Hamilton, Ontario, June 6, 2011… The Canada Revenue Agency (CRA) announced today that Mohammad Ali Moarefdoust pleaded guilty on June 2, 2011, in the Ontario Court of Justice in Hamilton, to five counts of income tax and Goods and Services tax (GST) evasion as the Director of 1127834 Ontario Ltd., and 1206877 Ontario Ltd. He was fined a total of $168,552, and given two years to pay the fines. The fines represent 100% of the taxes evaded, resulting in a total of $337,104 in fines and federal taxes owing.

A CRA investigation revealed that, in 2004 and 2005, Mohammad Ali Moarefdoust owned and operated franchises, in Burlington and Mississauga, Ontario.

The court heard that the investigation commenced as a result of an audit which revealed a number of discrepancies between the financial reports of the franchises Mr. Moarefdoust owned and operated and the financial reports prepared by the franchisor. Further investigation revealed a lack of documentation, numerous cash transactions, and underreported sales and appropriated funds.

The CRA was able to determine that in 2004 and 2005, Moarefdoust failed to declare $202,221 on his personal income tax returns, resulting in $53,902 in federal taxes evaded. The two corporations together evaded the payment of $114,650 in federal taxes for the same years by failing to report $293,471 in taxable income, and failing to remit a total of $78,771in GST.

The preceding information was obtained from the court records.

When individuals are convicted of income tax and GST evasion, they must still repay the full amount of taxes owing, plus interest and any civil penalties that may be assessed by the CRA. In addition, the court may fine them up to 200% of the taxes evaded and impose a jail term of up to five 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.

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