Canada Revenue Agency

Canada Revenue Agency

February 02, 2010 17:12 ET

Ottawa Man's Car Flipping Scheme Lands Him in Jail for Tax Evasion

OTTAWA, ONTARIO--(Marketwire - Feb. 2, 2010) - Eric Stiles, of Ottawa, pleaded guilty in Ontario Court of Justice in Ottawa on January 29, 2010 to one count of GST evasion. He was sentenced to three years in jail and fined $657,000, which represents 100% of the taxes evaded. Stiles was given six years to pay the fine. The fine is in addition to any taxes and interest owed, as well as any civil penalties that may be assessed by the Canada Revenue Agency (CRA).

A CRA investigation revealed that Stiles set up and orchestrated a scheme where fictitious vehicle transactions were created between vendors and purchasers, in order to benefit from the difference in tax rates between provinces. Through his corporations, Stiles collected HST at 15% on the sales made in New Brunswick (NB) and Nova Scotia (NS) and paid GST at 7% on the purchases in Quebec where the vehicles were allegedly shipped. Stiles' corporations never filed any GST/HST returns and he did not remit the net tax he collected.

These transactions occurred mostly during the first seven months of 2006. They involved four legitimate vehicle dealerships from NB and NS and over 300 fictitious vehicle transactions that have been recorded in their books and records, bank accounts, and GST/HST returns. These transactions represent total sales of $9.6 million and net GST/HST refunds of $657,000 before commissions. Eric Stiles paid the dealerships over $200,000 in commissions to participate in these vehicle transactions. In addition, he paid fees to other participants as well as incurring other business expenses such as vehicle registration fees and mailbox rental fees. Stiles profited from the difference.

In 2006, Stiles obtained replacement vehicle registration certificates from Ontario for vehicle identification numbers (VINs) from vehicles that had been exported from Canada between 2002 and 2004. Through his corporations, which operated under the business names Capital Remarketing and Atlantic Fleet Solutions, these vehicles were sold to vehicle dealerships in NB and NS and then repurchased by Stiles in the Province of Quebec. Stiles orchestrated all actions for the sole purpose of giving the illusion that "real" vehicle transactions occurred when, in fact, only paper trail transactions were created to obtain false GST/HST refunds.

"Tax evasion costs all of us," said Euclide Michaud, Assistant Director of Enforcement at the Ottawa Tax Services Office of the Canada Revenue Agency. "The job of our investigators and auditors is to make sure that all Canadians pay the tax they owe."

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 Agency starts any action or investigation against them. These individuals may only have to pay the taxes owing, plus interest. More information on the Voluntary Disclosures Program (VDP) can be found on the CRA's website at www.cra.gc.ca/voluntarydisclosures

The Agency seeks publicity on convictions to maintain public confidence in the integrity of the self-assessment system and to increase compliance with the law through the deterrent effect of media coverage.

When individuals or corporations are convicted of tax evasion, they have to pay the full amount of tax owing, plus interest, and any penalties the CRA assesses. In cases of gross negligence, the Income Tax Act and Excise Tax Act allow the CRA to assess a penalty of up to 50% of the unpaid tax or the improperly claimed benefit. In addition, the court may, on conviction by way of indictment, fine them up to 200% of the tax evaded and sentence them up to a five-year jail term.

The information in this news release was obtained from the court records.

Further information on convictions can also be found in the Media Room on the CRA website at www.cra.gc.ca/convictions/

Contact Information

  • Canada Revenue Agency
    Rebecca Merrett
    613-961-2081