Tax evasion is an offence under the Income Tax Act and the Excise Tax Act (for GST/HST) but notably it is not a criminal code offence. Over the years CRA has come up with many policies to actively deter Canadian taxpayers from tax evasion but the new policy of the CRA as implemented in the fall of 2016 came unannounced. As per the new policy of the CRA it has begun to collect the fingerprints of anyone accused of tax evasion, even before they are convicted. The CRA will use police officers to collect the fingerprints. Furthermore these fingerprints which are being uploaded by CRA to the Canadian Police Information Centre (CPIC) database are not only accessible by all Canadian police officers but also by some foreign law enforcement agencies including the U.S. Department of Homeland Security and its border protection officers.
Travel problems for tax offenders (Canada and USA)
Historically a tax evasion offence was not a bar to entry into the United States. But now with US Homeland Security having access to the fingerprints on file with CPIC based on a charge and although without a conviction may as well result in a block to entry into the US. Furthermore since US Homeland Security vets the names of any passengers on planes overflying US airspace, aggressive enforcement by them could create problems for passengers not even travelling to the US. The CRA policy is unfair because not only does the fingerprinting take place before a taxpayer is convicted but it would take months before the fingerprints are actually removed and deleted from the CPIC database in case of wrong accusations. Thus these can lead to travel problems for innocent taxpayers. In such situations our best Canadian tax lawyers can provide you with the representation that you require and help protect your rights.
Voluntary Disclosure Program: A valid solution for tax evasion
What can a person facing tax evasion or tax fraud problems do to mitigate these travel problems? The solution to this problem is the Voluntary Disclosure Program (VDP or tax amnesty). Our team of top Canadian tax lawyers will guide you through the solution. The CRA voluntary disclosure program is available before CRA commences a tax audit or tax fraud investigation. Our experienced Canadian tax lawyers submit voluntary disclosure applications on almost a daily basis. A successful VDP application means no tax evasion charges can be brought, and civil penalties are also waived. CRA will always advise a taxpayer before tax evasion charges are brought. A Canadian tax lawyer should be retained immediately to try to prevent tax evasion charges from being levied. If you need tax help contact our Canadian tax law firm for immediate assistance.
If I get wrongly accused of tax evasion and then fingerprinted, will I be able to clear my fingerprints from the record in the future?
Of course. For a handful of years now, the CRA has been collecting fingerprints from every taxpayer accused of tax evasion. If you’ve been wrongly accused, you’ll be cleared after being audited by the CRA. The CRA requests the police to delete the fingerprints from taxpayers acquitted of all charges. However, fulfilling the request can be a lengthy process, taking anywhere between several weeks and a few months. During that time, affected taxpayers may experience certain travel restrictions. Contact our team for more information.
If I file a tax return late, am I already committing tax evasion?
Not yet, unless you plan on not filing at all; if you miss the tax filing due date, you’ll need to pay a late-filing penalty. The penalty is fixed at 5% of the previous year’s balance owing. You’ll also have to pay an additional 1% of the balance for every full month after the due date until your file. Filing on time is an easy way to reduce taxes by avoiding these penalties.
Is there a difference between tax evasion and tax fraud?
There’s a crucial distinction between tax evasion and tax fraud. Tax evasion is the intentional and deliberate misrepresentation of income to reduce taxes. Tax fraud as a concept is far more general. It covers a range of violations of the tax code. Most forms of tax evasion constitute tax fraud, but not all forms of tax fraud are tax evasion. For example, underreporting your income is a form of tax fraud used for tax evasion. Meanwhile, claiming tax credits under false pretenses would constitute tax fraud.