cra investigations for tax evasion

The Tax Evasion is a Criminal Offence.

Criminal Investigations for tax evasion.

Under CRA Investigations? How Can we help?

Ex-CRA Criminal Investigator is here to Help

During the CRA Tax Audit, we provide assistance to help you to understand what to expect from CRA and how to navigate and mitigate the risk of potential investigation for tax evasion.

Suppose the CRA Audit division sends a referral to the Criminal Investigations Division. In that case, we will assess your file’s risk to be accepted for investigation and recommend a plan of action.

During the CRA investigations, we provide forensic assistance to your counsel. We review the qualitative and quantitative analysis, including the Net Worth Analysis, of the lead investigator to identify weak evidence and allegations that could be challenged successfully in the court.

Our principal, Boris Davidkov, is a formal CRA investigator who participated in several domestic and international tax fraud investigations. He is aware of the investigation process, and he knows how to reduce the risk and the consequences of the prosecution for tax evasion.

When dealing with a criminal investigation for tax evasion, it is crucial to retain a criminal lawyer with tax experience. If you don’t have a lawyer, we will refer you to a criminal lawyer with tax experience. We will assist your lawyer in preparing an effective defence strategy and reaching a favourable settlement. 

Rain of questions about tax investigations

What is Tax Evasion in Canada?

Tax evasion in Canada might occur when an individual or business intentionally ignores tax laws, does not report income, or inflates expenses.

The priority for the CRA Investigations are material domestic and international cases that meet one or more of the following criteria:

  • Tax evasion schemes with an international element;
  • Tax schemes promoters and tax protesters;
  • Financial crime cases with other enforcement agencies;
  • Significant tax evasion involving income tax or GST/HST tax evasion, including the underground economy.
What triggers CRA investigations for tax evasion

What could trigger CRA investigations in Canada?

 The Canada Revenue Agency uses various sources of information that could initiate criminal investigations.

One of the primary sources for internal referrals is the audit programs.

If your business is audited by one of the audit programs and the CRA’s auditor determines that your case involves tax evasion, it will be referred to the Criminal Investigation Program.
If the CRA Investigations division accepts the case, an investigator is assigned to conduct a criminal investigation.

The criminal investigation usually includes searches, interviews, interrogations, evidence collection, and other investigative methods.  

prosecutor shakes down and gets all money from the convict for tax evasion

What are the consequences of Prosecution for tax evasion?

Tax Evasion is a serious criminal offence. If a taxpayer cheats on his taxes, the consequences could be severe. Being convicted for Tax evasion can lead to court-imposed fines, jail time, and a criminal record that is very punitive. 

When a person is convicted of tax evasion, the full amount of taxes owing must be repaid, plus interest, and any civil penalties assessed by the CRA. Also, the courts may fine them up to 200% of the taxes evaded and impose a jail term of up to five years.

The Criminal investigations Process in Canada

The criminal Investigation Division (CID) of the CRA conducts criminal investigations regarding alleged violations of the Income Tax Act, the GST/HST Tax Actthe Criminal Code of Canada, and various money laundering statutes. The CID sends the results of these investigations to the Public Prosecution Service of Canada (PPSC) for the recommended prosecution of federal offences. 

Sources of the CRA Investigations Leads

The tax authority can initiate Criminal Investigations from the leads obtained from within the CRA when a tax auditor or another CRA officer detects possible tax fraud. Information is also routinely received from the public and other federal and provincial law enforcement agencies across the country. 

Preliminary Analysis and Investigation Approvals

A Criminal Investigator is assigned to analyze and evaluate the preliminary information received to determine if a criminal tax offence or other financial crime may have occurred. The Lead Investigator decides to recommend or to decline a full-scale investigation. If the manager and the head office approve the recommendation, the Investigator initiates a “full-scale criminal investigation.”

Conducting a Criminal Investigation

Once the Lead Investigator receives the approval, the CID starts a full-scale investigation. The Lead Investigator obtains the facts and evidence needed to establish the elements of tax evasion and tax fraud. Various investigative techniques are used to obtain evidence, including interviews of third party witnesses, conducting surveillance, executing search warrants, subpoenaing bank records, reviewing and analyzing financial data.

The criminal Investigation Division works closely with The Public Prosecution Service of Canada (PPSC) during the criminal investigation. PPSC consults and ensures all legal aspects of the investigation and prosecution recommendation are correctly addressed. 

Prosecution for Tax Offence Recommendations 

After all the evidence is gathered and analyzed, the CID determines if the evidence does substantiate criminal activity. If the evidence is not sufficient, the investigation is ‘aborted.’  

If the evidence is sufficient, the lead investigator proceeds with preparing a written report detailing the findings of a violation of the law and recommending prosecution.

If CRA Investigations recommends prosecution, the report and the case materials are forwarded to the PPSC office for review.

PPSC may determine that evidence does not substantiate criminal charges and to abort the investigation.

Prosecution for Tax Offence in Canada

If the PPSC Canada accepts the prosecution’s referral, the lead investigator will be asked by the prosecutors to prepare and participate in the trial. However, once PPSC accepts the prosecution report, the crown lawyers manage the investigation.

Conviction

CRA Investigations and the prosecution’s ultimate goal is to obtain a conviction – either by a guilty verdict or plea.

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