Beware of schemes that claim you don’t have to pay taxes. There may be serious consequences.

The Canada Revenue Agency (CRA) is warning Canadians about tax schemes claiming that individuals don’t have to pay their taxes. Those who sell/promote these schemes may try to convince you that as a "natural person" you are not subject to tax laws. Individuals who promote such views are “tax protesters” who not only fail to report their own earnings, but they also try to convince others to engage in these illegal activities.

The CRA has been successfully cracking down on the tax protester movement. The criminal courts have consistently rejected tax protesters’ “natural person” arguments, going so far as to refer to their theory as illogical and to tax protesters as "snake oil salesmen".

People who evade taxes take resources away from social programs from which all Canadians benefit. Those who choose to participate in these schemes, as well as those who promote these schemes, face serious consequences, including fines and jail time.

As of March 31, 2017, the Agency has identified and reviewed tax returns of more than 3,100 taxpayers who have participated in tax protesters schemes. In addition, the CRA conducted criminal investigations, executed search warrants and laid criminal tax evasion charges.

Between 2006 and 2017, 75 tax scheme promoters from across Canada were convicted of tax offences related to tax schemes. This lead to $7.15 million in court imposed fines and a total of 936 months of jail time awarded. Furthermore, for the first time in the history of the CRA, we are seeing criminal convictions for “counselling others to commit a tax offense.” Don’t let this be you — Watch our video.

The CRA has seen a drastic decline in these types of schemes. The actions of the Agency and the serious jail sentences handed down by the justice system have served as strong deterrents.

How to recognize a tax protester scheme?

When a product offered to you sounds too good to be true, it just might be.

The tax protester movement also referred to as the "detax" movement has existed since the early 1990s. It started in Western Canada and gradually moved across the country.

Tax protesters suggest that people are not legally bound to pay taxes and that income tax obligations run counter to the Canadian Charter of Rights and Freedoms.

For more information on tax protesters and the false arguments they use go to: Tax Protesters - Questions and Answers.

What can you do?

The CRA encourages all Canadians to seek an independent second opinion from a reputable tax professional on important tax matters.

If you suspect tax evasion, you can report it over the internet at Canada.ca/taxes-informant-leads or by contacting the Informant Leads Centre line at 1-866-809-6841. Steps will be taken to protect your identity, although you may provide information anonymously.

In addition, the CRA continues to encourage taxpayers to come forward and correct their tax affairs through the Voluntary Disclosures Program (VDP): Canada.ca/taxes-voluntary-disclosures.

For more information about misleading statements and myths about Canada's tax laws, resources are available online at the CRA website: Debunking tax myths.

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