Tax Fraud

Like tax evasion, tax fraud involves using deceit and other fraudulent means to defraud a person or the public of any property, money or valuable security or any service. It is an offence under s.380 of the Criminal Code, with government documents noting that "the quality of life that all Canadians enjoy is supported by the taxes we pay." The seriousness of the charge depends on the amount involved. Where the alleged fraud exceeds $5,000, the Crown proceeds by indictment only, with a maximum sentence of 14 years in prison. Where the amount is $5,000 or less, the Crown may proceed either by indictment (maximum 2 years) or by summary convictionLess-serious criminal offences (maximum 2 years less a day). If you knowingly provide false information on your tax return, you may be found guilty of tax fraud. Examples would include: overstating your expenditures; neglecting to list an income source; failing to file a tax return; or claiming to reside in one province while actually living somewhere else. Tax-specific offences, such as tax evasion, are prosecuted under the Income Tax Act or the Excise Tax Act — see the Tax Evasion page.

If the value of the tax fraud is more than $5,000, the charge will be treated as an indictable offenceA more serious type of Canadian criminal offence. under the Criminal Code, with a maximum sentence of 14 years in prison. Tax frauds valued at less than $5,000 are handled as summary convictions, with a maximum penalty of two years in jail.

Where the same conduct is prosecuted under the tax statutes — the Income Tax Act or the Excise Tax Act — rather than as Criminal Code fraud, different offences and penalties apply. Those are covered on the Tax Evasion page.

An audit is considered a civil matter, verifying that information provided by a taxpayer to the Canadian Revenue Agency (CRA) is correct. You may be ordered to pay more money if discrepancies are found.

Criminal investigations typically involve a search warrant. These warrants are executed by the CRA with assistance from police officers. They can search both home and business premises and the offices of the accountant, seizing paper records as well as any computers and digital storage devices. Accountant records are not subject to privilege, unlike lawyer’s files.

Percentage-based minimum fines apply to tax offences under the Income Tax Act and Excise Tax Act — those are covered on the Tax Evasion page. Criminal Code fraud under s. 380 does not carry a percentage-based fine minimum, though s. 380(1.1) imposes a mandatory minimum sentence of two years' imprisonment where the value of the fraud exceeds $1,000,000.

This page focuses on Criminal Code fraud under s. 380. In some fact patterns, tax-specific offences under the Income Tax Act or Excise Tax Act may also apply — those are covered on the Tax Evasion page.

This page covers Criminal Code fraud. Evasion of taxes themselves is usually prosecuted under the tax statutes — see the Tax Evasion page.