Canada Revenue Agency - Toronto Tax Services Office

Canada Revenue Agency - Toronto Tax Services Office

January 11, 2005 14:45 ET

Canada Revenue Agency: Tax Evasion Attempt Nets $211,569 Fine


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: CANADA REVENUE AGENCY

JANUARY 11, 2005 - 14:45 ET

Canada Revenue Agency: Tax Evasion Attempt Nets
$211,569 Fine

WINDSOR, ONTARIO--(CCNMatthews - Jan. 11, 2005) - An Essex County couple
and their company were fined a total of $211,569 today in Ontario Court
of Justice after being found guilty of tax evasion on October 29, 2004.

Paul Klinec, age 57, of Harrow, was fined $53,379 for trying to evade
$53,379 in federal income taxes by under-reporting his income by
$183,806 on his 1997 to 2000 personal income tax returns. His spouse
Branka Klinec, age 51, of Kingsville, was fined $29,895 for trying to
evade $29,895 in federal income taxes by under-reporting her income by
$103,086 over the same four-year period.

Klinec Electric Services and Manufacturing Limited, a Windsor company of
which Mr. and Mrs. Klinec are both directors, was fined $33,527 for
trying to evade $33,527 in corporate income taxes by claiming false
business expenses over a three-year period. The company was fined an
additional $9,238 for failing to remit goods and services tax (GST) in
the amount of $9,238 for various quarterly periods from 1998 to 2000,
and failing to report rental income received totaling $54,600. As
Directors of the company, Mr. And Mrs. Klinec were also fined an
additional $42,765 each. The fines must be paid within 12 months.

During the two week trial that concluded October 25, 2004, the court
heard that Mr. & Mrs. Klinec, in their capacity as directors of the
corporation, claimed personal expenses relating to home and property
renovations as business expenses. They then failed to report this income
as shareholder benefits received on their personal income tax returns.
The Canada Revenue Agency investigation also revealed that both Mr.
Klinec and the corporation failed to report income received from a
rental operation.

"The Canada Revenue Agency is determined to hold tax evaders accountable
for their actions," said the Minister of National Revenue, John
McCallum. "Canadian taxpayers must be confident that the tax system is
fair."

When individuals or corporations are convicted of tax evasion, in
addition to any fines imposed by the court, they are still obligated to
pay the full amount of taxes owing, plus interest, as well as any
penalties that may be assessed by the CRA. On summary conviction, a
person is liable to a maximum penalty of a fine of 200% of the income
tax evaded and a two-year jail term.

Individuals 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 will not be penalized or prosecuted if they make a
full disclosure before the CRA starts any action or investigation
against them. These individuals will only have to pay the taxes owing,
plus interest. To take advantage of the voluntary disclosure policy,
clients served by the Windsor Tax Services Office can call (519)
973-7193, or visit the CRA website at www.cra.gc.ca for more information.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Canada Revenue Agency
    Media information: Peter Delis
    Manager of Communications
    (416) 512-4135