Introduction
Taxation law is a complicated, nuanced beast. When a criminal investigation is launched by the Canada Revenue Agency (CRA) into a taxpayer for alleged violations of tax law, the law’s complications become more pronounced. In these moments, it can be stressful for taxpayers and their advisors to be aware of certain collateral consequences that can arise from criminal investigations. That said, it is frequently worse for the taxpayer to overlook the ways in which a criminal tax investigation presents a different set of challenges than regular tax administration.
This article aims to introduce taxpayers and their advisors to some of these collateral consequences, including: Disclosure of taxation offences and investigations to the public; invasive and lengthy investigations conducted by the CRA; and the possibility of charges being laid against individuals associated with the taxpayer. When advising taxpayers on their tax liability in situations where there is potential for criminal charges, it is important to be mindful of these consequences derived from criminal law.
The Disclosure of Taxation Offences and Investigations to the Public
In 2022, the Canada Revenue Agency reported 14 instances of taxpayers having been convicted and then sentenced for criminal offences related to taxation. In 2023, the CRA reported 11 instances in the year; in 2024, the comparative figure was only 5. As of the date of publication of this piece, the CRA has reported 1 such instance for 2025. We know this because the CRA maintains a website where it advises the public on cases where taxpayers (individuals as well as trusts and corporations) have been sentenced following convictions for tax offences. This website reveals the identities of individuals and corporations convicted and sentenced for taxation offences. It also provides case-specific facts and information for each convicted and sentenced individual and entity, all of which is derived from court records.
The CRA also maintains an enforcement notifications service from which it sends out notices by e-mail when there have been new sentencing activity for tax matters. Members of the public can subscribe to this mailing list to receive such notifications. (Less frequently, the CRA will also publish a notice upon someone being charged with criminal offences related to tax, notably for high-profile enforcement actions.)
On another webpage intended to help the public understand tax evasion, the CRA states that, from April 1, 2019 through to March 31, 2024, its Criminal Investigations Program had led to 135 convictions with $25.1 million in court-imposed fines along with sentences of more than 108 total years in jail for 58 individuals. Similar statistics are reported in the sentencing publication notices for prior years.
The Purposes Behind the Disclosure
The CRA explains on its website in respect of GST/HST), but paragraphs 239(1)(a) and (d) are most frequently referenced.
The criminal acts – actus reus – for these offences are fairly straightforward, although the scope of the act that forms the basis for a criminal tax offence can be broader than one might expect. For the s. 239(1)(a) offence of making a false or deceptive statement in a return (or in a statement or answer filed or made as required under the ITA), the mens rea requirement is that the accused made the statement knowing it to have been false or deceptive but with the intention that the statement be accepted as true. For s. 239(1)(d), the mens rea requires the accused’s act to evade the payment of tax to have been undertaken with the purpose of evading such payment.
Returning to the criminal act itself, another aspect of tax prosecutions that is not necessarily obvious is the range of investigated individuals who can become accused in the criminal process. In short, criminal investigations are not limited to the taxpayers themselves but can draw in principals (for corporate taxpayers) or tax preparers.
For instance, the s. 239(1)(d) tax evasion offence is not restricted to a taxpayer’s evasion of his or her own taxes. Instead, the offence relates to depriving the state from tax being collected. Accordingly, a scheme’s promoter can face tax evasion charges. An accused can also be convicted of tax evasion in circumstances where the accused had enabled others to claim deductions to which they were not properly entitled. Moreover, a corporate taxpayer can be convicted of tax evasion. (Although in such cases there is often a corporate principal also charged with tax evasion, given that corporations can only act through natural persons.)
Establishing mens rea for white collar offences such as tax evasion is tricky, as it requires an in-depth investigation into the financial matters of the taxpayer to demonstrate an intent or an attempt to avoid payment of tax owing. Demonstrating this intent through financial evidence is what is key in differentiating legitimate tax planning from nefarious tax evasion. As stated by Justice Doherty in R. v. Klundert for the Court of Appeal for Ontario at para. 41If a taxpayer should be approached by the CRA, it is important that they be made aware of these collateral consequences. In these situations involving potential criminal prosecution, taxpayers should consider retaining knowledgeable and experienced criminal counsel to complement their existing tax advisors before the process gets too far along.
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