CRA Undertakes Significant Tax Fraud Investigation

by Mike Godfrey, for LawAndTax-News.com, Washington

26 March 2008

Over 300 Canada Revenue Agency investigators and other CRA officers have been executing search warrants across western Canada, it emerged last week.

The searches, which began earlier this month, were conducted at over 50 separate locations as a result of alleged involvement in fraud related to fictitious Registered Retirement Savings Plans (RRSPs), investment scams, and other tax evasion schemes.

RRSP and investment scams are popping up across Canada and the CRA has announced that it is making its presence known by auditing and investigating the promoters who back these schemes.

"The CRA is taking substantive action against promoters and others who lure Canadians into tax evasion schemes," explained CRA Commissioner William V. Baker.

Many Canadians have lost their entire retirement savings by participating in schemes such as the ones currently being investigated. Additionally, if the scam involves RRSP withdrawals, the victims have to pay tax on the withdrawals when their income tax returns are reassessed by the CRA.

The CRA is urging Canadians to use caution and check the legitimacy of RRSP funds and investment opportunities before making any contributions.

"Canadians should know that they are responsible for taxes and interest owed on taxes evaded, even if a promoter indicates otherwise," added Baker.

The CRA's Voluntary Disclosures Program gives individuals the chance to make a full disclosure about any omissions or mistakes they may have made, but the taxpayer must approach the Agency before any review, audit or investigation is started.

Individuals may then only have to pay the taxes owing plus interest, but not penalties, and may avoid a criminal investigation and prosecution.

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