Ottawa, Ontario, November 22, 2012… The Canada Revenue Agency (CRA) announced today that Tania Kovaluk and Lee Williams pleaded guilty in the Superior Court of Justice in Ottawa on November 20, 2012, to multiple counts related to income tax and GST evasion, and counseling others to commit an offence. Kovaluk was sentenced to two years and five months in jail and was fined a total of $887,328 which represents 100% of the total taxes evaded. Her husband, Lee Williams, was sentenced to five years in jail and a fine of $56,756, representing 100% of the taxes evaded. All fines are to be paid in full by June 30, 2014.
A CRA investigation found that from 2003 to 2008, Kovaluk and Williams actively promoted and participated in a scheme in Canada that counseled participants to commit income tax evasion. Williams was an educator of the scheme promoted by Russ Porisky through the Paradigm Education Group. Kovaluk and Williams promoted this scheme through seminars held in Ottawa and Toronto, where they sold educational materials and counseled others to join the Paradigm program, including nine employees working at Kovaluk’s dental practice. The total federal tax evaded through Williams’ teachings was $4.5 million.
Kovaluk implemented the tax evasion scheme in her own tax affairs and knowingly failed to report $2,578,987 in income she earned from 2003 to 2007 while practicing dentistry in Ontario, thereby evading $721,617 in federal taxes. Kovulak reported income earned through her practice as sub-contract expenses and did not report it as personal income.
Additionally, Williams used his wife’s Canadian bank accounts from 2003 to 2008 to deposit cheques made out to him for the business he conducted as an educator of the Paradigm Educational Group. Williams did not report the income he earned, or remit the proper amount of GST in relation to his business venture as an educator of the scheme. In doing so, Williams evaded paying $39,643 in personal income tax and $17,113 in GST. In addition to spending large amounts of money on personal luxury items such as art, jewelry, vacations and personal home furnishings, Kovaluk and Williams, built two villas in Costa Rica for a total cost of $621,585 USD, purchased gold through off-shore accounts and Canadian banks of at least $578,195, purchased gold in Canada with cash totalling $201,143 and built a home in Ottawa that cost at least $974,250.
The preceding information was obtained from the court records.
“Canadian taxpayers must have confidence in the fairness of the tax system,” said Vince Pranjivan, Deputy Assistant Commissioner of the Ontario Region of the Canada Revenue Agency. “To maintain that confidence, the Canada Revenue Agency is determined to hold tax evaders accountable for their actions.”
The Canada Revenue Agency warns all Canadians to beware of individuals that try to convince you that Canadians do not have to pay tax on the income they earn. These individuals, also known as tax protesters, not only fail to report their own earnings, but they also conspire, counsel, and promote these tax schemes. Canadian courts have repeatedly and consistently rejected all arguments made in these tax protester schemes. For those involved in tax protester schemes, the CRA will reassess income tax, and charge interest and penalties. In some cases, these individuals will be prosecuted for tax evasion. If convicted, they could face significant fines and possibly jail time. More information on tax protester schemes is available at www.cra.gc.ca/alert.
Taxpayers 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 may not be penalized or prosecuted if they make a valid disclosure before they become aware of any compliance action being initiated by the CRA against them. These taxpayers 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 Web site 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.