KITCHENER, ONTARIO--(Marketwired - April 24, 2014) - The Canada Revenue Agency (CRA) announced today that on April 17, 2014, Simon Poladian and S&V Service Centres Ltd. (S&V), both of Cambridge, Ontario, pleaded guilty, in the Ontario Court of Justice in Kitchener, Ontario, to a total of two counts of income tax evasion and one count of Goods and Services/Harmonized Sales Tax (GST/HST) evasion. Poladian and S&V were sentenced to fines totaling $480,000, representing 200% of the personal and corporate taxes evaded and 100% of the GST/HST evaded.
A CRA investigation revealed that Poladian, an officer of S&V, worked with one of the corporation's suppliers in order to evade the payment of taxes. The supplier would inflate, by approximately 50%, the cost of specialized racking systems installed on delivery trucks and invoice S&V accordingly. Poladian would then receive a kickback from the supplier equal to the inflated amount. Poladian failed to report this additional income of $221,350, on his 2004, 2005, 2006 and 2008 personal income tax returns, thereby evading $64,192 in federal taxes. He also expensed the full amount of the inflated invoices on the corporation's 2004 to 2008 income tax returns, thereby reducing the taxable income for S&V. This resulted in the evasion of $154,762 in corporate federal taxes.
The investigation also revealed that Poladian, on behalf of S&V, improperly claimed the Input Tax Credits (ITC) related to the inflated invoices, thereby evading $42,219 in GST/HST.
The preceding information was obtained from the court records.
When taxpayers are convicted of income tax and GST evasion, they still must 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% 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. More information on the Voluntary Disclosures Program (VDP) can be found on the CRA's Web site at www.cra.gc.ca/voluntarydisclosures.
Further information on convictions can also be found in the Media Room on the CRA website at www.cra.gc.ca/convictions