Written by: by Anjuli Gustafson, Sept., 2020
Over the past few months, the CRA has successfully prosecuted a number of individuals found to have committed tax fraud.
In May of 2020, the CRA announced that Damien Edward Reynolds was sentenced to a conditional sentence of 2 years less a day and ordered to pay a fine of $121,179. A jury found Mr. Reynolds guilty of guilty of one count of fraud, one count of attempted fraud under the Criminal Code, and guilty of one count of goods and services tax/harmonized sales tax (GST/HST) evasion under the Excise Tax Act.
A jury and a British Columbia (BC) Supreme Court judge determined that Mr. Reynolds committed fraud by failing to file Canadian income tax returns for the 2004 and 2005 tax years. In addition to the court-imposed fine, Mr. Reynolds will also have to pay the full amount of tax owing, plus related interest and any penalties assessed by the CRA.
Tax evasion is a criminal offence. Falsification of records, claims, documents, wilfully not reporting income, or inflating expenses can lead to criminal charges and include jail time. Under the income tax and excise tax laws, being convicted of tax evasion can include fines ranging from 50% to 200% of the evaded taxes and up to five years in jail. Being convicted of tax fraud under section 380 of the Criminal Code carries a sentence of up to 14 years in jail.
The CRA announced in June of 2020 that Michael Curt Helmut Scholz from West Vancouver was found guilty of two counts of uttering forged documents under the Criminal Code, and three counts of committing tax-related offences under the Excise Tax Act. The CRA’s investigation found that Mr. Scholz provided CRA officials with forged documents in order to reduce taxes owed on a residential property in West Vancouver. Mr. Scholz also claimed tax credits related to the property that he was not eligible for and mislead the CRA with a forged lease agreement to decrease the property’s assessed value that would be used to calculated additional taxes owed. Sentencing for Mr. Scholz has yet to take place.
There are serious consequences for willfully failing to follow tax laws. This could include reassessments, the imposition of civil penalties, criminal investigations, and prosecutions, resulting in the imposition of court fines, jail time and a criminal record. If a taxpayer is convicted of Goods and Services Tax/Harmonized Sales Tax (GST/HST) tax evasion, they will be required to repay the full amount of taxes owing, plus 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.