Is Tax Evasion a Criminal Offence in Canada?

Tax evasion refers to the deliberate and illegal act of not paying the taxes that an individual or business owes to the government. This is distinct from tax avoidance, which involves legally minimizing tax liability by taking advantage of tax deductions and credits. Examples of tax evasion include not reporting income, making false claims for tax deductions, and failing to file income tax returns.

Tax evasion is a crime that can result in severe consequences such as fines, imprisonment, or both. It undermines the integrity of the tax system and affects the ability of the government to provide essential public services. Therefore, it is crucial for individuals and businesses to fulfill their tax obligations to avoid the serious consequences of tax evasion.

The Canadian tax system can be complicated, and it’s important to understand the laws that relate to tax evasion. Canada’s Income Tax Act and the Excise Tax Act are the two primary laws that deal with tax issues in Canada. These laws set out the rules for filing income tax returns, paying taxes, and reporting income. They also contain provisions related to tax evasion. The Canada Revenue Agency (CRA) is responsible for enforcing these laws and investigating suspected cases of tax evasion. 

Income Tax Act

Under the Income Tax Act, anyone who evades or attempts to evade taxes can be charged with tax fraud. Tax fraud occurs when a taxpayer knowingly makes false or deceptive statements on their income tax returns or omits information in order to reduce the amount of taxes they owe. Tax fraud is a criminal offence that can result in fines and even imprisonment.

Excise Tax Act

The Excise Tax Act deals with tax evasion related to goods and services tax (GST) and harmonized sales tax (HST). The penalties for GST/HST evasion are similar to those for income tax evasion, with fines and possible imprisonment for those found guilty.

If you’re suspected of tax evasion, the CRA may conduct a normal tax audit, which is an examination of your tax return and financial records. If the CRA discovers evidence of tax evasion during the audit, they may launch a criminal investigation. The CRA has the power to seize your assets, freeze your bank accounts, and even prosecute you for tax evasion.

Tax Evasion as a Criminal Offence

In Canada, tax evasion is considered a form of fraud, but is also specifically defined as its own criminal offence in section 380 of the Criminal Code.. If found guilty of tax evasion, individuals can face severe penalties, including hefty fines, imprisonment, or both. 

The severity of the punishment may vary based on the amount of money and the duration of the offence. If the tax evasion exceeds a million dollars, there is a minimum punishment of two years jail. Tax evasion is a serious crime that can significantly impact an individual’s reputation and future prospects, including job opportunities and creditworthiness.

The Canadian government takes tax evasion very seriously and has implemented various measures to detect and punish those who engage in this illegal activity, such as imposing stricter penalties and increasing the use of technology to track down offenders.

In addition to the penalties imposed by the courts, tax evaders may also face a benefit tax evasion penalty. This penalty is equal to 50% of the taxes evaded and can be applied in addition to any other penalties.

Defences to Tax Evasion Charges

If you’re facing tax evasion charges, it’s essential to work with a criminal defence lawyer who can help you understand your options and mount a strong defence. There are several possible defences to tax evasion charges, including:

• Mistake of fact: If you can prove that you made an honest mistake in your tax return, you may be able to avoid a conviction for tax evasion.
• Lack of intent: If you didn’t intend to evade taxes and can demonstrate that your actions were accidental or unintentional, you may be able to avoid a conviction.

Working with a Criminal Defence Lawyer

Facing tax evasion charges can be an overwhelming and stressful experience. It can be difficult to navigate the complexities of the legal system and to understand the charges against you. That’s why it’s important to work with a criminal defence lawyer who has experience handling tax evasion cases.

A skilled lawyer can guide you through the legal process and help you understand your options. They can analyze the evidence against you, identify any weaknesses in the prosecution’s case, and build a strong defence strategy to protect your rights and interests.

A criminal defence lawyer can also negotiate with the Canada Revenue Agency (CRA) and the courts on your behalf. They can advocate for a reduction in charges, a plea deal, or other favourable outcomes. They can also help you understand the potential consequences of a conviction and how to minimize their impact on your life.