Canada Revenue Agency Audits and Tax Evasion

Canada Revenue Agency Audits and Tax Evasion

OTTAWA TAX EVASION LAWYER – The Canada Revenue Agency (CRA) is the organization in charge of examining your tax return, which includes income, expenses, investments, and other financial matters.

When a taxpayer doesn’t pay the full legally-required amount of income tax, as determined by their return, there’s a chance they will be audited or even investigated by the CRA – and perhaps accused of income tax evasion as a result.

The CRA employs assessors and investigators who review Canadians’ tax documentation. They are specially trained to spot overstated or understated entries. When they find a false entry, it can result in higher taxes, interest, and penalties.

An audit takes things one step further. The agency will call for an audit or investigation if they suspect that tax evasion – a criminal offence in Canada – has occurred. After the CRA finishes an investigation, the taxpayer in question may be charged.

The CRA decides who to audit based on a number of information sources:

  • Formulas and algorithms, developed to detect irregular or suspicious tax information.
  • The CRA has a “tip line,” where individuals can send in a tip alerting the agency to an instance of tax evasion, or related offences.
  • Occasionally, information on individuals’ financial circumstances will be sent to the CRA by whistleblowers, foreign authorities, or other sources.

Occasionally, disclosures from that third group can cause much concern for the CRA and potentially lead to many audits. That’s what we saw in the recent news story involving HSBC in Switzerland, and it is likely that many of the 1,785 Canadians whose names were transferred over may be audited or investigated by the CRA in connection with possible tax evasion activity.

In situations where the taxpayers’ money is held in foreign banks – especially with Swiss banks which are famous for their secrecy – that taxpayer may think that their financial information is safe from assessors and auditors.

Unfortunately, it’s not that simple – accountants are not protected by any professional privilege, and therefore must disclose client information if they are ordered to by the CRA or by the court.

If the CRA is auditing you, or you have concerns that an assessment may result in an audit, the first thing you should do is seek expert advice. A lawyer experienced in defending income tax evasion can help you proceed. What you should not do is attempt to deal with the accusations yourself, without appropriate legal advice and the aid of a professional.

If you have already been charged with tax evasion, it’s crucial that you hire a lawyer who is experienced with large-scale tax cases, and has a proven track record defending against accusations of white-collar crime. For more information, contact the criminal defence and tax evasion lawyers at Auger Hollingsworth by phone 613-233-4529 or by email [email protected]

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