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Tax Time, Protect yourself!
As Canadians get busy filing their taxes, the Canada Revenue Agency (CRA) reminds everyone to be cautious of fraudulent tax filing.
If you are approached by a tax preparer offering larger refunds than other preparers, don’t be fooled! While the vast majority of preparers provide excellent service to tax filers, there are unscrupulous ones who file false and fraudulent tax returns— and in the end, it’s you, the client, who pays.
Remember that even if someone else prepares your tax return, you are responsible for all the information on the return.
•Be informed about who you are dealing with at tax time and what their credentials are.
•Stay away from tax preparers who offer you false tax claims such as charitable donations, child care expense claims, or even business expenses or losses. Don’t get involved. You will be caught.
•Get a second opinion. Taxpayers should seek independent advice from a reputable tax professional or contact the CRA Individual Income Tax Enquiries line at 1‑800‑959‑8281 for further information if they are thinking about taking part in such a scheme. Ask questions or enquire further before submitting your return.
•Make sure the tax preparer gives you a copy of your return for your records.
•Never sign a blank tax form.
•Generally, if it sounds too good to be true, it probably is.
Failure to follow tax laws will result in serious consequences. The CRA will audit, reassess and can apply a penalty equal to 50% of the additional tax payable if it can show that a taxpayer knowingly, or under circumstances amounting to gross negligence, made a false statement when filing a return.
The CRA will also undertake criminal investigations and will recommend prosecution against the taxpayers promoting, organizing or participating in such tax schemes. Canadians expect no less, so that the tax system is fair for everyone.
If found guilty of criminal tax evasion, taxpayers face fines of up to 200% of the taxes they sought to evade plus potential jail time of up to five years.
If you have not previously reported all of your income or want to correct a past mistake, the CRA offers a second chance to make things right through its Voluntary Disclosures Program. If you make a full disclosure before any compliance action is started, you may only have to pay the taxes owing plus interest, but not the penalties. Visit www.cra.gc.ca/voluntarydisclosures for more information.
If you think you’ve been an unknowing victim of fraud or any type of tax or benefit scam, call us at 1‑800‑959-8281, and immediately notify your bank and the Royal Canadian Mounted Police’s Canadian Anti-Fraud Centre by email at email@example.com or by calling 1-888-495-8501.
Anyone who is aware of a tax evasion scheme should contact the CRA’s Informant Leads Program with their information. The CRA does not divulge the identity of an informant.
The CRA encourages anyone, no matter where they are in the world, to come forward if they have information about major international tax non-compliance. We strongly recommend that you first call the CRA’s Offshore Tax Informant Program (OTIP) at 1-855-345-9042 (North American toll-free number) or 613-960-4265 (collect calls will be accepted), weekdays from 8:00 a.m. to 4:00 p.m., Eastern Standard Time, except on public holidays.
The CRA penalizes tax fraudsters
The CRA is coming down hard on unscrupulous tax preparers, promoters, and other third‑party representatives who draw Canadians into dishonest schemes with promises of easy money.
For example, between January 2007 and March 2014, the CRA convicted 35 taxpayers who were part of the tax protester movement, which promotes schemes to avoid taxes. In addition to having to pay the taxes owing, the taxpayers were sentenced to a total of $5.4 million in court fines and 325 months of jail time. Of these 35 taxpayers, four were convicted for “counselling others to evade taxes”. These four tax scheme promoters were sentenced to a total of $1.28 million in court fines and 188 months in jail.
In the same time period, the CRA also convicted 45 tax preparers for tax evasion related to their tax affairs or those of their clients. The courts sentenced these tax preparers to a total of over $4.8 million in fines and 659 months of jail time.