Tax evasion leads to jail time

Man found guilty July 18, 2012. The court granted Isaac three years to pay the fines

A Vernon man has been sentenced to jail time and given a hefty fine for tax evasion.

The Canada Revenue Agency says Harold David Isaac was sentenced to 12 months in jail and an $84,030 fine for income tax evasion, six months in jail and a $37,401 fine for goods and services tax (GST) evasion and two months in jail and a $636 fine for participation in receipt of excess GST tax credits.

The jail time is to be served concurrently. Isaac was found guilty July 18, 2012. The court granted Isaac three years to pay the fines.

The CRA said, in a press release, that its investigation revealed that Isaac failed to report $821,732 in taxable income for the 2004 to 2008 taxation years, and as a result evaded $168,061 in federal income tax payable.

By understating his net income, $4,706 in GST credits were paid to his spouse, to which she was not entitled. In addition, Isaac also failed to collect and remit $74,802 in GST.

Isaac claims that he is a “natural person” and not subject to taxation and not required to collect GST on his electrical contracting revenue.

The courts have consistently rejected this argument and in Isaac’s case found him guilty on all counts. The preceding information was obtained by the CRA from court records.

The CRA said individuals who plan to use the tactics of tax protesters should know this could have significant personal and financial consequences, including fines, imprisonment, or seizure of goods.

When taxpayers are convicted of income tax evasion, they must still repay the full amount of taxes owing, plus interest and any civil penalties that may be assessed by the CRA.

In addition, the court may fine them up to 200 per cent 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.

Information on the Voluntary Disclosures Program can be found at www.cra.gc.ca/voluntarydisclosures.