Reporting Tax Fraud in Canada: A Step-by-Step Guide
It is possible to submit a report on suspected tax or benefit fraud in Canada through the CRA Leads Program. This program allows individuals to report leads online, via phone or fax, or by mailing them to the designated address. You can find more information about reporting leads here.
Additionally, the CRA faces a loss in tax revenue each year due to illegal international tax shelters. To combat this, the CRA has established the CRA Offshore Tax Informant Program (OTIP), which encourages individuals from anywhere in the world to come forward with information about major international tax non-compliance. Informants may be eligible for financial rewards if their information leads to the collection of taxes owed.
Defining Tax Fraud
"In the context of taxes, tax fraud refers to the deliberate failure to declare income earned within a year with the intention of evading taxes or wrongfully obtaining government-funded social benefits," explains Wes Beharrell, a Certified Financial Planner with Investors Group Financial Services in London, Ontario.
This can manifest in several ways, such as engaging in cash transactions without maintaining records, not declaring income, neglecting to claim tips and gratuities, or falsely claiming tax credits or expenses. It is important to note that the CRA does not prosecute individuals for unintentional omissions or deductions that are ineligible, as these cases are addressed by the Tax Review program.
Reporting tax fraud plays a crucial role in ensuring that the tax burden in Canada is distributed fairly and equitably among taxpayers.
Providing Tax Fraud Information
Here are the ways you can report tax fraud:
Note: Anonymous reporting is available for all tips and information, except for the international program.
- Even if you decide not to provide anonymous tips, the CRA is obligated to safeguard your identity and keep it confidential.
- The CRA will not inform you of any investigations, assessments, or actions taken as a result of your information, as these are also treated as confidential.
The Voluntary Disclosures Program
The CRA has a Voluntary Disclosures Program (VDP) that allows individuals to voluntarily disclose unpaid taxes, inaccurate information, or unfiled tax returns. By proactively correcting your taxes through this program, you may be able to avoid penalties or prosecution. To make a declaration, you will need to use Form RC199, the Taxpayer Agreement - Voluntary Disclosures Program.
- To qualify for any benefits provided under the VDP, you must take action before the CRA initiates any enforcement measures.
- Your declaration must be complete and not attempt to conceal any additional irregularities.
- The VDP is only applicable in cases where new information has come to light to prevent a tax penalty.
If you forget to report a T slip, there is no need for you to make a voluntary disclosure because doing so would only result in a reassessment rather than any punitive measures.
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