CRA employs new tools in ongoing battle against tax cheaters

While these new tactics are a good thing for those of us who don’t operate in the black market and do pay taxes, criminals are still finding ways to scam Canadians using the CRA as a blunt instrument.
While these new tactics are a good thing for those of us who don’t operate in the black market and do pay taxes, criminals are still finding ways to scam Canadians using the CRA as a blunt instrument.

With the year-end approaching, those who are thinking about pulling a fast one on the tax man may want to think again.

The Canada Revenue Agency (CRA) recently unveiled a new set of tools in its never-ending quest to collect every tax dollar it’s owed. In 2016, the federal government department earmarked $444.4 million over five years to fight these tax-avoidance tactics.

But recently, the agency seized assets of those accused of crime, before they were convicted.

“I can say that this is indeed the first time, but I can promise you that this is not the last time that we (will use) those provisions of the Criminal Code to restrain or seize assets that tax evaders have acquired through their illegal behaviours,” said Stéphane Bonin — who is with the CRA’s criminal investigations divisionto the CBC.

It is the first time the agency has done this. The CRA ire is directed at Chi Van Ho (Ho) and Thanh Ha Thi Nguyen (Nguyen), who unreported income of $3,114,100, alleged the CRA in announcing charges of tax evasion on Oct. 23, and didn’t pay $523,532 in federal taxes.

“The criminal charges against Ho and Nguyen allege that, from 2008 to 2013, multiple schemes were utilized to under-report their taxable income. The schemes included appropriating funds from multiple corporations under their control for personal purposes, appropriating corporate rental income and manipulation of supplier invoices,” according to the CRA website.

The CRA is also becoming “far more aggressive and far less taxpayer-friendly. While in the past they might conduct an audit, they’re now placing the onus on tax payers to do it for them,” said Harris Kligman, partner with Kestenberg Rabinowicz Partners LLP, a Markham, Ont., accounting firm.

“The agency has the power to declare all income as unreported until proven otherwise. This places an enormous burden on business owners to prove that their tax claims are, indeed, legitimate,” he said.

It’s all part of recent budget investments that “have resulted in the CRA having better tools and approaches to help receive and analyze more data to find more of those not paying their fair share,” according to the government’s web site.

While these new tactics are a good thing for those of us who don’t operate in the black market and do pay taxes, criminals are still finding ways to scam Canadians using the CRA as a blunt instrument.

An elderly woman in Mississauga, Ont., was the latest victim of a bad actor convincing someone that they owed taxes and to pay up immediately.

And according to Peterborough This Week, the bad guys are the “pros” and are employing ever-more clever tactics such as call spoofing, so the victims see a phone number that they believe comes from a legitimate source, but in reality, they are not.

“Be aware of Caller ID spoofing. Scammers will alter the number appearing on your caller identification to look like they are the CRA. They may also leave a local area code number for you to call disguised as a ‘direct hotline’ to the CRA. When you call that number, it is redirected to the scammers,” writes Sarah Sobanski.

The CRA continues to go after the real tax scammers and it employed its snitch line to convict 307 cheats over a five-year period.

"This involved $134 million in federal tax evaded, and court sentences totalling approximately $37 million in court fines and 245 years in jail," CRA spokesperson Etienne Biram said to the CBC.

Underreported income from wait staff was also the focus of a CRA earlier this year, as about 200 staff P.E.I.’s Murphy Hospitality Group were sent a letter warning them that they may have evaded taxes relating to their 2014 and 2015 tax years.

“The agency is claiming some individuals failed to declare as much as tens of thousands of dollars and is asking for back taxes on it, with potential further financial penalties of up to half of what’s owed,” according to Josh O’Kane at The Globe and Mail.

While this might be heavy-handed to target small fish such as wait staff, at least the tax agency is trying to ensure Canadians do pay what they are owed.

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