What is tax evasion and tax fraud:

• falsifying records and claims
• purposely not reporting income
• inflating expenses
• claiming a fraudulent refund or benefit

Tax evasion is an offence under section 239 of the Income Tax Act and section 327 of the Excise Tax Act.

Watch the following series of videos to help you distinguish the different forms of tax evasion:

Offshore non-compliance

• Criminal Investigations Program – Offshore non-compliance - YouTube

Tax protesters

• Criminal Investigations Program - Tax protesters - YouTube

Promoters of tax evasion schemes

• Criminal Investigations Program – Promoters of tax evasion schemes - YouTube

Tax fraud is an offence under section 380 of the Criminal Code. Like tax evasion, tax fraud involves using deceit, falsehoods and any other fraudulent means to defraud a person or the public of money or anything else of value.

Combatting tax evasion, tax fraud, and other financial crimes is important for the protection of Canada’s tax base. The quality of life that all Canadians enjoy is supported by the taxes we pay. Revenues collected help to fund programs and services such as health care, child care, education, and infrastructure projects that benefit all Canadians.

Consequences of committing a financial crime

Whether you’re cheating on your taxes, or hiding assets or money in foreign jurisdictions, the consequences are serious.

When convicted of tax evasion:

• you must still pay the full amount of taxes owing, plus interest and any civil penalties assessed by the CRA
• you may be fined up to 200% of the taxes evaded
• you may be imposed a jail term of up to five years

Being convicted of tax fraud carries a sentence of up to 14 years in prison.

Other consequences include fingerprinting and foreign-travel restrictions. To learn more about the consequences of evading your taxes, watch the video called Criminal Investigations Program – Tax evasion.

Enforcement notifications

Criminal convictions and other high-profile enforcement actions are publicized through enforcement notifications.

The CRA has set up a free subscription service to increase Canadian taxpayers’ awareness of enforcement actions and warn them about potential tax schemes.

Subscribers will receive notifications about CRA enforcement activities, which may include information on:

• the execution of searches;
• the laying of criminal charges;
• convictions; and
• sentencing.

For more information on the CRA’s enforcement actions, and to subscribe to this service, go to enforcement notifications.

The difference between an audit and a criminal investigation

An audit is the verification of information provided by taxpayers to the CRA.

• Generally speaking, when an audit is conducted, it is to determine a tax liability and taxpayers may be ordered to pay sums of money to the Receiver General for Canada to correct their tax affairs
• Audits are considered a civil matter, and they relate to possible tax avoidance

In a criminal investigation, the CRA investigators gather evidence to determine whether there has been tax evasion, tax fraud and/or other serious violations of tax laws. Once investigations have been carried out, the CRA recommend cases to the PPSC where it believes that there is a likelihood of a prosecution. In order for charges to be considered, the PPSC will evaluate whether the laying of a charge is in the public interest, and whether there is a high likelihood of a conviction.

During the prosecution stage, the Crown has to show that a taxpayer wilfully contravened Canadian tax laws in order to evade taxes. The case must therefore meet the beyond a reasonable doubt standard to secure a conviction; if convicted of tax evasion and/or tax fraud, a taxpayer may face court-ordered fines and/or imprisonment.

How you can help

Send information to the Offshore Tax Informant Program

Are you aware of a situation of international tax evasion and aggressive tax avoidance? Do you have any information on this?

Report offshore tax cheating

Send information to the National Leads Centre

Do you have information about suspected tax evasion and tax fraud that you want to anonymously report?

Report a lead on suspected tax or benefit cheating in Canada