As a result of charges of tax evasion, Robert Morrison of Holland Centre, Ontario appeared in the Ontario Court of Justice in Owen Sound on December 20, 2010. Mr. Morrison pleaded guilty to three counts of tax evasion and received a fine of $47,344, to be paid within a five year grace period. In addition to the fine, Mr. Morrison was required to pay all civil penalties determined by the Canada Revenue Agency (CRA), as well as all taxes and interest owing.
Mr. Morrison’s masonry contracting business operates in the Owen Sound area. During an audit by the CRA’s Underground Economy Section it became evident that the income reported for 2003 and 2004 was under-reported by a substantial amount, consequently the file was referred to the CRA’s Enforcement Division. The Enforcement Division expanded the investigation to include the 2005, 2006 and 2007 taxation years. It was discovered that from 2003 to 2007 federal income tax totaling $61,173 and GST totaling $33,514 had been evaded.
As stated above, following a conviction of tax evasion, all taxes, interest and CRA penalties must be paid. Where there has been gross negligence, the CRA is allowed to assess a penalty of as much as 50% of the unpaid tax or improperly claimed benefit. Further, on summary conviction the Court may impose a fine of 50% to 200% of tax evaded as well as a jail sentence of up to two years.
There is a way to avoid CRA penalties and/or prosecution. Previously unreported income can be claimed and delinquent returns can be filed under the CRA’s Voluntary Disclosure Program. However, entry into the Program is dependent upon whether or not the CRA has contacted the taxpayer regarding the undisclosed income or unfiled tax returns. As soon as the CRA initiates an action or investigation the Program is no longer open to the taxpayer.