The Canada Revenue Agency (CRA) has announced on their website that a Winnipeg-based insulation company has been fined after underreporting its taxable income by more than $1 million.
The CRA’s Investigators found irregularities in the books and records of Thermo Applicators Inc., such as, that the company’s president included personal expenses in the company’s books, including construction costs for a cabin near Kenora, Ont. and a vacation home in Mexico, as well as a fly-in fishing trip. None of these are eligible tax deductions.
Thermo pleaded guilty in Manitoba provincial court on May 21 to two counts of making false or deceptive statements in the 2009-14 tax years. The court found $1,139,000 million in taxable income went unreported, in addition to the claiming of ineligible expenses.
As a result, the company is being ordered to pay $190,142 in income tax and $47,611 of sales tax that should have been withheld. In addition to paying the taxes, the company was fined $237,753.
Once penalties and interest are added to the debt dating back to 2009 the balance will shoot up well over $500,000.
This conviction is a clear reminder that failing to declare income and claiming false expenses can be very costly should the CRA perform and audit and find it.
Keep good records, report all income and claim eligible expenses.
A Coaldale, Alberta man has been arrested for fraud after allegedly being one of the central figures in a so-called “gifting” scheme which has taken in about 500 individuals across the province of Alberta.
Gifting schemes have been under the microscope at the Canada Revenue Agency for over a decade, and in all cases, the CRA have rejected these schemes, and denied the donation receipts of the contributors.
While these cases play out in Tax Court, the participants are left to fend for themselves, often accruing penalties and interest which far exceed the amount of their contribution or their tax benefit.
In this specific scheme, Steele Cameron Tolman, 57, was charged with fraud over $5,000 and possession of the proceeds of crime over $5,000. He is scheduled to appear in court in Lethbridge on May 17 to answer LPS charges he is a “main presenter” or “promoter” of a gifting circle fraud which began in September 2018.
These schemes – and this scheme specifically – operate under false pretences, whereby people are recruited by telling them that if they contribute $5,000 they will eventually receive $40,000 with no risk.
The fraud occurs when that $5,000 is used to payout the $40,000 to one of the earlier members which means new members must be recruited in order to continue paying out members.
If this scheme was promoted out of a parking lot, and some guy’s back of their van, they are going to say this scheme was completely ridiculous, however, this was promoted by friends and family who received the $40,000 payout which added additional legitimacy to the scheme.
The fraud is criminal in nature because the recruitment of new members occurs under the false pretense of “no risk. Those who participated and received their $40,000, are in receipt of the proceeds of crime, which is illegal, and those who received their payouts must declare that income to the Canada Revenue Agency.
What is truly amazing is that people who participate in schemes and scams like these can claim that they did so thinking it was legal, and have used that argument in conversations with the police and the CRA.
If you give someone $5,000 and they give you back $40,000 – which seems too good to be true… Means it is too good to be true.
Much in the same way that someone donating $1,000 to a “charity” and receives a tax receipt for a donation of $2500. It’s illegal, and you’re going to get caught and the penalties and interest will far exceed the amount of benefit received.
Be careful with your hard earned money. There are no fast and easy ways to make a buck. Don’t fall for scams and schemes and get left with a tax debt, or worse.
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.
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.
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The Canada Revenue Agency (CRA) announced that, on December 4, 2017, David 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.
To receive updates on what is new at the CRA, you can:
- Follow the CRA on Twitter – @CanRevAgency.
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SOURCE Canada Revenue Agency
The Canada Revenue Agency (CRA) has announced that James Harvey Cameron, from Calgary, was criminally convicted on March 28th of creating and operating a fraudulent RRSP scheme.
According to court documents, from 2002 to 2006, Cameron was the master-mind behind a fraudulent RRSP scheme through which he diverted $2.5 million of investors’ funds for his own use. He also failed to report the money as taxable income, evading federal taxes totalling $673,871.
The CRA considers these offenses serious, and the courts found Cameron guilty of tax evasion and fraud.
A date for a sentencing hearing has yet to be set, but is likely to take place between April 24 and May 12, 2017.
The CRA is encouraging victims of Cameron’s fraud who wish to appear at the sentencing hearing to seek restitution or make a victim impact statement to contact the Public Prosecution Service of Canada at 403-299-3978 by April 20th.
The CRA has reported that Herb Metcalfe, a former senior adviser to Stephane Dion and Liberal lobbyist has received a conditional sentence of two years less a day – including 12 months house arrest – for failing to report $1.4-million in payment and benefits between 2002 and 2006.
Mr. Metcalfe pled guilty to one count of income-tax evasion and was fined $396,259, which represents 100% of the total taxes evaded.
A CRA investigation focused on Mr. Metcalfe’s work as a director and employee of the Capital Hill Group Ottawa Inc., which the agency describes as “a political lobbying business.” He is no longer a member of this group – having stepped aside from the business.
The agency states that Mr. Metcalfe prepared his tax returns each year by hand and either knew, “or was willfully blind to the fact,” that the income he received was required to be reported on his returns.
“The Canada Revenue Agency pursues tax evaders to maintain public confidence in the integrity of the tax system,” said my former Director of the Toronto North Tax Services Office, Vince Pranjivan, who is now the CRA’s assistant commissioner for the Ontario Region.
The CRA issued a news release dated Nov. 18, 2015, outlining the fine and conviction. However the release did not immediately receive media attention due to public-service rules related to communicating during an election. Mr. Metcalfe was sentenced on September 30th, 2015 which was during the Federal election campaign, which meant the CRA posted the conviction on November 18th and at that time was able to notify the media.
On November 27th, 2015, the Canada Revenue Agency (CRA) issued notice that Nicolet, Quebec resident and tax protester named Christian Lachapelle was sentenced to four years in prison by a Court in Quebec. Lachapelle plead guilty October 22nd, 2014 to charges related to tax fraud.
A Canada Revenue Agency (CRA) investigation revealed that, between June 2007 and November 2010, Mr. Lachapelle advised and enabled 93 individuals to avoid, or try to avoid, paying nearly $2 million in income tax for the 2003 to 2010 tax years.
The scheme used by Mr. Lachapelle consisted of helping or advising individuals to file income tax returns or request a reassessment using the distinction between a “natural” person and a “legal” person.
For some reason, tax protesters continue to attempt this avenue to avoid having to pay taxes and in doing so regularly convince others that this technique can be used when Canadian courts have repeatedly and consistently rejected such arguments.
This is not the first time that Mr. Lachapelle has had issues with the CRA and the law. He was sentenced to 30 days in jail in 2012 for failing to file his income tax returns despite a court order, as well as fines of $7,000 in 2005 and $14,000 in 2011 for the same reasons.
All case-specific information above was obtained from the court records.
The Canada Revenue Agency warns the public to beware of people who assert that Canadians do not have to pay tax on the income they earn. Canadian courts have repeatedly and consistently rejected arguments made in these tax protester schemes. For those involved in such schemes, the CRA will reassess income tax and interest, and charge penalties – usually Gross Negligence Penalties too which can represent at minimum 50% of the tax being evaded.
More information on tax protester schemes can be found on the CRA website, here: www.cra.gc.ca/alert.
If you have ever made a tax mistake or omission, you have the ability to correct this error through the Canada Revenue Agency’s Voluntary Disclosures Program (VDP).
You must make the full and complete disclosure before you become aware that the CRA is taking action against you, and if accepted, you may only have to pay the taxes owing plus interest (not penalties).
More information on the CRA’s VDP can be found on the CRA’s website atwww.cra.gc.ca/voluntarydisclosures.
Additional information on CRA convictions can be found on the Media page of the CRA website at www.cra.gc.ca/convictions.
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The following news items was released by the Canada Revenue Agency (CRA) on September 8, 2015, regarding a former Tax preparer from Vaughan, Ontario, who was convicted of Tax Fraud for adding fictitious deductions to 4,200 tax returns from 2003 – 2005. She was sentenced to 10-years in jail and fined almost $700,000.
The news release read:
“The Canada Revenue Agency (CRA) announced today that Ms. Doreen Tennina was extradited to Canada from Italy on September 4, 2015, and is now in custody serving a 10-year sentence for tax fraud.
On May 31, 2013, Ms. Tennina was found guilty in the Superior Court of Justice in Oshawa, Ontario, on two counts of fraud over $5,000 under the Criminal Code and was sentenced in absentia to the maximum period of 10 years in jail on each count to be served concurrently. A news release publicizing Ms. Tennina’s conviction and sentence was issued on June 4, 2013.
Ms. Tennina, a former Vaughan, Ontario tax preparer, fraudulently claimed carrying charges and charitable donations totaling $58,500,000 in 4,200 tax returns prepared on behalf of her clients from 2003 to 2005, inclusive. The false claims reduced the amount of federal taxes owed by over $10 million. She was also ordered to pay a fine of $699,608 for causing her company, Executive Accounting, to fail to report income received from the tax evasion scheme.
The preceding information was obtained from the court records.
Taxpayers who claim false expenses, credits or rebates from the government are subject to serious consequences. They are liable not only for corrections to their tax returns and payment of the full amount of tax owing, but also to penalties and interest. In addition, if convicted of tax evasion, the court may impose jail time and fine them up to 200% of the tax evaded.”
Remember, taxpayers who have not filed returns for previous years, or who have not reported all of their income, can still voluntarily correct their tax affairs if the CRA has not contacted them first for the returns. If applicable, the Voluntary Disclosure Program (VDP) allows for filing / amended filing without penalty or prosecution provided the disclosure is full and complete. These taxpayers may only have to pay the taxes owing, plus interest.
More information on the Voluntary Disclosures Program (VDP) can be found on the CRA’s website at www.cra.gc.ca/voluntarydisclosures.
A link to the news release is below;