Better Late than Never Doesn’t Cut It with CRA: File on Time to Avoid Severe Penalties

The Canada Revenue Agency (CRA) has always been serious about penalizing tax evasion, and they are sharpening their focus on investigating anyone who facilitates or encourages non-compliance.

In a dramatic move, a Calgary investment promoter, Milowe Allen Brost, was fined $390,878 for tax evasion on April 16, 2015, and sentenced to a jail term of 27 months. As head of Capital Alternatives Inc., and then the Institute for Financial Learning, Group of Companies Inc., Mr. Brost promoted national and international investments to the public, trained others to promote them as part of his Ponzi scheme, and knowingly failed to claim the income on which he was earning commission and other income.

But it doesn’t take such an elaborate scheme to run afoul of the taxman; simply failing to file a return will attract fines, too. For example, on May 8, 2015, CRA announced that a taxpayer from Surrey, BC, was fined $5,000 for failing to file personal income tax returns from 2003 to 2007.

According to the CRA, “When taxpayers are convicted of failing to file tax returns, in addition to any fines imposed by the courts, they must still file the returns and pay the full amount of taxes owing, plus interest owed, as well as any civil penalties that may be assessed by the CRA.” And, in the case of income tax and GST evasion, the court may impose an additional fine, up to 200% of the taxes evaded and impose a jail term of up to five years.

Bottom line, if you haven’t filed yet, fess up . . . it will definitely be cheaper in the long run.

Advisor Alert: June 15 is the deadline for proprietorships to file their taxes. Be sure to call your clients and get them in the door to avoid them facing a higher tax bill than necessary.

Consumer Alert: Failing to file your taxes on time is not an innocent case of procrastination or simply an oversight. CRA views this as a serious offence and will penalize you accordingly. If you’re not up to date on your tax returns, consult your financial advisor as soon as possible and find out how you can set things straight through CRA’s Voluntary Disclosures Program, before CRA takes action against you (www.cra.gc.ca/voluntarydisclosures).