Canada Revenue Agency - Kitchener/Waterloo Tax Services Office

Canada Revenue Agency - Kitchener/Waterloo Tax Services Office

April 17, 2007 15:10 ET

CRA: Evading Taxes Nets Over $150,000 in Fines for Shareholders of Cambridge Machine Shop

KITCHENER, ONTARIO--(CCNMatthews - April 17, 2007) - Karl Straker, of Cambridge, and Milton E. Thomas, of Ayr, pleaded guilty to tax evasion in Ontario Court of Justice in Kitchener today. They were fined $83,451 and $67,255, respectively, which represents 65% of the federal income taxes they each evaded paying.

Straker, 53, was fined for not reporting income of $425,097 on his 1998 to 2001 personal income tax returns. By doing so, he evaded paying $128,387 in federal income taxes.

Thomas, 51, was fined for not reporting income of $342,208 during the same tax years, thereby evading payment of $103,470 in federal income taxes.

Straker and Thomas, 50% shareholders of Cantec Manufacturing Inc., each operated separate businesses that received management fees from Cantec. A Canada Revenue Agency (CRA) investigation revealed that both men claimed fraudulent expenses in the books and records of those businesses, which operated as K.S. Enterprises and M.T. Resources. They also failed to report income received from Cantec, including funds that were misappropriated from the corporation.

Cantec and Straker and Thomas used a bookkeeping service whose owner controlled several non-operating corporations. Through these shell corporations, the bookkeeper invoiced the three for engineering, consulting, and sub-contracting fees for which no goods or services were ever provided. The fictitious invoices were paid and claimed as expenses by the three parties. The amounts paid were then funneled through various bank accounts of these shell corporations. The bookkeeper, after deducting a commission for himself, paid the original money back to Straker and Thomas personally. Both men failed to report this income on their personal tax returns. Charges have been laid against the bookkeeper.

When individuals 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 summary conviction, fine them 50% to 200% of the tax evaded, and sentence them to a jail term of up to two years.

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

Contact Information

  • Canada Revenue Agency
    Pat Kisil
    Manager, Communications
    (519) 973-7102