Criminal Tax Defence
Tax evasion is the general term for efforts by individuals, corporations, trusts and other entities to evade taxes by illegal means. Tax evasion usually entails taxpayers deliberately misrepresenting or concealing the true state of their financial affairs to the tax authorities in order to reduce their tax liability and includes dishonest reporting such as failing to fully declare taxable income or gains, or claiming deductions or expenses not permitted under the legislation. More sophisticated schemes include RRSP strips and obtaining illegal input tax credit refunds.
It is not uncommon, however, for Taxpayers or their accountants to be screened into the Canada Revenue Agency’s (“CRA”) Criminal Investigation Program (“CIP”) on account of genuine errors, as opposed to any wilful criminal act. However, once a criminal investigation has begun, the CRA and their lawyers at the Public Prosecution Service of Canada are extremely focused on obtaining a conviction.
Fines in Canada for income tax evasion are between 50% and 200% of the tax sought to be evaded and/or 2 to 5 years in jail. Further, the taxpayer must still pay the additional tax owing, as well as civil gross negligence penalties of 50% of the unreported amount. The financial and personal risks associated with these cases cannot be understated.
Proper representation of taxpayer requires in depth knowledge in accounting practices, tax return preparation, tax law, and well as criminal law and procedure. Criminal Tax Litigation is a very specialized area of the law.