HAMILTON, ONTARIO--(Marketwired - Dec. 2, 2013) - The Canada Revenue Agency (CRA) announced today that on November 29, 2013, David Morgan and Ashmic Enterprises Inc., both of Burlington, Ontario were fined a total of $187,581 for tax evasion. Morgan was given a further six month conditional sentence, which includes three months of conditional house arrest, and three months of a court imposed curfew. On September 18, 2013 Morgan and Ashmic Enterprises Inc., pleaded guilty in the Ontario Court of Justice in Hamilton to a total of one count of income tax evasion and one count of Goods and Services/Harmonized Sales Tax (GST/HST) evasion. The fines represent 100% and 150% of the taxes evaded respectively.
Morgan, on behalf of Ashmic Enterprises Inc., operator of a sandwich franchise, failed to report income of $164,465 thus evading corporate taxes of $20,835 for 2007 and 2008. From January 2003 to June 2007, Morgan, on behalf of the corporation, also underreported income for GST/HST purposes which resulted in the failure to remit $111,164 in GST/HST.
The CRA investigation revealed that Morgan's home computer contained electronic files labeled "real" sales and "fake" sales. A comparative analysis between corporate bank account records and income and expense reports provided by Morgan and Ashmic to the franchisor determined that the "fake" sales figures were used for taxation purposes.
The preceding information was obtained from the court records.
"Canadian taxpayers must have confidence in the fairness of the tax system," said Vince Pranjivan, Deputy Assistant Commissioner of the Ontario Region of the Canada Revenue Agency. "To maintain that confidence, the Canada Revenue Agency is determined to hold tax evaders accountable for their actions."
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.