Tag Archives: tax evasion

The Tax Evasion Canada Program with Whistle Blower Rewards

The 2013 CRA budget announces the CRA’s initiative to encourage Canadians to provide relevant information identifying tax evasion especially for international tax evasion. The latest changes in the `Stop International Tax Evasion Canada Program will enable the CRA to reward those individuals who have knowledge of major cases in tax non-compliance on an international level. The incentive will be as much as fifteen per cent of the income tax amount collected on account of the information that has been provided. As per the Statistics Canada Bureau, the Canadian funds in the biggest tax havens in the world have gone up to a record one hundred and seventy billion dollars.

The fifteen per cent rewards in the tax evasion Canada Program are going to apply only to those tax assessments or the reassessments on the international transactions which are over one hundred thousand dollars. So far, the federal government has been able to convict only around forty people with offshore tax cheating through the tax evasion Canada Program since the past eight years and the total amount of fines that have been levied are about seven million dollars in taxes that had been evaded.

The new changes in the tax evasion Canada program system are going to bring Canada in line with other important countries like the United States of America, Germany and the United Kingdom. The new kind of reporting criteria is going to require the banks, the co-operative societies and the credit unions along with the loan and trust companies to report to the CRA. The reporting will include all incoming or outgoing electronic fund transfers of ten thousand dollars and above. These standards will be the same as set by FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada.

Presently, individuals, corporations and trusts who are owning foreign investment properties costing more than one hundred thousand dollars have to file a Form T1135. The CRA does not have the power to reassess these people for additional tax after the normal assessment period. The relevance of the voluntary disclosure program has been increased. It will allow the taxpayers to come forward proactively to disclose any non-compliance in the past, resulting in penalties getting waived. The interest which is assessed on the tax will get reduced. The potential criminal prosecution for tax evasion Canada also gets waived.

It has to be remembered that the tax evasion Canada prosecution is a criminal one. This kind of case is prosecuted under Section 239 of the Income Tax Act. There are a couple of ways that this kind of prosecution can proceed. One is by means of a summary conviction that carries a potential penalty of a fine which is not less than fifty per cent and not more than two hundred per cent of the tax amount that was evaded. Imprisonment can also be charged for a term not exceeding two years. The second kind of prosecution is by indictment that carries a penalty of not less than one hundred per cent and not more than two hundred per cent of the tax amount which was evaded with imprisonment not exceeding a period of five years.

Understanding Tax Evasion vs. Tax Avoidance

Understanding Tax evasion vs. Tax Avoidance

Tax Evasion is illegal; it is the evasion of taxes by taxpayers including individuals and businesses such as corporations. Under tax evasion taxpayers intentionally misrepresent the true income or tax owing status to the tax authorities to reduce their tax liability. Such act may include false tax filing, such as report less income, profits or gains than actual or inflating expenses or deductions.  The extent of tax evasion is measured in the amount of unreported income, which is the difference between the reported income and the actual income.

Tax avoidance, on the other hand, is not illegal. It is when taxpayers use tax laws to reduce tax liability. Both tax evasion and avoidance are tax noncompliance in different degree, as they cover activities that intend to play with the tax system, although such classification of tax avoidance is disputable, given that avoidance is not illegal.

Canada Revenue Agency CRA Response to Tax Evasion

The degree of tax evasion depends on several factors, such as the amount of income an individual or a corporation has. Normally, when the amounts involved are minimal, the efforts to evade income tax decline. The extent of evasion also depends on the CRA’s tax administration effectiveness.

CRA has been improving its technology, procedure and staff training to combat tax evasion. CRA also adopted various means to reduce tax evasion and increase the level of tax enforcement. Tax auditors are required to identify tax evaders, collect the taxes interest and penalties and often those evaders become published on mass media or CRA website so they can become examples for their fellow Canadian taxpayers to comply with the tax rules.

 

Level of Tax Evasion and Punishment

Just like many other countries, Canadian tax authority considers tax evasion a crime, and the guilty party is liable to fines and/or imprisonment.  Dishonestly misreporting income in a Canadian tax return is not necessarily considered a crime. It is also a reality that the extent of evasion depends on the severity of punishment for evasion. As long as you have undeclared income you could face penalties or prosecution for tax evasion. The Canadian Income Tax Act Section 238 and 239 set out details on tax evasion and the penalties for tax evasion in Canada.

The offenders who are guilty under section 239 of the Income Tax Act will be subject to a fine of up to double the amount of the tax that was evaded and/or imprisonment for a term not exceeding two years.

Income tax evasion can lead to criminal charge and it is a serious act. It should be avoided at all costs. If you have been hiding for years from the CRA for unreported or under reported income, you may want to consider cleaning up your tax problems voluntarily. With experienced tax professionals’ help, your damage will be greatly reduced. The worst nightmare happens when after many years of hiding, all of sudden CRA starts investigation. You could lose everything overnight. Take risk free action immediately before it is too late. Contact Tax 911 Now, the experienced tax professionals for a private, confidential, free no obligation consultation! Call 1-877-918-2991 today!