The CRA's criminal investigations process

Tax evasion is illegal and deprives citizens and governments of public funds, which are essential to supporting critical infrastructure projects and important social programs and services like health care, child care, and education.

The Canada Revenue Agency (CRA) is committed to fighting tax evasion and other serious tax crimes. There are serious consequences to breaking the law.

Once convicted, tax evaders can face penalties, court fines, and jail time —in addition to having to pay the taxes they tried to evade, plus interest. However, criminal investigations are complex and often require years to complete. There are many steps and several factors that can affect the length of the investigations.

Below is a general outline of the CRA's criminal investigation process:

  1. Triggers for a criminal investigation
  2. Files are selected for investigation
  3. Criminal investigation steps
  4. The Public Prosecution Service of Canada's role
  5. Tax crime consequences

1. Triggers for a criminal investigation

Various sources of information may lead the CRA's Criminal Investigations Program (CIP) to initiate a criminal investigation, such as:

  • internal referrals within the CRA, including the various audit programs
  • tips from individuals through the CRA informant leads program
  • information from various law enforcement agencies
  • publically available sources of information such as media articles 

2. Files are selected for investigation

Not all files will trigger a criminal investigation.

A file is usually selected by:

  • analyzing information to determine the extent of the alleged tax offence
  • assessing the circumstances, the availability of evidence, and the likelihood of a prosecution

The CIP will place priority on the following:

  • Significant cases of tax evasion with an international element
  • Promoters of sophisticated and organized tax schemes
  • Joint investigations with other enforcement agencies, including cases of tax evasion involving money laundering
  • Significant cases involving income tax and/or GST/HST tax evasion, including the underground economy, and
  • Significant cases of benefit fraud

3. Criminal investigation steps

A criminal investigation has many steps. They include:

  • gathering evidence, interviewing taxpayers and witnesses, executing search warrants, and analyzing evidence
  • preparing a comprehensive investigation report
  • sending the report to the Public Prosecution Service of Canada for review of the evidence to support the laying of criminal charges and subsequent prosecution

The CRA can communicate with the public at different stages of the criminal investigation by issuing an enforcement notification.

As with any criminal investigation by law enforcement, CRA criminal investigations of tax evasion and fraud are complex and usually require years to complete. Here are some factors that affect the duration of the investigation:

  • complexity of the case
  • number of individuals involved
  • availability of information or evidence
  • degree of cooperation by witnesses or the accused
  • various legal tools that may need to be employed to gather sufficient evidence
  • need to get information abroad

4. The role of the Public Prosecution Service of Canada

When they receive a report from the Criminal Investigation Program, the Public Prosecution Service of Canada analyzes the information and decides whether to prosecute. If they do, the following steps are taken:

  • CRA investigators lay charges
  • the accused is summoned to court to stand trial (and possibly to be fingerprinted)
  • the accused receives full disclosure of the case against him/her

At the conclusion of a prosecution that results in a conviction, the CRA will publicize publically available details, including the identity of the taxpayer, the nature of the tax evasion, the court-imposed fine and applicable jail sentence by issuing an enforcement notification.

5. Consequences of tax crime

In addition to having to pay taxes owing, as well as interest and penalties, under the Income Tax Act and the Excise Tax Act, Canadians who are convicted of tax cheating face serious consequences, including:

  • a criminal record
  • a possible jail sentence
  • significant fines imposed by the courts
  • negative media publicity

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