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CRA fines residential contractor for tax evasion; are YOU clean?


August 27, 2013
By Anthony Capkun

August 27, 2013 – The Canada Revenue Agency (CRA) announced Ronald Foster of Trout Creek, Ont., pleaded guilty to two counts of tax evasion. He was fined $61,214, representing 80% of the taxes evaded and unwarranted benefits received, and was ordered to complete 120 hours of community service.

Foster was also ordered to file all tax-related income and information returns on time for the next two years.

Foster, the sole proprietor of a residential construction business called Control One Contracting, failed to report business income totalling $496,254 on his 2007 to 2010 personal income tax returns, which resulted in the evasion of $48,782 in federal taxes. Also, as a result of not reporting all of his business income, Foster and his family received a total of $27,736 in Canada Child Tax Benefits and the GST/HST credits to which they were not entitled.

“Tax evasion takes money away from the services that benefit all Canadians,” said Vince Pranjivan, deputy assistant commissioner of the Ontario Region of the Canada Revenue Agency (CRA).

A CRA investigation revealed Foster reported large net business losses for the 2007 and 2009 taxation years, and lower business profits for 2008 and 2010. Furthermore, he did this by depositing business income into a personal bank account; on occasion asking customers to pay in cash; or cashing cheques, received from customers, without first depositing them into his bank account.

The court also heard Foster had a poor compliance history with CRA in that he did not keep proper books and records, and failed to file subcontractor payment, payroll and GST/HST documentation as required by law.

When taxpayers are convicted of income tax and/or GST/HST evasion, they still must repay the full amount of taxes owing, plus interest and any civil penalties that may be assessed by CRA. In addition, the court may fine them up to 200% of the taxes evaded and impose a jail term of up to five years.

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. CLICK HERE for more information on the Voluntary Disclosures Program (VDP).