Post-Tax Season Realities: CRA Outs Offenders

In the CRA’s crackdown on sophisticated or aggressive tax avoidance schemes, convictions are routinely listed on the agency’s website for all to see. But public shaming is the least of the consequences lawbreakers will have to face. Stiff fines and penalties are a much bigger issue.

In April, the CRA announced that Vancouver real estate developer Brendan James Schouw was sentenced to one count of goods and services tax (GST) evasion in the Provincial Court of British Columbia. Between July 31, 2008, and July 1, 2009, Mr. Schouw did not remit the $203,082 in GST due on sales of personal units sold by Grace Residences Ltd., of which he was the sole director and officer. The fine for this instance of tax evasion was $300,000.

Any taxpayer convicted of GST evasion must pay the full amount of taxes owing, plus any civil penalties assessed by the CRA. Beyond that, the offender may also face an additional fine of 200% of the taxes owing and even a jail term of up to five years, imposed by the court.

In another case announced in April, James Harvey Cameron of Calgary was convicted under the Criminal Code for tax evasion and fraud between 2002 and 2006. Not only did his illegal investment scheme divert investors’ RRSP funds totaling $2.5 million for his own use, but he also failed to report this amount as taxable income, thus evading $673,871 in federal taxes. Victims of Mr. Cameron’s fraudulent scheme were invited to participate in the sentencing process and to make victim impact statements at his sentencing hearing.

Any taxpayers who have made a tax mistake or have neglected to pay taxes, knowingly or unknowingly, have a chance to rectify their affairs by availing themselves of the CRA’s Voluntary Disclosure Program. Penalties may be limited to paying the taxes owing plus interest if a disclosure is made before the CRA takes any action against the taxpayer.

It can be a smart move to have a DFA-Tax Services Specialist help before a tax error or omission, gross negligence or tax fraud grow to their ultimate, prohibitively expensive conclusion.

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