Tax Law - ONCJ

The Appellants, a banquet hall corporation and its director, appealed convictions for numerous tax-related offences under the Employer Health Tax Act and Retail Sales Tax Act, and the imposed sentence.

The appeal grounds included the Kienapple principle, mens rea categorization, due diligence, arraignment defects, expert witness weight, unreasonable delay, witness credibility, and judicial recusal.

The court dismissed the appeal against conviction, finding no legal or factual errors in the trial judge's findings regarding distinct offence elements, mens rea application, rejection of due diligence, and procedural regularity.

However, the court allowed the appeal against sentence in part, affirming the custodial term but significantly reducing the total fines, applying the principles of proportionality and totality, and capping daily fines to the date the Information was laid rather than the date of arraignment.

The defendants were convicted of 69 counts under the Employer Health Tax Act and 62 counts under the Retail Sales Tax Act, involving the failure to remit over $1,675,000 in taxes.

The sentencing decision addresses a sophisticated, multi-year tax evasion scheme involving the operation of multiple related corporations and the deliberate mischaracterization of employment relationships.

The court imposed a custodial sentence of 21 months imprisonment, substantial fines totaling approximately $9.9 million, and probation, finding that the offences constituted fraudulent conduct warranting incarceration despite the defendant's lack of prior criminal record.

The defendant was tried on eight counts of improperly claiming or obtaining refunds under section 239(1.1) of the Income Tax Act.

The Crown alleged that the defendant prepared and filed false T2 Corporate Income Tax Returns containing false claims for taxes withheld at source in order to fraudulently obtain refunds.

The defendant, representing himself, raised various arguments including that he was not an OPCA litigant, that the court lacked jurisdiction, and that he was a natural person not obliged to pay taxes.

The trial judge found the defendant guilty on all eight counts, determining that the Crown had proven beyond a reasonable doubt that false statements were made in the T2 Returns, that the defendant participated in making those statements, that refunds were claimed, and that the defendant knew the statements were false and intended to obtain unwarranted refunds.

This is a comprehensive tax evasion prosecution involving Le Jardin Banquet and Conference Centre Inc. and its director Carlo Parentela.

The defendants operated a banquet hall in Woodbridge, Ontario and were charged with 131 offences under the Retail Sales Tax Act and Employer Health Tax Act, including wilfully evading tax, making false statements in returns, failing to remit collected taxes, failing to collect taxes, failing to file returns, operating without a vendor permit, and wilfully failing to register as a vendor.

The Crown's investigation revealed that the defendants concealed true sales revenue through restricted access to the Sales Logix software system, withheld cash sales information from their bookkeeper and accountants, and systematically underreported tax obligations.

The defendants were found guilty on all counts after a lengthy trial spanning multiple years.

The accused was convicted at trial of tax evasion for failing to file income tax returns for four consecutive tax years (2007-2010) while receiving over $2 million in salary, bonuses, and dividends from his company.

The Crown sought a custodial sentence of up to two years plus a fine of 100% of taxes evaded.

The defence sought a conditional sentence with a fine of 50-100% of taxes evaded.

The court imposed a 20-month custodial sentence and a fine of 100% of the taxes evaded ($552,976), finding that a conditional sentence would not provide sufficient deterrence given the sophistication of the offender, the scale of the evasion, and the ease with which such offences can be committed.

The accused was charged with wilfully evading or attempting to evade payment of $552,976 in Federal taxes by failing to file income tax returns for the taxation years 2007-2010 contrary to s.239(1)(d) of the Income Tax Act.

The accused admitted the failure to file but claimed he always intended to pay taxes in the future.

The Crown argued the accused deliberately chose not to file to avoid immediate tax payment.

The court found the accused guilty, determining that the Crown proved beyond a reasonable doubt that the accused had the requisite intent to evade taxes.

The court found the accused was not a credible witness and that his claim of future intent to pay did not provide a defence to tax evasion.

The defendant was initially charged with 120 offences contrary to the Income Tax Act.

After the Crown elected to proceed summarily and withdrew two counts, the defendant pleaded guilty to 78 counts involving false or deceptive statements in income tax returns and fraudulent claims for refunds.

The defendant had operated a side business preparing tax returns for clients, providing fraudulent charitable donation receipts and false employment expense claims, resulting in approximately $70,365.55 in unpaid federal taxes.

The court dismissed the defendant's application for a stay of proceedings based on alleged abuse of process and Charter violations.

The defendant was sentenced to concurrent conditional sentences of imprisonment for one year to be served in the community, plus fines totalling $70,365.55 (100% of taxes evaded).

Conditions included home confinement for the first eight months and prohibition from tax preparation work or church volunteer positions involving financial authority.

The applicant sought to exclude evidence obtained during a Canada Revenue Agency audit of his company and subsequent search warrants, alleging breaches of sections 7 and 8 of the Canadian Charter of Rights and Freedoms.

The applicant contended that the CRA auditor's predominant purpose was to investigate his alleged criminal tax liability rather than conduct a civil compliance audit.

The court found that the audit remained a bona fide compliance audit until the auditor received answers to the first query on July 14, 2010, at which point the auditor's predominant purpose shifted to a penal investigation.

The court excluded evidence obtained through the second query but admitted evidence from the first query and the search warrant execution.

The accused was charged with two counts of defrauding the Government of Canada contrary to s. 380(1)(a) of the Criminal Code.

The Crown alleged that the accused operated a business called Fiscal Arbitrators that prepared false income tax returns for numerous clients, charging fees plus a percentage of fraudulently obtained refunds.

A second count alleged similar fraud in relation to the accused's own personal tax returns.

At the preliminary inquiry, the Crown presented evidence from ten civilian witnesses whose tax returns had been prepared by Fiscal Arbitrators, as well as testimony from the lead investigator from the Canada Revenue Agency.

The court found sufficient evidence to commit the accused to stand trial on both counts.

The defendants were convicted of willfully evading compliance with the Retail Sales Tax Act by failing to collect, report, and remit retail sales tax totalling $240,866.42 over 54 reporting periods from August 1, 2004 to February 23, 2009.

The individual defendant, Eugena Hayward, was the sole director and operating mind of the corporate defendant.

The court found that the defendants had collected retail sales tax in trust for Ontario but failed to remit it, instead using the funds for personal benefit including dividend payments of $341,000 to Hayward.

The court imposed a custodial sentence and substantial fine on the individual defendant, reflecting the serious breach of trust and the need for denunciation and deterrence.

The defendant brought a Jarvis application seeking to exclude evidence obtained through search warrants on the grounds that the CRA's audit function had improperly transitioned into a criminal investigation, thereby breaching his Charter rights under sections 7 and 8.

The defendant was charged with two counts of fraud and four counts of tax evasion related to a GST refund scheme involving a dormant company.

The court found that the defendant lacked standing to bring the application, as he had no legitimate privacy interest in the mail box or bank account that were the subject of the search warrants, having fraudulently misappropriated the identity of the company.

Alternatively, the court found no breach of the Jarvis doctrine, as the predominant purpose of the inquiry remained audit-focused until after November 4, 2005, when the bank requirement revealed the connection between the defendant and the fraudulent refunds.

The court admitted all evidence.

The accused, a chartered accountant, pleaded guilty to fraud over $5,000 for his role in a large-scale tax evasion scheme involving false personal income tax returns and fraudulent charitable donation receipts.

Over six years (2003-2008), the accused prepared 487 false returns for numerous clients, resulting in false deduction claims totalling $3,674,000 and unpaid taxes of $1,045,111.21.

The accused received approximately $94,000 in compensation.

The defence sought a conditional sentence of two years less a day, while the Crown sought a penitentiary sentence of three to five years.

The court imposed a two-year penitentiary sentence with a $100,000 fine.

The respondent father brought a motion for a summary decision on whether settlement funds of $175,000 USD received for copyright infringement of his musical composition constituted "income" for child support purposes under the Child Support Guidelines.

The applicant mother cross-moved, arguing the funds were income or, alternatively, that income should be imputed.

The court held that the settlement funds constitute "income" for child support purposes, even if not taxable for income tax purposes, as they represent compensation for lost royalties and profits from the copyright.

The court allowed reasonable deductions for expenses directly incurred in recovering the damages and addressed tax grossing-up and currency conversion issues.