Trio fined for obtaining fraudulent tax refunds

Burlington, Ontario, September 20, 2013 … The Canada Revenue Agency (CRA) announced today that Jonathan Sherwood, Joan Callon and Jeffrey Phinney, formerly of Burlington, Ontario, were sentenced on September 17, 2013, in the Ontario Court of Justice in Burlington, Ontario to a total fine of $43,432. Mr. Sherwood, Ms. Callon and Mr. Phinney pleaded guilty on November 30, 2012 to one count each under the Income Tax Act of willfully obtaining a refund to which the person is not entitled or obtaining or claiming a refund or credit under this Act in an amount that is greater than the amount to which the person or other person is entitled.

Ms. Callon was sentenced to a fine of $15,386, or 150% of the total refund she received from filing the false return. As well, Mr. Sherwood was fined $14,802, or 130% of his unwarranted refund, while Mr. Phinney was fined $13,244, or 100% of his unwarranted refund. The fines are in addition to any taxes owing from the reassessed returns. They have 18 months to pay the fines.

A CRA investigation revealed that Ms. Callon, Mr. Sherwood and Mr. Phinney each knowingly filed their 2006 income tax return which included fraudulent T4 information. The fraudulent information created a refund balance on each return. Mr. Sherwood responded to initial inquiries from the CRA about his return by providing a false T4 slip to support the amounts reported on his 2006 return. He initially told the CRA investigator that the employment earnings on the fraudulent T4 return was from consulting work. He then claimed that he obtained the fraudulent T4 slip as a kickback in compensation for renovation work he had completed. The unwarranted refund was deposited in a bank account which he shared with Ms. Callon, who also filed her 2006 return with fraudulent T4 information, creating a refund balance. Mr. Phinney allowed a third party to file his 2006 T1 return with false information, also obtained from a fraudulent T4 slip. He deposited the resulting refund into his bank account.

Taxpayers who claim false expenses, credits or rebates from the government are subject to serious consequences. They are liable not only for corrections to their tax returns and payment of the full amount of tax owing, but also to penalties and interest. In addition, if convicted of tax evasion, the court may fine them up to 200% of the tax evaded and sentence them for up to a five-year jail term.

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

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