From: canadarevenue.agency@hotmail.com   
      
   Why tax cheats in Canada are rarely jailed: CRA SOTW   
      
   CRA has broad investigative powers but is limited in how it uses them in   
   criminal investigations   
      
   By Sean Davidson, CBC News Posted: Mar 02, 2015 5:00 AM ET   
      
   If you're going to get caught cheating on your taxes, get caught in Canada.    
      
   You might have to repay every red, withheld cent -- plus fines and interest.   
   But once the Canada Revenue Agency is done with you, there's a good chance you   
   won't also be in prison.   
      
   "The government, basically, just wants its money back," says Toronto-area   
   accountant Darryl Hayashi. "They want their taxes, their penalties and their   
   interest. Bottom line."   
      
   And in most cases, they can get that money back through civil proceedings in   
   Tax Court without having to lay criminal charges, which are possible under the   
   Income Tax Act but which the CRA typically only pursues in especially   
   egregious cases or against    
   tax protesters, who try to make spurious legal arguments that the federal   
   government doesn't have the right to collect any tax, from anyone.    
      
   More than 1,800 Canadians were caught up in the recent tax evasion scandal   
   involving the British bank HSBC's Swiss subsidiary. The CRA says it has   
   received 264 voluntary disclosures related to HSBC, which resulted in the   
   recovery of $28.4 million in    
   unpaid taxes. (Alastair Grant/Associated Press)   
   A conviction for tax evasion -- which includes not filing returns, hiding   
   income or making bogus claims -- can result in fines and up to five years in   
   prison under the Income Tax Act or the Excise Tax Act. The penalty for fraud,   
   which falls under the    
   Criminal Code, goes up to 14 years.   
      
   The CRA convicted 128 people of tax evasion or tax fraud in fiscal year 2013   
   but only 29 of them, or 23 per cent, were sentenced to jail time. The average   
   sentence in those cases was 22 months.    
   The cases involved a total of $32.6 million in lost tax revenue, the tax   
   agency said, and led to an average fine of a little more than $777,000.   
      
   That same year, the U.S. had 3,311 tax-related criminal convictions, according   
   to the Internal Revenue Service. That's roughly 25 times more convictions in a   
   country with just nine times the population. And just over 80 per cent of   
   those cases led to    
   jail time.   
      
   In the 2014 fiscal year, the CRA convicted fewer people -- 98 -- than the   
   previous year, but a higher proportion -- 26 per cent -- went to jail,   
   averaging sentences of 25 months each.   
      
   Crackdowns in Canada, U.K.   
   The British are moving in a similar direction to the U.S. when it comes to   
   coming down hard on tax evaders. Investigators at the U.K. tax agency, known   
   as Her Majesty's Revenue and Customs, are midway through a five-year campaign   
   to increase tax-related    
   criminal prosecutions fivefold.   
      
   Ottawa has also made efforts to crack down on tax cheats and last year opened   
   a tip line aimed at finding unreported revenue hidden by Canadians in other   
   countries. Informants are offered a percentage of any recovered taxes as a   
   reward -- if the amount    
   owing exceeds $100,000, excluding interest and penalties.   
      
   The CRA says it heard from just over 600 would-be informants during the   
   Offshore Tax Informant Program's first 12 months and that more than 100 of   
   those cases are getting a closer look.   
      
   'Everything is documented'   
   Lawyers say it's harder to convict tax cheats in Canada than in some other   
   jurisdictions in part because of how the CRA conducts its investigations and   
   audits.   
   'CRA's powers of investigation are practically limitless.'- Adam Aptowitzer,   
   tax attorney   
      
   The CRA has broad powers to investigate suspected tax cheats. In the process   
   of conducting a civil audit to assess how much tax a person really owes, the   
   tax agency can call up bank records, freeze accounts, compel the release of   
   business, payroll and    
   other records, and root through land registries and other government data.   
      
   "You'd be surprised how much can be evidenced from documents, and everything   
   is documented somewhere," says Adam Aptowitzer, a tax attorney in Ottawa.   
      
   "And CRA's powers of investigation are practically limitless. They can request   
   any document for anything necessary for an audit -- not just about what was   
   reported but also for what wasn't reported."   
      
   The CRA has broad investigative powers when it comes to sorting through your   
   records and finding out how much you owe but that doesn't mean it can use   
   those powers to pursue you criminally. (Canada Revenue Agency)   
      
   Hayashi agrees and says he makes no bones about how far the CRA's reach   
   extends when he advises clients. He recalls one meeting with two potential   
   clients -- brothers who, it emerged, were hiding a house-flipping business.   
   The CRA had sent them a letter    
   indicating it knew about a $1-million property of theirs and asking for   
   information on any other properties they had.   
      
   There were eight others. The brothers asked Hayashi if he thought the CRA knew   
   about them.   
   "I'm like, 'Are you kidding me? They know about everything,'" he said.   
   "They're giving you a chance to show your credibility."   
      
   Got a warrant?   
   But the CRA faces a hurdle if it wants to use any of that information to   
   pursue a criminal case, which must be made within the limits of the Charter of   
   Rights and Freedoms and gives the alleged tax cheat protection against   
   self-incrimination.   
      
   The Supreme Court of Canada ruled in 2002 that "there must be some measure of   
   separation between the audit and investigative functions" of the CRA. When the   
   purpose of an investigation is to determine criminal liability, an   
   "adversarial relationship"    
   between the state and the taxpayer exists because the individual's liberty is   
   at stake, the court said, and hence, charter protections apply and prohibit   
   tax officials from relying on their "powerful inspection and requirement   
   tools."    
      
   That means the CRA must often go back and get a warrant to obtain the very   
   information it had already uncovered in the course of an audit.   
      
   "The cases, or case law, on the issue of what constitutes unconstitutional   
   self-incrimination versus proper use of CRA audit and administrative powers   
   has bounced back and forth for years," says Toronto-based tax lawyer Jonathan   
   Garbutt. "Sometimes, the    
   courts have found the CRA's behaviour unconstitutional; sometimes, they have   
   allowed criminal tax evasion charges to go forward."   
      
      
   [continued in next message]   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)