Audit v. Investigation
Being audited is not the worst encounter you may have with the CRA. During an audit, the CRA will review your internal documents (contracts, invoices etc.) and possibly conduct interviews with people who may have information about your personal or business affairs to clarify issues arising from your tax returns. However, if serious isssues are discovered by the CRA before or during an audit, such as misrepresentation, fraud or tax evasion, then you may find yourself the subject of a CRA investigation.
The CRA seeks to enforce taxpayer self reporting of income and expenses and general voluntary tax compliance with the Income Tax Act (Canada). In exceptional cases, the CRA may initiate a criminal investigation if it has determined that circumstances warrant pursuing allegations of tax evasion, especially if such cases involve foreign elements (for instance, transferring of funds to various offshore jurisdictions or “tax havens”) or cases with complicated tax schemes.
You should not disregard the seriousness of any criminal investigations by the CRA. If found guilty you may face serious penalties ranging from fines up to imprisonment. Moreover, the details of your conviction (including your name, crime committed and court sentence) will generally be made public.
If you are at all concerned that you may already be subject to a CRA criminal investigation or that you are at risk of being investigated or that what the CRA may uncover during the course of a regular audit may trigger an investigation, we strongly recommend you seek legal counsel and proper advice in your dealings with the CRA.
Contact us in confidence and with the protection of solicitor client privilege to discuss your personal situation and let us start to help you.