Evelyn Jacks: Tax protestors pay the price

The Canada Revenue Agency (CRA) has proved once again: there is no escaping your responsibility to pay income taxes.

In early January, a couple from Ottawa, the Websters, pleaded guilty in the Superior Court of Justice to tax evasion. The couple were fined close to $350,000 (100% of federal income taxes evaded) and their sentence included house arrest, the husband for six months and the wife for three.

The CRA investigation found the couple had failed to report more than a $1 million in income from 2004 to 2009. Unfortunately, the Websters had relied on the “Paradigm scheme” which is based on the faulty premise that it is unconstitutional for the government to impose a direct tax on a human being, and taxing the labour of human being is a violation of the Canadian Bill of Rights.

In posting its win, the CRA also provided a strong warning against tax protesters who not only fail to report their own earnings, but also conspire, counsel and promote these tax schemes to others. The CRA will not hesitate to reassess income taxes and charge interest plus penalties, as well as drag these taxpayers into court to prosecute them for tax evasion.

It is legal, however, to arrange your affairs within the framework of the law to pay the least taxes possible. Canadians who embark upon tax planning within the framework of the law are within their rights.

It’s Your Money. Your Life. You can avoid penalties and interest as well as house arrest and jail time by voluntarily complying with the law. If you have failed to file a previous year’s return, do so now to avoid gross negligence and tax evasion penalties. Your tax practitioner can help.

Evelyn Jacks is the best-selling author of Jacks on Tax: Your Do-it-yourself Guide to Filing Taxes Online and Essential Tax Facts: Secrets and Strategies for Take-Charge People, available at www.knowledgebureau.com and better bookstores.