Tax Fraud Could Cost Stock Promoter Plenty

Be warned that the CRA is taking tax avoidance and tax evasion more seriously than ever. The federal budget funded increased verification activities, additional auditors and specialists focused on the underground economy. A major focus of the CRA Criminal Investigations program has also targeted sophisticated taxpayers and promoters of schemes.

One case in point is that of Damien Reynolds, charged on April 4, 2017, with fraud under section 380 of the Criminal Code and tax evasion under section 327 of the Excise Tax Act. Reynolds, a 49-year-old dual citizen of Canada and Australia, is a mining industry consultant and stock promoter based in Vancouver.

CRA alleged that Mr. Reynolds used offshore companies in the British Virgin Islands and Ireland to over-claim capital losses and under-report income, thereby falsely reducing his tax payable by millions of dollars from 2004 to 2012.

According to a news release from CRA, court records reveal that the alleged schemes include under-reporting of personal income, falsely claiming non-resident status, claiming false losses and evading payment of Goods and Services Tax/Harmonized Sales Tax.

Taxpayers convicted of income tax evasion must not only repay the full amount of taxes owing, but must also pay interest and any civil penalties that may be assessed by the CRA. In addition, the court may fine them up to 200% of the taxes evaded and impose a jail term of up to five years. A jail term of up to 14 years may be imposed for convictions under section 380(1)(a) of the Criminal Code.

Taking advantage of the CRA’s Voluntary Disclosures Program (VDP) can save you a lot of money and jail time. So, if you have a guilty conscience, amend your tax return and file any outstanding returns. The happy result may even be an unexpected tax refund.

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