Canada Revenue Agency

Canada Revenue Agency

January 20, 2012 16:32 ET

CEO Sentenced to Fine and Jail for Tax Evasion

TORONTO, ONTARIO--(Marketwire - Jan. 20, 2012) - The Canada Revenue Agency (CRA) announced today that on January 16, 2012, Mohammed Shahid, of Woodbridge, Ontario, pleaded guilty to five counts of tax evasion in the Ontario Court of Justice in Toronto. He was fined $189,534, which represents 100% of the federal taxes that he attempted to evade. Mr. Shahid was also sentenced to 60 days in jail, to be served on weekends. Furthermore Ultra-Form Mfg. Co. Ltd. (Ultra-Form), of which Mr. Shahid was a majority shareholder, pleaded guilty to eleven counts of corporate tax and Goods and Services tax evasion and was fined $105,649, also representing 100% of the federal taxes and Goods and Services tax (GST) evaded.

Mr. Shahid is the chief executive officer of Ultra-Form, a manufacturer of custom vehicle parts operating in Toronto. He was also the controlling mind of Power Consulting Group (PCG), a sole proprietorship shell company. PCG invoiced Ultra-Form for commissions that were found by the CRA to be non-qualifying expenses. As a result, Ultra-Form evaded the payment of $76,268 of federal corporate tax and received $29,381 in unwarranted GST refunds. Furthermore, the investigation revealed that Mr. Shahid was in receipt of the income paid to PCG, however, Mr. Shahid did not report it on his personal tax returns for the taxation years 2002 to 2006, thus evading $189,534 in taxes.

The preceding information was obtained from the court records.

"Canadian taxpayers must have confidence in the fairness of the tax system," said Darrell Mahoney, Assistant Commissioner of the CRA, Ontario Region. "To maintain that confidence, the CRA is determined to hold tax evaders accountable for their actions."

When individuals 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.

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 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 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.

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

Contact Information

  • For media information:
    Canada Revenue Agency
    Linda Watts
    Communications Manager
    (416) 952-8105