A recent fraud case involving an individual who pled guilty to two counts of tax evasion and was sentenced to time served plus one day and fined $145,760 serves as a reminder to donors and charities alike that the Canada Revenue Agency (“CRA”) is committed to investigating and prosecuting offenders. Such prosecutions are part of the CRA’s new enforcement project called Project Trident. The individual in this case was a tax preparer who provided his clients with false donation receipts totalling $11,699,104 from a number of churches and similar charitable organizations. The individual prepared and falsified 801 income tax returns for approximately 300 different individuals. The CRA issued refunds totalling $3,275,749 based on these false returns. The individual collected over $900,000 in fees from his clients once the refunds were received and paid a portion of his fees to associates, including officials of the charities involved.
The CRA states that Project Trident will help to protect the tax base by prosecuting key players in fraudulent tax schemes and reassessing related tax returns. Project Trident is aimed at targeting three types of fraud: identity theft, charities-related fraud, and tax-preparer fraud. The CRA warns that fines and imprisonment can apply where false or deceptive statements are made in a tax return. Fines and prison sentences are imposed by the courts.
The CRA can also assess civil penalties and is responsible for collecting these penalties as well as the full amount of taxes owing, plus interest. For example, anyone who does not file a personal, corporate, or GST/HST return as required is guilty of an offence. On summary conviction, that person or corporation is subject to a fine of between $1,000 and $25,000, or both the fine and imprisonment for up to 12 months, for each count.
For more information on Project Trident, please visit http://www.cra-arc.gc.ca/projecttrident.