Barrett Tax Law, We take it personally, Toll-Free: 877-8-TAXTAX (829829),Vancouver: 604-248-4861, Calgary: 403-450-3488, Edmonton: 780-665-1613, Fort McMurray: 780-747-2071,Toronto: 416-907-8429, Ottawa: 613-667-2419, Fax: 866-367-9130
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1.What is tax evasion? Simply put, tax evasion is the act by any person, business or entity to illegally evade paying taxes. Tactics used in
tax evasion include the misrepresentation of income and profit by reporting less than actually earned and taking additional deductions that are not allowed by
law. 2.What are the penalties for tax evasion? According to Section 238 of the Income Tax Act, if an annual tax return is not completed and filed, then an individual
is guilty of a summary offense and can face a fine between $1,000 and $25,000. A judge may also sentence the offender to up to twelve months of
incarceration. 3.What is tax fraud? Tax fraud is the illegal offense of purposefully trying to evade paying taxes that are owed to the government of
Canada by law. 4.What is the underground economy? The underground economy consists of any commercial activity that is not recorded and reported to the Canadian government for tax purposes. This only applies to income that would be taxable if it were reported. Cash payments and transactions often result in the non-reporting of income which is prevalent in areas like construction and hospitality. According to the Canada Revenue Agency, income received in cash does not make one exempt from paying due taxes and is considered tax evasion, which could result in convictions, penalties, fines and even incarceration. For further information on the penalties and consequences of tax evasion please see Question 2: "What are the penalties for tax evasion?" 5.Can a CRA tax audit lead to criminal prosecution for tax fraud, tax evasion or other tax-related criminal charge? Yes, yes and YES! Although it is not the norm, the Canada Revenue Agency can and does refer cases to the courts for
criminal prosecution. During the 2008/2009 tax year, 164 cases were sent to the Public Prosecution Service of Canada and 58 GST audits to the Ministere de la
Justice du Quebec for criminal prosecution. A total of 257 cases resulted in criminal convictions for tax evasion or tax fraud, as a result of previous years.
referrals. If you fear you may be in danger of being criminally prosecuted for tax evasion, tax fraud or any other tax related criminal charge, then it is
imperative you stop reading this and consult a tax lawyer now. 6.Could I go to jail if I am found guilty of tax evasion or tax fraud? Yes, incarceration is a possibility if found guilty of tax evasion or tax fraud. Under the Income Tax Act and the
Excise Tax Act, the Canada Revenue Agency has various civil and criminal actions it can take which can lead to monetary fines, penalties and even prison
time. 7.What is the difference between tax avoidance and tax evasion? The major difference between tax avoidance and tax evasion is that tax avoidance is legal while tax evasion is not. The definition of tax avoidance is using tax law or code legally to the benefit of oneself in order to pay less tax. This can include, for example, moving to a different country, state or region solely because income taxes are lower. Tax evasion, on the other hand, is the illegal act of misrepresenting or misleading tax authorities in order to pay fewer taxes. This is mostly done through improper and untruthful tax returns; for example, failure to report income received in cash. 8.Are there additional penalties charged by the CRA for continuously underreporting income? The Canada Revenue Agency does impose penalties for repeated misrepresentation on tax returns if it occurs twice
within a four year period. For example, if a tax return filed for 2007 was reassessed by the CRA to include unreported income and the same situation occurs in
2010, a fine will be imposed. The federal and provincial fines are both equal to 10% of the unreported income for the current year. 9.Are there additional penalties for lying on my tax return? There may be additional penalties if an individual has purposefully or with gross negligence made untruthful statements or exclusions. The penalty is equal to $100 plus 50% of the unstated tax or the false additional deductions claimed by the taxpayer. 10.What is the Canada Revenue Agency's Special Enforcement Program (SEP)? The CRA.s Special Enforcement Program (SEP) focuses on individuals who are suspected of acquiring income illegally. Such individuals can be subjected to fines, penalties or jail time depending on the severity of illegal activities. Tax audits and investigations of suspected persons can also lead to the seizure of goods if the individual does not pay the required fines imposed by the CRA. The goal is to reduce the monetary profits and incentives that often lead to criminal activity. 11.What is the Canada Revenue Agency.s Criminal Investigation Program (CIP)? The CRA.s Criminal Investigation Program (CIP) examines serious violations of tax laws such as tax evasion and tax fraud. These criminal investigations often lead to convictions which can result in fines and even imprisonment. Not only are convicted individuals required to pay fines required by the judicial system (up to 200% of unpaid taxes), they also must pay all of the taxes owed in addition to penalties and interest charges as enforced by the CRA. 12.What is the Canada Revenue Agency.s Informant Leads Program? The Informant Leads Program is the organized effort by the CRA to gather all leads concerning non-compliance with tax legislation by individuals or businesses. The goal is to co-ordinate all information received and take any warranted enforcement action. There are five centers throughout Canada which allow informants the opportunity to share information. This can be done anonymously if desired; however, the CRA states they do not share any of the informant's information. 13.What is the contact information and hours of operation for the Informant Leads Centre in the Atlantic region? The Atlantic Region Informant Leads Centre can be reached at the following telephone and mailing address: 14.What is the contact information and hours of operation for the Informant Leads Centre in Quebec? The Quebec Region Informant Leads Centre can be reached at the following telephone and mailing address: 15.What is the contact information and hours of operation for the Informant Leads Centre in Ontario? The Ontario Region Informant Leads Centre can be reached at the following telephone and mailing address: 16.What is the contact information and hours of operation for the Prairie Region Informant Leads Centre? The Prairie Region Informant Leads Centre can be reached at the following telephone and mailing address: 17.What is the contact information and hours of operation for the Pacific Region Informant Leads Centre? The Pacific Region Informant Leads Centre can be reached at the following telephone and mailing address: |
