Published: April 13, 2020
Last Updated: April 26, 2021
Without making a formal announcement CRA has begun to collect the fingerprints of anyone accused of tax evasion, even before they are convicted. Furthermore the fingerprints are being uploaded by CRA to the Canadian Police Information Centre (CPIC) database, which is not only accessible by all Canadian police officers but also by some foreign law enforcement agencies including the U.S. Department of Homeland Security and its border protection officers. The stated purpose of this new policy, implemented in the fall of 2016, is to provide a general deterrence to tax evasion by causing mobility restrictions. The CRA will use police officers to collect the fingerprints.
Tax evasion is an offence under the Income Tax Act and the Excise Tax Act (for GST/HST) but notably is not a criminal code offence. While tax evasion and related tax offences under the Tax Acts carry with them possible jail terms, many convictions only bear monetary penalties and do not carry the stigma of a criminal code conviction. Historically a tax evasion offence was not a bar to entry into the United States. An internal CRA memorandum, obtained by the CBC under the Access to Information Act, indicates that U.S. officials checking the CPIC database “may view a taxpayer charged and/or convicted for tax evasion as inadmissible to their country.” With US Homeland Security becoming more protective of US borders merely having fingerprints on file with CPIC based on a charge and not a conviction may well result in a block to entry into the US. Furthermore since US Homeland Security vets the names of any passengers on planes overflying US airspace, aggressive enforcement by them could create problems for passengers not even travelling to the US.
Given that the fingerprinting will take place when a taxpayer is charged with tax evasion, even though they may never be convicted, the new CRA policy is unfair. As top Canadian tax lawyers we have seen many tax evasion charges that are dropped before trial or where the taxpayer is acquitted. While CRA will request that the fingerprints of a Canadian taxpayer acquitted of tax evasion will be deleted from the CPIC database, it can take months before the fingerprints are actually removed. So from the time a taxpayer is wrongly accused of tax evasion until the time, possibly several years later, when the fingerprints are removed by CPIC, there may be severe travel problems.
What can a person facing tax evasion or tax fraud problems do to mitigate these travel problems? The CRA voluntary disclosure program (VDP or tax amnesty) is available before CRA commences a tax audit or tax fraud investigation. Our experienced Canadian tax lawyers submit voluntary disclosure applications on almost a daily basis. A successful VDP application means no tax evasion charges can be brought, and civil penalties are also waived. What if it’s too late for a voluntary disclosure because CRA has already commenced a tax audit or tax investigation?
CRA will always advise a taxpayer before tax evasion charges are brought. A Canadian tax lawyer should be retained immediately to try to prevent tax evasion charges from being levied. If you need tax help contact our Canadian tax law firm for immediate assistance.
"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."