Enforcement Notification - Winnipeg insulation company guilty of falsifying books and records

WINNIPEG, May 23, 2019 /CNW Telbec/ - The Canada Revenue Agency (CRA) announced that, on May 21, 2019, Thermo Applicators Inc. (Thermo), pleaded guilty in Manitoba Provincial Court to two counts of making false or deceptive statements in their books and records for the 2009 to 2014 tax years. It was found that Thermo underreported taxable income in the amount of $1,139,000 which represents $190,142 of income tax and $47,611 of goods and services tax / harmonized sales tax (GST/HST) that should have been paid. The court sentenced Thermo to a fine of $237,753. In addition to the court imposed criminal fine, Thermo will also have to pay the taxes owing, plus related interest and any penalties as determined by the Tax Court.

Thermo is a Winnipeg-based industrial and commercial insulation application company, of which Robert Gray is the President and Director. Mr. Gray also pleaded guilty to one count of tax evasion in the amount of $109,620 on his 2009 and 2010 personal income tax returns. The court sentenced Mr. Gray to a fine of $109,620. In addition to the court imposed criminal fine, Mr. Gray will also have to pay the taxes owing, plus related interest and any penalties as determined by the Tax Court.

The investigation revealed that certain personal expenses of Mr. Gray had been recorded in Thermo's books and records as business expenses. These included:

• Construction costs for Mr. Gray's waterfront cottage located near Kenora, Ontario;
• Construction costs for his personal vacation villa in Pochutla, Oaxaca, Mexico; and,
• A fly-in trip for Mr. Gray and five family members at a fishing lodge in Northern Canada.

All case-specific information above was obtained from the court records.

The CRA takes tax evasion very seriously. Tax evasion occurs when an individual or business wilfully ignores or disregards Canada's tax laws. For example, those participating in tax evasion under-report taxable income or claim expenses that are non-deductible or overstated. Those who do not fully comply with tax laws place an unfair burden on law-abiding taxpayers and businesses and jeopardize the integrity of Canada's tax base. For the 5-year period of April 1, 2013 to March 31, 2018, the courts have convicted 307 taxpayers of tax evasion. This involved $134 million in federal tax evaded and court sentences totaling approximately $37 million in court fines and 2,964 months in jail.

Wilfully failing to follow tax laws could result in serious consequences, including reassessments, the imposition of civil penalties and criminal tax investigations and prosecutions resulting in the imposition of court fines and jail time. Under the income tax and excise tax laws, persons convicted of tax evasion will face fines ranging from 50% to 200% of the evaded taxes and up to five years imprisonment. If convicted of fraud under Section 380 of the Criminal Code, an individual can face up to 14 years in jail.

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Associated Links

Offshore Tax Informant Program 
Informant Leads Program
Voluntary Disclosures Program

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SOURCE Canada Revenue Agency