HST Fraud

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In late October of 2013, an Annapolis Valley businessman was charged with a total of $14,862 dollars in fines stemming from tax evasion and falsifying tax records. After pleading guilty to thee accusations in July, he was ordered to pay the amount by November of 2014.

The charges stemmed from evidence that Laurie Bruce Cameron has engaged in false statements and fraudulent input tax credits on HST returns (Harmonized Sales Tax) from his business known as Cameron’s Farmer’s Market. The investigation that was initiated by the Canada Revenue Agency (CRA) had found that between 2008 and 2010 Mr. Cameron claimed well over the amount of input tax credits to the tune of $19.,816 dollars. It was further observed that the sales receipts which he provided had been physically altered and belonged to citizens other than himself.

Due to the fact that Mr. Cameron suffers from health issues and his current financial position, the judge had ordered him to pay a fine constituting to seventy-five percent of the total amount of taxes that he had initially avoided paying. Also, Mr. Cameron will still be responsible for all of the back taxes that are owed in addition to penalties and any other fines that may be levied by the CRA. This final variable will be determined by the CRA themselves.

Stiff Penalties
It should be clear that any Canadian citizen who willingly falsifies refunds, credits or expenses is not only responsible for the full amount owed but also any further interest and penalties. Furthermore, if a court finds the individual guilty of tax evasion, a maximum fine of up to 200% as well as a two-year jail term may also be imposed; depending on individual circumstances.

However, those who have not filed returns or who may have failed to report all of their taxable income are allowed to proactively correct these discrepancies. This allowance is intended to encourage those who may have been less than truthful in the past to voluntarily correct their mistakes; whether intentional or otherwise neglected. Unless they are aware that they are being actively investigated by the CRA, there will be no penalisation involved for those who rectify their returns willingly. This may very well only result in the payment of any owed taxes and the associated interest. Still, this is obviously intended to be more of a preferable option than a 200% additional fine and a term of imprisonment up to six months (or both).

For more information pertaining to the rules and regulations dictated by the Canada Revenue Agency and to learn more regarding the Voluntary Disclosures Program (VDP), visit www.cra.gc.ca/voluntarydisclosures.
Additionally, recent news in regards to tax convictions can be found at www.cra.gc.ca/convictions.

Eric La CaraEric La CaraManaging Partner and Tax Practice manager for Capital Tax in Vancouver and Tokyo. Eric is a U.S. and Japan Personal & Corporate tax specialist with more than 15 years of experience in the area of cross-border structuring and taxation. Eric is charged with developing Capital Tax overall operations and strategic direction using the business and technical skills he has acquired during his professional career in Asia.