Janette Graf, a real estate agent and resident of Kitchener was found guilty of three counts of failing to file her 2004 to 2006 personal income tax returns. She was fined $1,200 per count for a total of $3,600. The fine is in addition to any taxes and interest owed, as well as any civil penalties that may be assessed by the Canada Revenue Agency (CRA).

When individuals or corporations are convicted of failing to file tax returns, in addition to any fines imposed by the courts, they are still obligated to file the tax return and pay the full amount of taxes owing, plus interest, as well as any civil penalties assessed by the CRA.

Individuals 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 will not be penalized or prosecuted if they make a valid disclosure before they become aware of any compliance action being initiated by CRA against them. These individuals may only have to pay the taxes owing, plus interest. Information source – CRA.

Here are the major changes per CRA guide:

Universal Child Care Benefits (UCCB): A single parent can choose to include all UCCB amounts in the dependant’s income.

Elect to defer Security option benefits: If you exercised an option and bought eligible securities, the election to defer the benefits will no longer be available.

Special relief for tax deferral elections on security option benefits: You may elect for special relief in respect of gains from a disposition of eligible securities on which you elected in a previous year to defer the option benefits.

Scholarship exemption and Education amount: Programs consisting mainly of research are eligible for scholarship exemption and the education amount only if they lead to a college or university degree. Post-doctoral fellowships are taxable. For a scholarship received with a part-time program for which you can claim the part-time education amount, scholarship exemption is equal to the amount of tuition paid plus the cost of related materials.

U.S. Social Security benefits: You may be eligible to claim a deduction of 50% of the benefits received.

Employment Insurance premiums on self employment and other eligible earnings: You may be able to enter into an agreement with the Employment Insurance Commission to participate in the new EI Measures for the Self Employed People.

Medical expenses: Cosmetic procedures qualify as medical expense only if they are required for medical or reconstructive purposes.

Investment tax credit: Eligibility for the mineral and exploration tax credit has been extended to flow-through shares agreements up to April1, 2011.

Rollover of RRSP proceeds to a registered disability savings plan (RDSP): The existing RRSP rollover rules will be extended to allow a rollover of a deceased individual’s RRSP proceeds to the RDSP of the deceased individual’s financially dependant infirm child or grandchild.

The thief is the unprofessionalism in tax preparers. Therefore these people should be properly called unprofessional tax preparers (UTPs)

There are too many of them around. Unlicensed accountants are most likely to be UTPs. However, some licensed accountants may also be UTPs. UTPs cost you hundreds/thousands of dollars or more whether you realize it or not.

You must know if you are—or have been—dealing with a UTP. Identifying them is not difficult. Here are some some ways.

1. Consider what happened when your last return was completed. You were dealing with a UTP if you experienced one of more of the following.

• You were not provided with a comprehensive copy of your return. If you were not given even a copy—instead of a comprehensive one—you are dealing with a worse UTP and if you were given no copy, you are dealing with the worst kind.
• You were not shown and explained a draft summary before completion of the return.
• Before signing your return, you were not walked through every line of your return.
• Although your return included an unusual but large deduction, your copy of the return did not include some easily understandable, credible printed material to support that deduction.

2. Consider what happened when your last return was being prepared. You were dealing with a UTP if you experienced one of more of the following.

• You were not provided a list of missing papers, e.g. an interest income slip from your bank or your last year’s Notice of Assessment. The return was based on only the papers you gave the UTP.
• You were hardly asked any questions on the information potentially missing from your papers, e.g. were your borrowed funds used for investing or vacation?

3. Assuming you are presently putting your papers together for getting this year’s return prepared. You are dealing with a UTP if you experienced one of more of the following.

• You have not been provided any list of documents required for preparing your return properly. UTPs prepare your return with just what you give them. They do not bother giving you any helping reminders.
• You were not asked to provide a formal but short list of tax related changes (LTCs) that took place in your life in the year, e.g. bought an RRSP and took a college course.

If you have been dealing with a UTP, you should look for a professional tax preparer (PTP) for this year’s return.

Doreen Davis and a related corporation Dead Reckoning Enterprises Inc. (Dead Reckoning) were sentenced in November 2010 for evading personal income tax and goods and services tax (GST). She was fined a total of $90,728m. Besides, as a director she was convicted of GST evasion and failure to file the 2000 to 2003 corporate income tax returns. She was fined an additional $28,511 for those offences. The corporation was also sentenced for GST evasion and failure to file tax returns. The corporation was fined a total of $28,511.

Through Dead Reckoning, Davis provided film production accounting services to companies for the years 2000 to 2004. Rather than reporting the revenues and GST collected, Davis and her partner used those revenues for personal expenditures including rent, personal credit card charges, boat moorage and life, home and auto insurance. In total, she failed to report $517,360 personal income and to remit $5,728 in GST. Dead Reckoning failed to file income tax returns and report $24,511 in GST.

When you are convicted of tax evasion, besides court fines you must pay the taxes, interest and any penalties owed. If convicted, the court may impose a fine of up to 200% of the federal tax evaded and a jail term of up to five years. Information source – CRA.