Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Ethics and Canadian Charities, Avoiding 'Charity' Scams
The CRA put out a Tax Alert today - they identified that in the last fiscal year (2008-2009) they had “reassessed over 20,000 individuals who had participated in at least 1 of 20 unacceptable tax shelter gifting arrangements.” Also they noted in the Tax Alert that when they prosecuted for fraud or tax evasion “Convictions were obtained in 98% of the cases prosecuted.” If you have been bamboozled by a charity gifting tax shelter promoter consider making a voluntary disclosure under the VDP.
Come to us, before we go to you
The Canada Revenue Agency (CRA) wants to make you aware of the Voluntary Disclosures Program (VDP) as we move forward to aggressively address non-compliance internationally and domestically.
Here are some examples of what the CRA did to address non?compliance in the 2008–2009 tax year:
•The CRA conducted over 350,000 audit and review actions, including about 17,300 underground economy audits, and more than 1,100 audits of taxpayers suspected of earning income from illegal activities.
•The CRA completed 20,750 international audits and 34,111 audits of tax shelters.
•The CRA identified a total dollar value of $5.7 billion in non?compliance for international and large business and $2.1 billion for small and medium-sized enterprises.
•The CRA reassessed over 20,000 individuals who had participated in at least 1 of 20 unacceptable tax shelter gifting arrangements.
•The CRA completed 148 interprovincial tax avoidance cases, which resulted in more than $300 million worth of taxes being recovered.
These accomplishments led to results in the courts, including significant fines and—for some people—jail time:
•In 2008–2009, the CRA referred 164 income tax and goods and services tax/harmonized sales tax (GST/HST) investigations to the Public Prosecution Service of Canada.
•The CRA referred 58 GST investigations to Justice Québec.
•These and referrals from previous years resulted in 323 convictions for fraud or tax evasion (including 66 cases in Quebec courts).
•Courts across Canada imposed fines of close to $29.2 million (including $9.3 million in Quebec courts).
•The offenders were sentenced to more than 81 years in prison collectively (including 17 years in Quebec courts).
•Convictions were obtained in 98% of the cases prosecuted.
In cases of gross negligence, the Income Tax Act and Excise Tax Act allow the CRA to assess a penalty of up to 50% of unpaid tax or an improperly claimed benefit. In addition, a court may, on summary conviction, fine people 50% to 200% of the tax evaded, and sentence them to a jail term of up to two years.
The CRA is a member of international organizations that work to tackle the abusive use of tax havens. International partnerships help us uncover schemes that are developed abroad and marketed in Canada. Taxpayers with unreported assets and income offshore could face penalties of up to 50% of unreported tax on income and 5% per year for any unreported assets.
You can come to us to correct your tax affairs before we go to you. Under the VDP, taxpayers who have not reported all of their income can voluntarily correct their tax affairs. They will not be penalized or prosecuted if they make a valid disclosure before they become aware of compliance actions being started by the CRA against them. These individuals may only have to pay the taxes owing, plus interest. More information on the VDP can be found on the CRA Web site at http://www.cra.gc.ca/voluntarydisclosures.
Mark Blumberg is a lawyer at Blumberg Segal LLP in Toronto, Ontario. To find out more about legal services that Blumbergs provides to Canadian charities and non-profits please visit http://www.canadiancharitylaw.ca or http://www.globalphilanthropy.ca Mark can be contacted at or at 416-361-1982.
This article is for information purposes only. It is not intended to be legal advice. You should not act or abstain from acting based upon such information without first consulting a legal professional.
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.