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Canada Revenue Examples of Tax Evasion

The information in the news releases excerpted below was obtained from the court records.

Further information on convictions can also be found in the Media room on the CRA Web site at www.cra.gc.ca.

GST fraud scheme lands Kirkfield man $94,185 fine and 90 days in jail

Belleville, Ontario, August 24, 2004... A Kirkfield resident was fined $94,185, sentenced to 90 days in jail, and given 12 months' probation after pleading guilty to goods and services tax (GST) fraud in a local court on August 23. As director of three incorporated companies, the man filed false GST returns in a scheme to obtain fraudulent GST refunds. All three corporations, incorporated in 1998, were falsely claimed to be farming and farming services businesses. Once they were incorporated, the man used false business addresses to register the three corporations for GST. A Canada Revenue Agency (CRA) investigation revealed that the accused and the corporations did not conduct any commercial activity, nor own or rent properties, during the period for which GST refunds were claimed. Once the companies were registered, the man started filing fraudulent GST returns on behalf of the corporations, using separate bank accounts and post office boxes. With these fraudulent returns, he illegally obtained a total of $94,185 in GST refunds for the three corporations from 1998 to 2001. In June 1999, he was convicted of an unrelated fraud in relation to a charity. This previous conviction was entered as part of the court deliberations because he was serving a conditional sentence while committing the GST fraud. In addition to the fine and jail sentence, the Kirkfield resident, as director, has to pay $141,300 in GST, interest, and penalties.

Businessman sentenced to more than 2 years in jail and fined over $500,000 for GST fraud

Vancouver, British Columbia, February 2, 2005... On February 1, an Abbotsford businessman and his incorporated company were found guilty of 14 counts of GST fraud in Abbotsford Provincial Court. The man and the company were fined $501,830 for the charges, and he was also sentenced to two years and six months in jail. The Canada Revenue Agency (CRA) began an investigation after the company failed to provide books and records to substantiate their GST claims. The company reported more than $7 million in sales from 1993 to 1996. Based on the total input tax credits the company reported to the CRA, it should have purchased over $7 million in heavy equipment during the same period. CRA's investigation, which included assistance from U.S. Customs Services, concluded that there was little evidence to suggest that the company was a viable and operating business. The investigation also found that the company's 14 GST returns, which resulted in refunds totalling $462,190, were fraudulent. When individuals or corporations are convicted of GST fraud, in addition to court fines, they must repay any amounts fraudulently claimed plus interest and any civil penalties that CRA assesses. "The Canada Revenue Agency protects the public interest with audit and enforcement programs to detect fraud and other tax offences," said Minister of National Revenue John McCallum. "We ensure that Canadians have the information they need to understand their legal obligations. But we back up those awareness programs with responsible enforcement actions to deal with individuals who attempt to cheat their fellow citizens."