Tuesday, July 23, 2013

London corporation and former resident fined for tax evasion

London, Ontario, July 23, 2013… The Canada Revenue Agency (CRA) announced today that Industrial Waterproof Systems Ltd. (IWS), of London, Ontario and Craig Beattie, formerly of London, Ontario, pleaded guilty in the Ontario Court of Justice in London on July 22, 2013 to a total of three counts of income tax and of Goods and Services Tax (GST) evasion. They were fined a total of $77,487.

A CRA investigation revealed that IWS issued company cheques to pay for personal household expenses and home improvements for Mr. Beattie, the sole director of IWS. IWS improperly deducted $353,664 for these expenses on its 2006 and 2007 corporate income tax returns. By claiming these deductions the corporation evaded $36,779 of federal corporate taxes for which they were fined $18,390, representing 50% of the amount evaded. The corporation also improperly claimed Input Tax Credits (ITC) related to these same expenses, evading payment of $19,559 in GST. IWS was fined an additional $19,559, 100% of the GST evaded. The corporation’s total fine of $37,948 has been paid in full.

Mr. Beattie did not report $279,176 of personal expenses paid for by the company and cash diverted to his personal bank account on his 2005 to 2007 income tax returns and evaded payment of $79,079 in income taxes. He was fined $39,539 representing 50% of the federal taxes evaded. He was given six months to pay.

The preceding information was obtained from the court records.

"Canadian taxpayers must have confidence in the fairness of the tax system," said Vince Pranjivan, Deputy Assistant Commissioner of the Ontario Region of the Canada Revenue Agency. "To maintain that confidence, the Canada Revenue Agency is determined to hold tax evaders accountable for their actions."

When taxpayers are convicted of income tax and GST evasion, they still must repay the full amount of taxes owing, plus interest and any civil penalties that may be assessed by the CRA. The court levied a lower fine after learning that Mr. Beattie cooperated fully with the CRA throughout the investigation. On summary conviction, the court may fine an individual 50% to 200% of the tax evaded, and sentence them to a jail term of up to two years. In cases of gross negligence, the Income Tax Act also allows the CRA to assess a penalty of up to 50% of the unpaid tax or the improperly claimed benefit.

Taxpayers who have not filed returns for previous years, or who have not reported all of their income, can still voluntarily correct their tax affairs. They may not be penalized or prosecuted if they make a valid disclosure before they become aware of any compliance action being initiated by the CRA against them. These taxpayers may only have to pay the taxes owing, plus interest. More information on the Voluntary Disclosures Program (VDP) can be found on the CRA's website at www.cra.gc.ca/voluntarydisclosures.

Further information on convictions can also be found in the Media Room on the CRA website at www.cra.gc.ca/convictions.

Canada Revenue Agency

This a a reproduction copy of an official work that is published by the Government of Canada and that the reproduction has not been produced in affiliation with, or with the endorsement of the Government of Canada.

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