Canada Revenue Agency’s Tactics on Canadian Tax Evasion

To deal with Canadian tax evasion problems, although Canada Revenue Agency works hard and smart to collect taxes, there are still some individuals and businesses that evade taxes that cause Canadian tax evasion problems. The no-nonsense CRA tax collectors might catch up with you and you will hate their legal actions against you. Tax evasion is not the same thing as tax avoidance. Evasion occurs when a person or a business entity decides to ignore the law that requires them to pay their taxes.

There are different types of Canadian tax evasion problems Canada Revenue Agency has recorded so far. Some individuals or businesses will submit their tax returns but will report less taxes that they actually earned. Others will misrepresent their income or take additional deductions than the law allows. Individuals who are employed can easily make cash outside employment and hide it from the CRA.   Businesses steal government taxes in a number of ways including reporting fewer sales that they actually made during the taxation year in question.  By so doing they avoid paying taxes on any extra sales transactions they process.

Another Canadian tax evasion offense involves value added taxes (VAT). This is usually done when a businessman decides to purchase items outside their area of tax jurisdiction so as to pay less VAT than they normally do. Such purchases must be reported to the CRA to avoid breaking the law.  Tax avoidance, as stated above, is not the same as tax evasion. It happens when an individual or a business creates loopholes in the legal system to pay fewer taxes. Hence they will submit their tax returns using legal tactics only that they will take illegal shortcuts to reduce their tax amounts.

Canadian tax evasion attracts a very heavy price.  If you are ever caught, the CRA will make sure that it recovers everything you have stolen from the government via penalties. According to the section 238 of Income Tax Act, each type of tax evasion attracts a particular offense. But there is generally a fine that could range between one thousand to twenty-five thousand dollars. On top of this fine, you can face twelve to twenty-four months of jail time. If you read Section 239 of the Income Tax Act, you realize that a tax evader could pay half to double the amount that they were trying to save by evading their taxes. The CRA has strong measures to detect those who dodge taxes. The first measure is the Informant Leads Program. It is a program that collects information on known or unknown tax evaders.

It is actually a program that invites the public to report those who are evading taxes via the internet, phone or mail. They also have a Criminal Investigations Program that looks into Canadian tax evasion offenders and refers their cases to the Public Prosecution Service.  Since global crisis in 2008, CRA has become so aggressive now that it is even exposing those who have been convicted. You do not want to be convicted any time soon. Therefore you are advised to see a tax consultant who can help you report your undeclared income or repair false or incomplete information on your previously submitted tax returns.