‘Tax evasion can be devastating

IF YOU cheat on your in- come tax, I hope you have no enemies.

Michael

DOLLARS AND SENSE

‘*We get a good cross-section of whistle-blowers — informants who contact us about individuals and companies who perhaps aren’t declaring all their income,” said Ina McMillan, public affairs divi- sion chief for Revenue Canada, Taxation, Vancouver district of- fice. ‘‘And we do explore all the leads we get.”’

McMilban said one of the maia sources of such leads is the ex- spouse, whether ex-married or ex-common law.

“At first,’? she said, ‘‘we thought these would be former wives, for example, who felt they hadn’t zeceived a large enough eattlement. But it often turns out to be people who simply want revenge.

“This frequently occurs when the couple had their own family business. Typically, the partner who ends up out of the marriage and out of the business tells us about ways the other partner or the company is not reporting in- come or otherwise evading tax. Clearly, the informant knows all about how the business is being run.”

Disgruntled people with 2 grudge against their former employer could also have inside knowledge of the company’s or owner’s finances that would inter- est Revenue Canada.

“We hear from these individu- als, as well as from a business’s competitors,’’ McMillan said.

“And we get tips from unhappy customers who feel they didn’t get good value in the products or ser- vices they bought — and know the supplier is taking cash under the table or doesn’t provide proper invoices or receipts.’”

Closer to home, a suspicious (or unpleasant) neighbor could tip off Revenue Canada about the rental suite(s) in your house, just to see if you really are declaring the rent you receive.

McMillan said Revenue Canada no longer makes announcements to the media when a tax evader is convicted.

“But we will answer any media questions fer information that is on the public record,*’ she said. “And we regularly release a gen- eral report on tax evasion pro- secutions and convictions."’

Publicity about such convictions appears to have a deterrent effect.

“We are getting more voluntary disclosures —- taxpayers coming in to straighten out some past ‘mistakes’ involving, in some cases, miliions of dollars of undeclared income,’’ she said. ‘And this increase appears to be ua direct result of the publicity given to the convictions of tax evaders,

“Also, more judges these days see tax evasion as something that warrants jail sentences, and that’s

ae

what the offenders are receiving.”*

Under criminal law, tax evasion can cost you between 25 and 200 per cent of the unpaid tax and/or up to five years in prison — plus the unpaid tax, of course.

McMillan said Revenue Canada itself also keeps an eye out for potential tax evaders.

“Hf one of our auditors notices something, a report will go in to our special investigations unit.’’ she said. Publicity about an indi- vidual or company could also prompt a contact.

If you suddenly remember in- come you should have declared and decide to tcll Revenue Canada about it ~— before Revenue Canada comes asking — you can escape prosecution and penalties.

other than a late filing penalty if

you didn’t file a return when you should have. And your identitv will be kept confidential.

Provided Revenue Canada hasn't started any investigation as of the date you make contact and provided your disclosure is com- plete, you will be Hable only for the back taxes plus interest.

You are expected to pay what you owe, or make payment ar- rangements. You certainly want to slow or if possible stop the inter- est clock, which has been ticking away at an annual rate of 15 per cent, compounded daily; the rate, adjusted quarterly, drops to 13 per cent effective April 1. For more details, contact your focal tax office for a free copy of In- formation Circular IC 85-IR, Voluntary Disclosures.

While some people might disagree with the way government spends the tax money it collecis from us, those who don't pay what the law says they should simply shift an additional finan- cial burden to other taxpayers.

Mike Grenby is a Vancouver- based columnist and independent personal financial advisor.

Wednesday, March 20, 1991 — North Shore News - 25

photo Cindy jan

JIM STUART (right) accepts a Morrow snoboard from Bruce Brown (left) assistant manager of Save-On-Foods on Marine Drive. The board was grand prize in a Mars Candy draw (repre-

sentative Barry Atkinson looks on).

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