Navigating Tax Fraud Charges in Toronto: What You Need to Know
Facing tax fraud charges in Toronto can be a daunting experience, with potentially severe consequences, including hefty fines, a criminal record, and even incarceration. It’s crucial to understand what constitutes tax fraud and how to protect yourself if you’re under investigation or have been charged.
What is Tax Fraud?
Tax fraud occurs when an individual or business deliberately falsifies information on a tax return or engages in deceptive practices to avoid paying taxes owed to the government. Tax fraud is a broad and generic term that includes many different scenarios where a tax problem becomes the subject of a CRA investigation. Some examples of tax fraud include:
• Failing to file a tax return
• Making deceptive statements on a tax document
• Omitting relevant information from tax records
• Underreporting income
• Failing to declare assets
• Making false claims for deductions
• Failure to declare earned income to avoid paying taxes
• Failing to pay tax instalments if self-employed
• Failing to pay HST or HST installments
• Making a false statement or incomplete disclosure in a bankruptcy proceeding
• Failing to declare merchandise coming back into Canada from a trip
• Smuggling or dealing in the illegal trade of cigarettes and other products
Tax fraud can involve offences in the Criminal Code, Income Tax Act, or both. It may also involve offences under various other laws that involve some form of tax measures, such as the Bankruptcy and Insolvency Act, the Customs Act, the Excise Act, and the Greenhouse Gas Pollution Pricing Act.
The Role of the Canada Revenue Agency (CRA)
The Canada Revenue Agency (CRA) diligently monitors tax compliance to prevent the minority from evading payment. Early warnings from the CRA often precede tax fraud charges in Toronto. These warnings may come via telephone or mail, indicating a concern or issue with your tax filings. Ignoring these warnings or acting without consulting a tax professional can escalate the situation and potentially lead to charges. The CRA can ask business owners for their complete banking records and can also request the banking records of the individual’s spouse if they suspect unreported income.
The CRA operates a regular compliance program and may charge offences such as Tax Evasion, Filing a False or Misleading Statement or Failure to File. The Income Tax Act is one of the more elaborate areas of the law. Working with the CRA’s Criminal Investigations Program, for the 2015-2016 fiscal year, federal prosecutors had a conviction rate of 88%.
Seeking Legal Representation
If you are accused of tax evasion, it is important to seek legal support from an experienced criminal lawyer. Anything you say to an accountant can be used against you. However, when you retain a lawyer, the information you share is strictly confidential because it is protected by lawyer-client privilege. Lawyers experienced in tax fraud charges in Toronto can:
• Work with the Canada Revenue Agency to negotiate a positive resolution.
• It helps you avoid prosecution completely if you agree to pay all unpaid taxes.
• Explore all possible options to protect you from tax fraud charges.
Erickson Law can provide comprehensive advice and passionate advocacy whether the case is at the beginning of an investigation with the Canada Revenue Agency or after charges are laid, whether you are an individual or a business.
Potential Defenses for Tax Offences
An accusation of a tax offence can be overwhelming. Not every alleged wrongdoing in relation to tax is intentional or criminal because the laws are complex. Possible defences depend on the specifics of the case and may include:
• Honest Mistake or No Intent: Demonstrating that the issue resulted from an honest mistake or misunderstanding.
• Reliance on Professional Advice: Claiming you acted on the advice of a qualified professional.
• Insufficient Evidence: Arguing that the evidence against you is incomplete or weak.
• Procedural Errors by Tax Authorities: Challenging the charges based on violations of your rights during the investigation.
• Misapplication of Deductions or Expenses: Showing documentation that explains your position.
• Unawareness of the Actions of Others: Establishing a defence of lack of personal responsibility by showing that you did not know and you were not a party to these actions.
• Duress: Claiming you were forced or threatened to commit a tax offence.
Consequences of Conviction
Individuals convicted of tax evasion can face serious penalties, ranging from fines of 50% to 200% of the taxes evaded to imprisonment. In the most serious cases, an individual may be charged with fraud under the Criminal Code, which can carry a jail term of up to 14 years. It is also an offence under the Income Tax Act to file false or deceptive statements, and the penalties include substantial fines and potentially jail time, with a maximum punishment of 2 years imprisonment.
Finding Legal Assistance in Toronto
Several experienced law firms in Toronto can assist with tax fraud charges in Toronto.
Erickson Law (416) 363-3612: Can provide comprehensive advice and passionate advocacy whether the case is at the beginning of an investigation with the Canada Revenue Agency or after charges are laid, whether you are an individual or a business.
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