How the Canada Revenue Agency (CRA) Views Detaxers / Natural Citizens / Freemen

I recently had the “opportunity” to watch a video from a “Freemen” or “Detaxer” as they would be referred to by the Canada Revenue Agency (CRA).

I’m not going to lie… It made me cringe.

I was immediately brought back to my time spent working for the CRA, and more specifically, to the time spent working with these folks.  You see, the CRA knows there are corporations and individuals who evade and avoid taxes, and a lot of time and effort is spent to find and prosecute these entities. 

They CRA is also very aware of a large groups of individuals who see themselves as “natural individuals” and thus free from “illegal taxation”. They consider themselves to be free on the land, and make some story about being “corporations” and that they have 2 names, one legal and one given to them and they conveniently use the one that doesn’t require them to pay taxes.

To make a long story short, these groups use Canadian infrastructure – buildings, roads, power, etc., yet see themselves as sovereign and thus free from taxation.  They have been known to hold info-sessions and sell “tax-free” cards to the attendees – who try to use them only to find the RCMP at their door and their cards seized.

The problem with this view, is the fact that there have been MANY court cases dealing with this matter and in each and every case, the CRA has won. There is ZERO precedent for this view to have an ounce of legitimacy, no matter which “brilliant” person is trying to convince you or me otherwise.

I’m sorry to say, if you follow these views, you are just asking for trouble with the CRA, and that trouble comes in the form of late filing penalties, interest, gross negligence penalties (50% of the tax owing), assessments, prosecution, and potential jail time.

It’s a scam, so please, do yourself a favour and stay away. It’s in your best interests to avoid this type of theory.

Having worked in the CRA’s collections department for over 10-years, and having deal with these cases for many of those years, I can say with experience, and certainty that what ultimately happens is property seizures, frozen bank accounts, seized funds, wage garnishments and all that pressure applied together until there was no choice but to file and pay, often having to pay hundreds of thousands of dollars in penalties and interest.

Learning about these cases makes me sad, and wish that someone had taken the time to speak to the victims of this scam and answer questions so they know that it never ever ends well or in their favour.

It’s a lose-lose proposition.

Already in trouble?

File your returns, notify the CRA you’re coming clean. Make payment arrangements for your debts. Doing this now, before the CRA gets to you can help you with an application for Taxpayer Relief.

Gifting Scheme Conviction. Be Careful With Your Hard Earned Money!

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.

Former Canada Revenue Agency (CRA) Auditor Not Guilty of Fraud

A former Canada Revenue Agency (CRA) auditor and his wife were found not guilty of fraud when a judge rules that the CRA failed to prove that the fraud was intentional.

This is significant, folks!

The original article can be found here;

https://www.surreynowleader.com/news/former-canada-revenue-agency-auditing-employee-and-wife-found-not-guilty-of-tax-evasion/

What I truly hope is that this ruling provides the CRA with a much clearer understanding that there are actually some Taxpayers and businesses (and even former employees) who might not fully understand the CRA’s rules and regulations and their application, and that there exists a chance that people make mistakes.

I’m not saying in this case that there was a mistake – and I don;t believe that the judge was saying that either, but what was very clear from this ruling is that the for the CRA to win a case they need proof and facts.

The CRA obviously will be appealing this decision.

My experience in the CRA has afforded me this insight which I happily pass along to each of you who read this…  It’s okay to make mistakes.  We all do.  The CRA does not expect each and every Canadian Taxpayer to be tax experts, but where the CRA has zero tolerance is where Taxpayers try to circumvent the rules and do so knowingly.  At that point, you can’t claim you didn’t know the rules.  You’ll be no mercy from the Crown at that point in time.

As well, there are many, many, many opportunities to resolve the tax issues before having to bear the expenses of going to tax court!  This ruling was the first of it’s kind, and considering how many people want to sue the CRA or take the CRA to court, it makes you wonder who is advising them, and who is paying their bills!

To understand where you stand and what your options are, you can start by contacting inTAXicating Tax Services, at http://www.intaxicating.ca, and start dealing with you tax issues with the facts.

info@intaxicating.ca

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.

 

 

 

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?

Tax Scam Alert: CRA Does Not Issue Refunds Through Interac.

No, the CRA does not send tax refunds through Interac

via Does the CRA owe you money? Beware of this tax refund scam — Global News

July 9, 2016: The Canada Revenue Agency Revokes the Registration of the ACTLAP Children’s Foundation (A.C.F.)

The Canada Revenue Agency (CRA) has posted on their website that they will revoke the registration of ACTLAP Children’s Foundation (A.C.F.), a charity based in North York, Ontario, effective July 9, 2016. The notice of revocation has been published in the Canada Gazette.

On May 3, 2016 the CRA issued a notice of intention to revoke the registration of the ACTLAP Children’s Foundation (A.C.F.) as a charity, in accordance with subsection 168(1) of the Income Tax Act (The Act). The letter stated, in part, that:
“The audit by the Canada Revenue Agency (CRA) has revealed that the Organization operated primarily for the non-charitable purpose of furthering a tax shelter donation arrangement, the Pharma Gifts International Inc. program. The Organization agreed to accept alleged gifts of property from participants and to act as a receipting agent for this donation arrangement. For the period of June 16, 2012 to June 15, 2014, the Organization improperly issued receipts totalling over $64 million for purported donations of cash and pharmaceuticals, which were not legitimate gifts. Of the $1,724,814 in cash contributions it received, the Organization paid $1,289,385 to the promoters of the tax shelter. Of the $62,315,818 million [sic] worth of tax receipts issued for the gifts of pharmaceuticals, the CRA determined that the Organization significantly over-reported the value of the alleged property, resulting in grossly inflated tax receipts to participants.

The audit has shown that the Organization has failed to comply with several requirements set out in the Act. In particular, the Organization issued donation receipts for transactions that did not qualify as gifts, issued receipts otherwise than in accordance with the Act and its Regulations, did not devote all its resources to charitable activities and failed to maintain proper books and records. For all of these reasons, and for each reason alone, it is the position of the CRA that the Organization no longer meets the requirements necessary for charitable registration and should be revoked in the manner described in subsection 168(1) of the Act.”

Registered charities perform valuable work in our communities, and Canadians support this work in many ways. The CRA regulates these organizations through the Act and is committed to ensuring that they operate in compliance with the law. When a registered charity is found not to comply with its legal obligations, the CRA may revoke its registration under the Act.

Registered charities receive generous tax incentives under the Act including the ability to issue official donation receipts. To maintain this privilege, charities must continue to meet all the requirements of the Act.

The CRA is committed to preserving the integrity of Canada’s tax system.

The CRA audits every gifting tax shelter that offers official donation receipts in excess of the value of any property donated.

The CRA has also repeatedly warned Canadians of the consequences of participating in abusive tax shelters that it holds to be non-compliant with the Act.

There is a substantial amount of information on the CRA’s website and the CRA has published information, including warnings about tax shelters and donating wisely, in a variety of newspapers, magazines and various other media sources.

For more information, go to Tax shelters and Donor Beware, a special report from the Office of the Taxpayers’ Ombudsman.
An organization that has had its registration as a charity revoked can no longer issue donation receipts for income tax purposes and is no longer a qualified donee under the Act. The organization is no longer exempt from income tax, unless it qualifies as a non-profit organization, and it may be subject to a tax equal to the full value of its remaining assets.

For more information about the registration of Canadian charities or to find out more about a registered charity, go to the CRA’s Charities and Giving webpage.

Quick Facts on charities:

• As of March 31, 2016, there were 86,191 registered charities across Canada.
• Canada’s approximately 86,000 registered charities issued receipts worth more than $15.7 billion in 2014.
• In the 2015-16 fiscal year (April 1 to March 31), the CRA’s Charities Directorate completed 726 audits of registered charities chosen using a variety of methods – including random selection, follow-up on possible non-compliance or complaints, and based on a review of annual information returns. During that same period, 20 charities had their registered status revoked by the CRA as a result of an audit.
• As of March 31st, 2015, the CRA reassessed more than 195,000 taxpayer returns, denying in excess of $6.6 billion in donation claims mostly due to tax shelter gifting arrangements.
• A copy of the Notice of Intention to Revoke and other letters relating to the grounds for revocation are available to the public on request, in the language in which they were originally written, by going to Request for registered charity information.

Related Products

Canada Revenue Charities Listings: http://www.cra-arc.gc.ca/chrts-gvng/lstngs/menu-eng.html
Charities Media Kit: http://www.cra-arc.gc.ca/chrts-gvng/md-kt/menu-eng.html

Stay connected

To receive updates when new information is added to the CRA website, you can:
• Follow the CRA on Twitter – @CanRevAgency.
• Subscribe to a CRA electronic mailing list.
• Add the CRA’s RSS feeds to your feed reader.
• You can also watch the CRA’s tax-related videos on YouTube.

In a nutshell, this charity received $1,724,814 in cash contributions.
It paid $1,289,385 of that money to the promoters of the tax shelter who were bringing in the people to donate.
This charity issued donation receipts totalling $62,315,818 million dollars.
It failed to keep adequate books and records.
It failed to devote 100% of its efforts to charitable work.

As a result, any of the taxpayers who have filed their tax returns claiming any of the donation deductions from this charity should hope that the CRA offers them a deal to accept the money donated on a dollar for dollar basis, or they should use the Voluntary Disclosure Program to amend their returns! (Just not the current year return).

Note: Please use common sense when making a donation! If you make a $100 donation and receive a donation receipt for anything more than that amount understand that the CRA will deny it… eventually.

How To Prevent Being Scammed By A Fake-CRA Call…

The best way to avoid being scammed by a fake CRA caller.

Hang up.

If they start raising their voice, threatening you, or tell you that you are going to be arrested, or that the government is going to seize your house, or car, and especially if they tell you that they are going to take away your children.

Just hang up.

If you receive an email from a scammer but it looks legitimate, check the return email address. Government email addresses end with “.gc.ca”, oh, and if claims to be from the Canada Revenue Agency (CRA), you should be aware that the CRA employees are they’re not supposed to and not allowed to email outside the office.

If you’re not sure, don’t buy into the threats, and certainly do not give them any information at all.

Hang up.

How To Avoid The Canada Revenue Agency (CRA) Phone Scam

As a former Canada Revenue Agency Business Collections employee – almost 11-years – from collector to Resource Officer and Manager, I understand the fear people have when they receive calls from the Canada Revenue Agency (CRA).

I also understand how scary it is when someone calls you, or leaves a recorded message for you, claiming to be from the Canada Revenue Agency (CRA), and demanding payment with threats of jail or immediate legal actions. I’ve been called as have many of my clients.

With a little knowledge and understanding of the CRA and the people who work there, I am going to list 10 signs that every Canadian needs to be made aware of in order to not be caught up in this scheme.

10 Facts Every Canadian NEEDS to Know About the Canada Revenue Agency (CRA)

 

10. Yelling and Screaming are NOT permitted, nor tolerated.

Regardless of what you have heard or experienced, the people who work in the Canada Revenue Agency are everyday people like you and I. If we yelled and screamed at our “client base” we would be disciplined or fired. They are no different.

9. Threats are NOT allowed.

The staff at the CRA will not threaten you with jail time, to send in the Sheriff, have you deported or to take every penny that you have.  Even is the call is not a scam you do not have to tolerate any threats from anyone at the CRA.

If you have been evading the paying of taxes, you already know that you could be charged and that jail time is possible. Any other type of collection action usually comes with pre-warning by a letter, Notice of Assessment or is started once you file / pay your taxes.

The CRA will not seize your principal residence!  Your cottage, rental properties, maybe, but house you and your kids live in… No.

8.  The Element of Surprise

If the call catches you by surprise, AND the person on the end of the phone is screaming at you, threatening to take your

7. Ask Questions.

In the instance you get a live person on the phone and they are trying to give you a hard time and force you to pay money, turn the conversation back to them and ask lots of questions. Ask them what the account number / social insurance number is, what periods or years the debt relates to (the debt they want you to pay). Ask them for a break-down of the total tax owing and the amount of penalties and interest – either the total amount or broken down by period or year. (They have this at their finger tips). Ask them what Tax Office they are calling from, and what the address and phone number is at that office. Ask them to send you a remittance voucher so that you can make that payment at the bank.

6. Defer

Tell them that while you would love to speak to them, you have an accountant who handles all your tax information and you would like to take down their information so your representative can call them back.

5. Do NOT Agree to Pay anything over the phone!

This rule applies not only to the CRA but to anyone else who ever calls your home / phone asking for money. Never, ever make a payment over the phone with your credit card.

4. Receipt Please!

If you are self-employed, you understand the importance of getting and keeping receipts.  Why would you buy a pre-paid gift card or charge card to send to some stranger who is not going to give you a receipt for payment?

You wouldn’t.

The CRA has recently allowed payment of some taxes by credit / debit card.  They will likely NEVER accept payment via gift cards, etc.

3. If you get such a call, hang up and report it to the Canadian Anti-Fraud Centre

The Canadian Anti-Fraud Centre can be found online at http://www.antifraudcentre-centreantifraude.ca or toll free at 1-888-495-8501.

If you believe you may be the victim of fraud or have given personal or financial information unwittingly, contact your local police service.

2.  Confirm, Confirm, Confirm.

If you want to confirm the authenticity of a CRA telephone number, call the CRA by using the numbers on its Telephone numbers page. The number for business-related calls is 1-800-959-5525. The number for calls about individual concerns is 1-800-959-8281

1.  The CRA NEVER…

Requests prepaid credit cards;

Asks for information about your passport, health card, or driver’s licence;

Leaves personal information on your answering machine!

Asks you to leave a message containing your personal information on an answering machine.

Emails seeking information or asking for payment.

 

 

So when in doubt, ask yourself the following questions:

Is there a reason that the CRA may be calling?

Do I have a tax balance outstanding?

Is the requester asking for information I would not include with my tax return?

Is the requester asking for information I know the CRA already has on file for me?

Are they too mean / demanding / aggressive?

 

It’s always better to defer the conversation than make the mistake of giving information or money to criminals.

Milowe Brost, Convicted of Theft and Fraud. Ordered to pay $390,878 in Evaded Taxes to CRA.

Milowe Brost, recently convicted of theft and fraud ordered to pay $390,878 in evaded taxes.

Another example of how a Ponzi scheme can result in a long-prison sentence and huge fine.

Unfortunately, the “victims” here are the people who took part in this scheme because they still owe taxes plus gross negligence penalties (50%) plus the CRA and the Courts have long considered people who partake in these scams and schemes to have done so knowingly and with full understanding they they are illegal.