Mark Feldstein & Associates

On June 11, 2010 Dominic and Pasqualina Commisso appeared in the Ontario Court of Justice in Brampton to face a total of nine counts of failure to file tax returns.  Five of the nine counts were in reference to personal tax returns.  Dominic Commisso had not filed personal income tax returns for the years 2006 to 2008.  His wife, Pasqualina Commisso,  had not filed returns for the 2007 and 2008 taxation years.  The resulting fine imposed by the Court was $1,000 per count, for a total fine of $5,000.  The remaining four counts of failure to file applied to the corporate tax returns of Joseph Anthony’s Riviera Hair Salon Inc., of which Mr. Commisso is a Director.  Corporate tax returns for the taxation years 2006 to 2008 inclusive, as well as a quarterly GST return for the period of May 1, 2006 to July 31, 2006, were not filed. Subsequent to charges being laid by the Canada Revenue Agency (CRA) all of the tax returns in question were filed.

Upon conviction of a charge of failure to file tax returns, the taxpayer must file all outstanding returns and pay all court fines, taxes owing and applicable interest, and any civil penalties as assessed by the Canada Revenue Agency.

The Voluntary Disclosures Program gives the taxpayer an advantage.  If delinquent tax returns are filed and/or unreported income is disclosed prior to contact by the CRA, it may be that only the taxes owing and applicable interest will have to be paid.  In this manner, CRA penalties and prosecution can be avoided.  However, it is critical that the outstanding returns be filed and the undisclosed income be reported prior to contact by the CRA.  Once the CRA has initiated an action or investigation, eligibility for the Voluntary Disclosures Program is no longer available.

Mark Feldstein Personal Taxes, Tax Convictions Brampton, failure to file, GST

As a result of a charge of tax evasion, Mr. Michael James Savage, of Port Coquitlam, British Columbia was fined $40,000 by the Ontario Court of Justice in Toronto on June 9, 2010.  Mr. Savage pleaded guilty to the charge.  His fine represents 88% of the federal income taxes he evaded in 2000 and 2001.   The court gave Mr. Savage one year to pay the fine.

An investigation by Canada Revenue Agency (CRA) revealed that Mr. Savage, the founder and President of Savage Telecom, as well as one of three shareholders in the firm, transferred money from the company to pay for personal expenses.  Substantial amounts were transferred:  $74,673 in 2000 and $88,871 in 2001.  These amounts were not reported by Mr. Savage on income tax returns and as a result a total of $45,074 in federal taxes were evaded in the 2000 and 2001 taxation years.  It was discovered that Savage made use of the bank accounts of his sister and his girlfriend in his attempt to evade taxes on the transferred funds.

Had Mr. Savage been aware of the Voluntary Disclosures Program, he would have had the opportunity to declare the unreported income and could have avoided prosecution.  Under this Program, undisclosed income can be reported and outstanding tax returns can be filed, as long as the taxpayer has not been contacted by the CRA and/or no investigation has been undertaken by the CRA.  If there is full disclosure of undisclosed income, and delinquent returns are filed under the Program, it is possible that the taxpayer may only have to pay taxes and interest owing.  However, eligibility for this Program disappears as soon as the CRA contacts the taxpayer.

Mark Feldstein Corporate Taxes, Personal Taxes, Tax Convictions Tax Evasion

In the Ontario Court of Justice in Kitchener,  Bolton Dental Manufacturing Inc. and Mr. Robert Bolton, President and sole shareholder of the company, pleaded guilty to tax evasion.  Mr. Bolton’s non-deductible personal expenses totaling $421,890 were claimed by the corporation on its 2003 and 2004 tax returns.    By claiming these disallowed expenses the corporation evaded paying federal income tax amount of $76,268.  There was also an evasion of $24,717 in GST, as the corporation also claimed false GST input tax credits relating to the non-deductible expenses they had claimed.  While the corporation was fined $100,985, Bolton was fined $129,475.  The amount of Bolton’s fine is 100% of the federal income taxes he temporarily evaded by not reporting income of $446,466 on his 2003 and 2004 personal tax returns.

A routine audit by the Canada Revenue Agency (CRA) revealed Mr. Bolton made a number of unsupported cash withdrawals  from the corporation bank account that were then expensed by the corporation.  Mr. Bolton’s personal expenses, including legal fees, maid services, landscaping and insurance expenses had been paid for and expensed by the company.  Mr. Bolton personally issued cheques to pay for the expenses and then directed the company controller to attribute the expenses to various accounts, including numerous expense accounts, capital assets accounts, his personal dividend account and his personal loan account.  As much as 40% of the credit card charges made on three corporate credit cards were personal expenses of Bolton.   These expenses were subsequently attributed to the corporation.  When the Enforcement Division  of the CRA determined that the shareholders appropriations received by Mr. Bolton  were not reported as income on his 2003 and 2004 personal income tax returns and had been expensed through the company a charge of tax evasion was laid.

In order to avoid prosecution and/or penalties the taxpayer can file outstanding tax returns and report previously undisclosed income through the CRA’s Voluntary Disclosures Program.  If the CRA has not initiated any action or investigation, outstanding tax returns can be filed and unreported income can be declared.  The taxpayer may be allowed to pay the taxes and interest owing without penalty or prosecution.

Mark Feldstein Corporate Taxes, Personal Taxes, Tax Convictions Kitchener, Tax Evasion

Subsequent to a plea of guilty, the Ontario Court of Justice in Timmins fined Mr. Thomas Alford of Richmond Hill $3,000 for failing to file his 2004 to 2006 personal income tax returns, $1,000 for each count of failure to file.

Following a  conviction of failure to file, all taxes, interest and penalties assessed the Canada Revenue Agency (CRA) must be paid and the delinquent returns must be filed.

The taxpayer can avoid penalties and/or charges being laid by the CRA by filing outstanding tax returns and claiming undisclosed income under the Voluntary Disclosures Program.  Under this Program, the only requirement for eligibility is that the taxpayer file the returns and claim the undisclosed income prior to being contacted by the CRA.  By reporting under the Voluntary Disclosures Program it is possible that only the taxes and interest owing will have to be paid.  However, if the CRA has initiated action or an investigation the taxpayer is not longer entitled to enter the Program and penalties and/or prosecution will follow.

Mark Feldstein Personal Taxes Richmond Hill, Timmins, Unclaimed Income

Mr. Gary Felder of London, Ontario, self employed in the construction industry, pleaded guilty to three counts of failing to file income tax and GST returns.  The Ontario Court of Justice in London imposed a fine of $3,000.  Mr. Felder had neglected to file an individual tax return for the 2005 taxation year as well as two GST returns related to his business.  Following the laying of charges by Canada Revenue Agency (CRA), Mr. Felder filed the outstanding tax returns.

Upon conviction of failure to file tax and/or GST returns the individual/corporation must file the delinquent returns, pay the taxes and interest owing, as well as any penalties determined by the CRA.

To avoid penalties and/or prosecution by the CRA, delinquent returns must be filed and undisclosed income must be reported under the Voluntary Disclosures Program prior to action or investigation by the CRA.  Eligibility for the Voluntary Disclosures Program is dependent on the taxpayer taking action before they are contacted by the CRA.  In taking pre-emptive action, the taxpayer may only be required to pay the taxes and interest owing.

Mark Feldstein Personal Taxes, Tax Convictions London, Tax Evasion, Unclaimed Income

Dr. Jack Klundert, an optometrist in Windsor, Ontario was found guilty of one count of tax evasion in the Superior Court of Justice in Windsor on May 20th , 2010.  At the trial the jury heard that Dr. Klundert reported his professional income as nil on his 1993, 1994 and 1997 personal tax returns, when in fact he received $1.4 million in professional income.  Federal income taxes amounting to $348,000 were evaded by his failure to report this income.  Returns had not been filed for the 1995 and 1996 taxation years. 

Dr. Klundert maintained that he had a moral obligation to challenge the validity of the Income Tax Act.  His argument was that the government does not have the authority to collect income tax.  Fortunately for Dr. Klundert, he was in a financial position to take his challenge to court.    On two previous occasions Dr. Klundert was acquitted for the same offence.    Unfortunately, his third attempt was not successful.   Following his conviction Dr. Klundert  was fined $500,000 and given a one year jail sentence.

Failing to comply with the Income Tax Act has serious consequences.  As well as interest and penalty charges, there is the possibility of garnishment of wages and/or bank accounts, seizure of assets, criminal prosecution and court fines.

Upon conviction of tax evasion, taxpayers have to pay all taxes owing, plus interest and any penalties as assessed by the Canada Revenue Agency (CRA).  Where the case is one of gross negligence, the CRA can impose a penalty of up to 50% of the unpaid tax and improperly claimed benefit.  On indictment the court may fine the taxpayer  100% to 200% of the tax evaded and impose a jail sentence of  up to five years.

The Voluntary Disclosures Program allows individuals or corporations who are delinquent in filing tax returns or who have not reported all of their income to do so without the threat of penalty or prosecution, provided they take action prior to any investigation initiated against them by the CRA.  By voluntarily disclosing unreported income and filing outstanding tax returns the taxpayer may only be required to pay the taxes owing, plus interest.

Mark Feldstein Personal Taxes, Tax Convictions criminal charges, Tax Evasion, tax penalties, Unclaimed Income, Voluntary Disclosure, Windsor

Mr. Daniel Brown pleaded guilty to two counts of tax evasion in the Ontario Court of Justice in Kitchener this past May.  As well as paying the outstanding taxes, interest and any civil penalties determined by the Canada Revenue Agency (CRA), Mr. Brown must now also pay a fine in the amount of $27,010.

The failure to report income in the amount of $226,185 on his personal income tax returns for the 2005 and 2006 taxation years was deliberate.  The federal income tax Mr. Brown tried to avoid paying amounted to $23,800.  There was also an attempt to avoid paying $15,034 in GST for the same period.

The tax evasion was discovered when the CRA carried out a routine audit of an electrical contractor based in Kitchener.  The electrical contractor received 308 invoices from Brown and paid him by money order, bank draft or cash.  In spite of the fact that the invoices included GST of $15,034, Brown did not file GST returns for 2005 and 2006.

While a conviction of tax evasion carries a fine, the taxpayer must still pay the taxes owing, plus interest and any penalties assessed by the CRA.  The CRA is allowed to assess a penalty of up to 50% of the unpaid tax or the improperly claimed benefit in cases of gross negligence.  A fine of 50% to 200% of the tax evaded can be imposed by the Court on summary conviction.  The court may also sentence those  convicted of tax evasion to a jail term of up to two years.

The Voluntary Disclosures Program allows individuals and/or corporations who have outstanding tax returns or who have neglected to report all of their income to correct their tax situation.  Provided the returns are filed and the income is reported prior to the CRA initiating action, the taxpayer will not be penalized or prosecuted.  It is possible that the taxpayer will only be required to pay the taxes owing, plus interest.

Mark Feldstein Corporate Taxes, Personal Taxes Tax Evasion, tax penalties, Voluntary Disclosure

In May 2009 the Canada Revenue Agency (CRA) laid six charges against Gordon Jackson:  two charges of tax evasion, two charges of obtaining income tax refunds to which he was not entitled and two charges of obtaining benefits to which he was not entitled.   On May 5, 2010 Mr. Jackson pleaded guilty to all charges in the Ontario Court of Justice in London, Ontario.  He was fined a total of $81,288 and sentenced to time served.

By failing to report commission income of $259,754 on his 2003 and 2004 income tax returns Mr. Jackson  evaded federal income taxes in the amount of $72,395.  He also received tax refunds of $5,260 and Canada Child Tax Benefit payments of $3,633. The commission income was earned when Mr. Jackson was employed by a technologies company in British Columbia.   He was fully aware that it was necessary to report all commission income and that he was required to pay all taxes on the income.

In November  of 2009 Mr. Jackson was found to be dwelling in Vancouver.  Through the Vancouver Police Department’s Con Air Program Mr. Jackson was brought back to London, Ontario on November 28, 2009.  He remained in custody until his court date.

To avoid penalty or prosecution by the CRA individuals and corporations can file tax returns from previous years and/or report previously undisclosed income under the Voluntary Disclosures Program.  Provided that the taxpayer/corporation files outstanding returns and reports undisclosed income prior to the CRA initiating action or investigation, there will be no penalty or prospect of prosecution and the taxpayer may only be required to pay taxes owing, plus interest.

Mark Feldstein Personal Taxes, Tax Convictions Tax Evasion, Voluntary Disclosure

Marie Philp appeared in the Ontario Court of Justice in Owen Sound, to answer to charges of failure to file tax returns. She was charged with four counts of failure to file and was fined $1,000 for each count, resulting in a total fine of $4,000. Upon charges being laid Ms. Philp filed the outstanding tax returns.

Upon conviction of a charge of failure to file tax returns the taxpayer is required to file all outstanding returns, pay the fines imposed, the taxes and interest owing and any civil penalties determined by the Canada Revenue Agency (CRA).

There is a program available wherein a taxpayer can avoid penalty or prosecution by the CRA. Under the Voluntary Disclosures Program an individual or corporation can file outstanding tax returns and/or report previously unreported income and may only have to pay the taxes owing, plus interest. However, the returns must be filed and the income reported prior to any action or investigation by the CRA.

Mark Feldstein Personal Taxes, Tax Convictions tax penalties, Unclaimed Income

As a result of failing to file his 2007 personal income tax return and two GST returns for his business, Bill Swan of Sarnia, Ontario faced three counts of failure to file. He pleaded guilty to all three counts and was fined a total of $3,000. Consequently he must pay taxes and interest owed, any civil penalties assessed by the Canada Revenue Agency (CRA) as well as the $3,000 fine. Subsequent to charges being laid Mr. Swan filed all outstanding tax returns.

The CRA’s Voluntary Disclosure Program allows individuals to file outstanding tax returns and/or report any income not previously reported without penalty or being prosecuted, if the taxpayer makes a full disclosure prior to the start of any action or investigation by the Agency. By filing under the Voluntary Disclosure Program the taxpayer may only be responsible for taxes owing, plus interest.

Mark Feldstein Corporate Taxes, Personal Taxes, Tax Convictions CRA, Goods & Services Tax, GST, Sarnia, Voluntary Disclosure