What is Tax Evasion in Canada?

What is tax evasion in Canada? Tax evasion is when you are not filing tax returns, not declaring income, hiding income or claiming expenses and tax credits you are not entitled to. The CRA (Canada Revenue Agency) attacks evaders without sympathy – auditors are required to bring tax evaders to account, collect the taxes interest and penalties and make an example of them to make taxpayers comply with the rules.

Tax evasion is a crime in Canada. It is not a crime to owe money to the CRA. As long as you have undeclared income you could be penalized or prosecuted for tax evasion. The Canadian Income Tax Act sets out the penalties for tax evasion in Canada.

Section 238 of the Canadian Income Tax Act addresses the penalties for failing to file a tax return: “Every person who has failed to file or make a return as and when required by or under this Act is guilty of an offence and, in addition to any penalty otherwise provided, is liable on summary conviction to:

1.A fine of not less than $1,000 and not more than $25,000; or
2.Both the fine described in paragraph 238(1)(a) and imprisonment for a term not exceeding 12 months.”

Section 239 of the Canadian Income Tax Act addresses the penalties for committing tax evasion.

If you want to know who is guilty of tax evasion under the Canadian Income Tax Act, we can tell you. Every person who has:

1.Made, or participated in, assented to or acquiesced in the making of, false or deceptive statements in a return, certificate, statement or answer filed or made as required by or under this Act or a regulation, (which means “lied in dealing with taxes”),
2.To evade payment of a tax imposed by this Act, destroyed, altered, mutilated, secreted or otherwise disposed of the records or books of account of a taxpayer, (which means “created fraudulent documents”),
3.Made, or assented to or acquiesced in the making of, false or deceptive entries, or omitted, or assented to or acquiesced in the omission, to enter a material particular, in records or books of account of a taxpayer, (which means “kept false books”),
4.Willfully, in any manner, evaded or attempted to evade compliance with this Act or payment of taxes imposed by this Act, or
5.Conspired with any person to commit an offence described in paragraphs 239(1)(a) to 239(1)(d).

 

Those who are guilty of an offence under section 239 of the Canadian Income Tax Act will be subject to a fine of up to double the amount of the tax that was sought to be evaded and/or imprisonment for a term not exceeding 2 years. 

As you can see, income tax evasion is very serious and can and must be avoided. Even if you are currently behind filing returns or know you have undeclared income – you need to come clean and put an end to your tax problem.  You can do so safely and the sooner the more likely you can avoid the fines and prison.

Will you come out of it with a tax debt? Likely… but by working with a professional organization that helps people who have tax problems, you can come up with a plan to deal with the tax debt and move forward on fresh footing.

For more information about income tax evasion please visit www.taxsolutionscanada.com or call 888-868-1400.