that was given is that the accused ‘wants to recreate the CRA process to double check the results to see if the results are accurate’,” the justice wrote. “This is not sufficient to establish that the information that is being sought is likely relevant to an issue that may arise at trial.

“The applicant did not provide an expert report, or for that matter, outline any possible concerns about the accuracy of the information that was provided or to raise questions about the process that was followed by the CRA during the review of the CRA records. In the end, all that was put forward in support of the request for the production of third party records were vague assertions that there was a problem with the results of the searches that had been undertaken.”

Those “vague assertions” amount to nothing more than “sheer speculation,” Cornell wrote, and “fall far short of satisfying the onus that lies upon the applicant to establish that such third party records should be produced in order to permit the accused to make full answer and defence.”

“In view of the fact that I have determined that the information sought is not likely relevant to an issue at trial or the competence of a witness to testify, I need not attempt to balance competing privacy interests of those who would be affected by disclosure against the accused’s right to be able to make full answer and defence.”

The accused could have requested a trail of his accesses through the Access to Information program available to all CRA employees and every Canadian Citizen.

 

If you would like, you can read the full decision, here; www.canlii.ca/t/hszmv.

 

CRA Acting Unusually, or Cabot Business To Be Charged With Tax Evasion

In what is either a case of the CRA acting in an unusual manner, or a business has misplayed their hand  – and is being charged with tax evasion under the Income Tax Act (ITA) and the Excise Tax Act (ETA).

Time will tell who is in the wrong.

The CBC has reported that a St. John’s car dealership and a director of the dealership, are being accused of tax evasion and making false and deceptive statements on tax returns by the Canada Revenue Agency (CRA).

The CRA filed charges under the ITA and the ETA against Cabot Ford Lincoln Sales Limited and director Frank Clarke, for the 2009-2011 taxation years.

The CRA has alleged in their court documents that Cabot Ford overstated their expenses in those 3-year by more than $240,000 in order to evade taxes owing by around $45,000 and on the GST side, they underpaid around $14,000 in GST through “false or deceptive statements” provided on their GST returns.

The director, is accused of personally evading more than $76,000 in taxes by failing to declare more than $270,000 in income over that same three-year period.

What I find really unusual, is that this case is not yet before the courts, so just by reading this, we are automatically coming to the conclusion that this company and director have done something illegal, however, that might not be true.  The director told the CBC that they are “still trying to understand everything ourselves, especially since the Canada Revenue Agency has not yet informed us of all details of the situation.”

If that is the case, having this go public is the worst case scenario for the business if the CRA’s claims turn out to be true.

On the other hand, if the CRA’s claims turn out to be false, then this would be another case where the CRA have stepped beyond their means to force an issue which was incorrect or inaccurate.

The director believes that the investigation is still underway, when he told the CBC that he [has] “been in touch with the CRA during their investigation and will continue to co-operate with them as this all moves forward.”

The charges were filed last week, and the matter is scheduled to be back at provincial court in St. John’s on March 26th.

We will be watching to see if this gets resolved ahead of time and what the long-term repercussions of this position taken by the business and by the CRA will be.

I would like to say that I would never let the CRA issue a press release about a client of mine which could do harm to their day-to-day viability – these issues can always be worked out in advance, however, not knowing all the details, it’s hard to say why this was done and who pushed for it.

If you have tax troubles with the CRA, or need them to stand down or back off, you need to contact inTAXicating Tax Services!  Visit our website at www.intaxicating.ca, or email us at info@intaxicating.ca

Former CRA Collections expertise to help resolve a CRA Collections problem.

CRA Charge 4 “Tax Protestors” in Quebec with Tax Evasion

The Canada Revenue Agency (CRA) have charged a quartet of “tax protesters” in Québec with tax fraud, alleging that the 4 operated a scheme which helped over 50 participants evade more than $1 million in federal income tax.

Allegations, not yet proven in court, claim that they advised 50 taxpayers to claim losses totalling more than $19 million in losses, or close to $1.08 million in federal income tax.

Pierre Cardin and Sylvain Quirion of Montreal, Jean-Marc Paquin from Laval, and Contrecoeur resident Guylaine Tremblay were arrested and released with a promise to appear, and court-imposed conditions, the CRA reported.

The CRA used this opportunity to reiterate its warning against getting involved with tax protestors, noting that Canadian courts have consistently rejected these schemes.

“For those involved in tax protester schemes, the CRA will reassess income tax, calculate interest and impose penalties,” the announcement says. “In addition, upon a conviction for tax evasion, the court may impose a fine between 50% and 200% of the tax evaded and a jail term of up to five years.”

Earlier this year, the CRA issued an alert about tax schemes claiming that, “natural people” are not subject to tax laws, because it’s not true.

“Individuals who promote such views are “tax protesters” who not only fail to report their own earnings, but they also try to convince others to engage in these illegal activities,” the CRA said in the alert.

The CRA has always kept an eye on these sorts of schemes and regularly uses the opportunity to promote situations where charges are laid, or where the court charges fraudsters in order to remind Canadians to steer clear of this type of tax evasion.

Recently, the CRA reported that, between 2006 and 2017, 75 promoters had been convicted in connection with these kinds of schemes, resulting in $7.15 million in fines and a total of 936 months of jail time.

If someone is charging you money to teach you how to pay less tax, you might want to steer clear.

If, however, you have taken part in a scam, or scheme, or if you believe that you are a “natural person” and that taxation does not apply to you, please send me an email to info@intaxicating, so we can discuss the very significant consequences which you can face.

I won’t judge you.  I’ll listen, and I’ll explain and answer questions.

 

 

 

Cobourg, Ontario Resident Sentenced by CRA for Tax Evasion.

The Canada Revenue Agency (CRA) announced that, on December 4, 2017David Porter Wilson of Cobourg, Ontario, was sentenced to a fine of $97,173 after pleading guilty in the Ontario Court of Justice in Cobourg, Ontario, to two counts of income tax evasion.

In addition to the court imposed fine, Wilson will also have to pay the full amount of tax owing, plus related interest and any penalties assessed by the CRA.

A CRA investigation revealed that Wilson failed to report income that he earned as a commissioned salesperson for a marketing company, totalling $449,745 on his personal tax returns for 2006 and 2007, thereby evading federal income taxes totalling $97,173. While under investigation, Wilson left Canada, and after the charges were laid an arrest warrant was issued on September 7, 2011. Wilson did not return to Canada until August 9, 2017.

All case-specific information above was obtained from the court records.

The CRA takes tax evasion very seriously.

Tax evasion occurs when an individual or business wilfully ignores or disregards Canada’s tax laws. For example, those participating in tax evasion under-report taxable income or claim expenses that are non-deductible or overstated.

Those who do not fully comply with tax laws place an unfair burden on law-abiding taxpayers and businesses and jeopardize the integrity of Canada’s tax base.

For the five-year period of April 1, 2012 to March 31, 2017, the courts have convicted 408 taxpayers – This involved $122 million in federal tax evaded and court sentences totaling approximately $44 million in court fines and 3,103 months in jail.

If you have made an omission in your dealings with the CRA, made a tax mistake or left out details about income on your tax return, the Agency may give you a second chance to correct your tax affairs and avoid criminal prosecution.

The Voluntary Disclosures Program (VDP) may give you the opportunity to come forward, make things right, and have peace of mind. Disclosures that are made before the CRA launches an enforcement action such as an audit or criminal investigation may only result in you having to pay taxes owed plus interest. That being said, the VDP is currently under review. Changes were announced in the fall of 2017. More information on the VDP can be found on the CRA’s website at Canada.ca/taxes-voluntary-disclosures.

The CRA has set up a free subscription service to help Canadians stay current on the CRA’s enforcement efforts.

Associated Links

Offshore Tax Informant Program
Informant Leads Program
Voluntary Disclosures Program

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SOURCE Canada Revenue Agency

Former Calgary man sentenced to 11 years in jail and fined $550,892 for tax evasion and fraud

The Canada Revenue Agency (CRA) announced that James Harvey Cameron, a former resident of Calgary, has been sentenced to 11 years in jail and fined $550,892 after defrauding investors of over $2.5 million through a deceptive investment scheme. The judge also ordered Cameron, 66, to pay restitution of $1,831,700 to his victims.

If Mr. Cameron fails to pay his fine in six months he will have to serve an additional four years in jail for default.

From 2002-2006, Cameron operated a fraudulent RRSP scheme which promised a 2% monthly return to individual investors. The scheme raised just under $8 million, but only paid out a total of $882,000 to investors.  Cameron misappropriated the funds to support his luxurious lifestyle, including buying property, cars, a horse, and a $75,000 cruise in the Bahamas. He also transferred funds offshore to Barbados.

A Canada Revenue Agency (CRA) investigation proved that Cameron diverted $3.9 million of the investors’ funds for his own use and failed to report this as income on his tax returns, evading $1,132,882 in taxes.

“I have no doubt whatsoever that [Cameron] executed a deceptive investment scheme with subjective knowledge of the prohibited act and consequences,” said presiding judge, Justice P.R. Jeffrey, in his written reasons for convicting Cameron. “The CRA acted towards him with considerable patience, forbearance and fairness.  He was given ample opportunity to provide to CRA any plausible alternate explanation for what occurred, yet did not.”

Justice Jeffrey commented in his sentencing report: “The $1,831,700 I have ordered payable in restitution should be subtracted from his [Cameron] total taxable income… therefore I find his taxable income to have been $2,118,817.”

Cameron was convicted of tax evasion under the Income Tax Act and fraud under the Criminal Code.

Sentencing took place today at the Court of Queen’s Bench in Calgary.

You can report suspected tax evasion to the CRA by visiting https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/informant-leads-program.html or by calling the National Leads Centre at 1-866-809-6841.

All case-specific information in this news release was obtained from the court records.

Did you know that between April 1, 2012, and March 31, 2017, total domestic and offshore related criminal investigations have resulted in 408 convictions involving $122 million in federal tax evaded and court sentences totaling approximately $44 million in court fines and 3,103 months in jail?

“New” CRA Powers are Not so New after all! Unless…

Recent radio advertising and newspaper or online articles would have you believe that the CRA has been ramping up staff in order to break down your door in the middle of the night and arrest you for tax fraud.

Deep down inside you knew that you should have opened a BN number and GST/HST account for your child\s lemonade stand because even though they were significantly under the $30,000 sales threshold, if registered, you could have claimed the Input Tax Credits – but you didn’t and the CRA wants their money!

You also know that if you had a question, the CRA call centre were going to mislead you, or lie to you so that you would be forced to pay even more money.

You also know that you might need help for a tax accountant, tax lawyer, tax broker, tax solutions firm, or tax audit specialist… but you cannot choose because the different names must mean they do different things and you don’t know which category you fall into, and … the CRA are so coming to get you… now!

(Is that rustling in the bushes in front of my house?)

spyingWell all of these new powers and the threats that they are going to break-down your door and arrest you on the spot are not really true.

You only have to fear the CRA breaking down your door (really the RCMP, but I’m sure the CRA would be there somewhere along the way) if you have done something wrong.  Very wrong.  Criminally wrong.

You should be concerned if the CRA knows you’ve done something criminally wrong, or have been involved in terrorist financing or activity because they’ll pass that along to the police.

The Canada Revenue Agency gained the little-noticed new authority, which does not require a judicial warrant, through an amendment tucked into the government’s most recent budget bill.

Previously, confidentiality provisions in the law prevented the CRA from handing information about suspected wrongdoing, on its own initiative, to law enforcement.

The exception was information that pointed to tax-related crimes.

The new provisions apply to offences including breaking and entering, vehicle theft, arson, corruption and kidnapping and in return, the CRA can now receive information from local authorities about any offence with a minimum prison term, or one with a maximum sentence of 14 years.

The list of offences is broad and is a significant shift in confidentiality policy allowing the CRA to pass along information to law authorities without a court-ordered warrant, even when the alleged crime(s) have nothing to do with taxes.

Interim procedures for administering the new powers were issued to all CRA employees in June 2016 not too long after the legislation received royal assent.

The intended use of this new tool, is that an exchange should occur when an employee gathers information in the course of their regular duties.

This information exchange was intended to be one-way and would be closely controlled through a set of strict criteria.

As an aside, it would have been nice to know who might be carrying on criminal activity, when I was working at the CRA and went to visit a business to determine why they stopped filing GST returns, only to learn that they were conducting illegal activities and was physically threatened before getting the heck out of there.

The following day the RCMP showed up, cleaned out the place and arrested the operators.

I never did get my outstanding GST returns, however, which could have been prosecuted as a criminal offense (but was not).

All potential referrals to police will be vetted by the agency’s criminal investigations personnel and must be approved by the assistant commissioner of the department’s compliance programs branch, CRA has reported.

The key points to remember are this;

  1. If you happen to have partaken in a criminal activity, you might not want to disclose that to the CRA collector.
  2. Make sure to stay compliant!  File up to date and don’t give the CRA reasons for looking for stuff.
  3. Take all of the tax-related advertising with a grain of salt.  Their intention is to scare you and force you to drop a ton of cash at their business.  Instead, I recommend you do your research, ask questions and get the solution that fits your tax problem.
  4. If you’re not sure… Ask.  Then use your judgement.