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Not filing returns risky way of handling tax dispute

One B.C. man may have only received the minimum penalty after recently being convicted of failing to file tax returns, but it is possible that someone in a similar situation could be ordered to pay a much larger fine or even face jail time, Toronto tax attorney David J. Rotfleisch tells

As the Penticton Western News reports, the B.C. Provincial Court in Penticton recently handed down the mandatory minimum fine of $1,000 after Erhard Unger pleaded guilty to one count of failing to comply with the Income Tax Act.

Unger reportedly told the court that he filed for a bad debt years ago that he had previously paid taxes on, which he says the CRA denied. The Crown said that in 2015, requirement to file notices were served to Unger and prior to that, a CRA employee had contacted Unger to give him several chances to file.

Unger said that that the CRA employee said his issue was not her problem, the article notes.

“The Canadian Income Tax Act has a number of penalty provisions, with tax evasion and tax fraud being the most well known and bearing the most severe penalties, including jail time of up to five years in the case of an indictment,” explains Rotfleisch, founding tax lawyer at Rotfleisch & Samulovitch Professional Corporation.

“Failure to file tax returns is an offence under subsection 238(1) of the Income Tax Act and carries a penalty of between $1,000 and $25,000 and jail time of up to 12 months. Unger’s failure to file the returns was deliberate and stemmed from a dispute with the CRA,” he adds.

In Unger’s case, the article notes that he has since filed his taxes for the missing years.

While Rotfleisch notes that disputes with the CRA are common, he explains that there are procedures in place to handle those disputes, including Notices of Objection for denied claims or service complaints for service problems. 

“Our Toronto tax lawyers solve these problems on a daily basis. Failing to file tax returns is the wrong way to deal with a CRA tax dispute,” he adds.

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