Guelph, Ontario, May 13, 2011… The Canada Revenue Agency (CRA) announced today that D+D Cleaning Inc. and its owner, Dennis Douglas, of Guelph, Ontario, pleaded guilty on May 9, 2011, in the Ontario Court of Justice to two counts of tax evasion. D+D Cleaning was fined $15,660, while Douglas was fined $29,522. The fines represent 50% of the total income tax evaded, and results in a total of $46,981 in fines and taxes for D+D Cleaning, and a total of $88,567 in fines and taxes for Douglas.
In 2006, the CRA commenced a routine audit of Douglas and his company, D&D Cleaning Inc., a commercial cleaning business that provides services to industrial, commercial, and retail businesses in Southern Ontario. It revealed unidentified bank deposits over a three‑year period totalling over $412,000, an undisclosed corporate bank account, and personal expenses claimed as business deductions by D+D Cleaning.
The subsequent investigation confirmed that D+D Cleaning had unreported sales totalling $233,234 for the 2004 and 2005 tax years. It also found that Douglas appropriated $224,026 from D+D Cleaning during the same period, which he failed to report on his income tax returns. In doing so, D+D Cleaning evaded $31,321 in corporate income tax, while Douglas evaded $59,045 in individual income tax.
The investigation also found that, during the period in question, Douglas deliberately failed to provide 167 sales invoices to his bookkeeper, resulting in the company’s sales being understated. Sales for 33 different customers were not reported, in whole or in part. Douglas opened a second corporate bank account and deposited the proceeds from the unreported sales in this account, and used the unreported sales proceeds for his personal benefit.
The information in this news release was obtained from the court records.
When individuals or corporations are convicted of tax evasion, they have to pay the full amount of tax owing, plus interest, and any penalties the CRA assesses. In cases of gross negligence, the Income Tax Act and Excise Tax Act allow the CRA to assess a penalty of up to 50% of the unpaid tax or the improperly claimed benefit. In addition, the court may, on summary conviction, fine them 50% to 200% of the tax evaded, and sentence them to a jail term of up to two years.
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 the Canada Revenue Agency (CRA) against them. These individuals may only have to pay the taxes owing, plus interest. More information on the Voluntary Disclosures Program (VDP) can be found on the CRA’s website at www.cra.gc.ca/voluntarydisclosures.
Further information on convictions can also be found in the Media Room on the CRA website at www.cra.gc.ca/convictions.