Ontario Man Accused of Tax Fraud After Alleged Child Tax Credit Scheme

written on behalf of Feigenbaum Law

An Ontario man is facing allegations of tax fraud after allegedly claiming more than $60,000 in child tax credits for more than forty fictitious children.

What Happened?

The 39-year old man is facing four charges under the Income Tax Act.

According to the Canada Revenue Agency, the man unlawfully claimed child tax benefits by “making, participating in, assenting to, or acquiescing in the making of a false or deceptive statement” to obtain Canada Child Tax Benefits.

Together, the falsely claimed benefits totaled:

• $32,320.05 in 2014;
• $29,140.83 in 2015.

The man also faces charges for filing false statements and filing fictitious supporting documents for both of these tax years.

The Canada Child Tax Benefit

The Canada Child Tax Benefit  (CCB) a tax-free monthly payment provided to families with children. The purpose is to help these families with the cost of raising children.

The CCB can include the child disability benefit and any related provincial and territorial programs.

Eligibility for the Benefit

In order to be eligible for the CCB, a person seeking it must meet all of the following criteria. They:

• must live with the child for which benefits are being claimed and the child must be under 18;
• must be primarily responsible for the care and upbringing of the child;
• must be a resident of Canada for tax purposes.

In addition, the person seeking the benefit, or their spouse or common-law partner must be:

• a Canadian citizen
• a permanent resident
• a protected person
• a temporary resident who has lived in Canada for the previous 18 months, and who has a valid permit in the 19th month
• an Indian within the meaning of the Indian Act, if they are not a Canadian citizen.

Applying for the Benefit

In order to receive the CCB, the person seeking it must file a tax return every year, even if they do not have an income. Information from income tax returns allows the CRA to calculate how much the CCB payments will be.

Payment and Annual Reevaluation of the Benefit

Benefits are paid monthly over a 12-month period beginning in July and ending in June of the next year. The benefits are reevaluated annually based on:

• the number of children who live with the person seeking the benefit;
• the ages of the children;
• the province or territory the family lives in;
• the adjusted family net income;
• the children’s eligibility for the child disability benefit;
• the marital status of the person seeking the benefit.

Amount of the Benefit

In general, the benefits are as follows:

• $6,639 per year ($553.25 per month) for each eligible child under the age of six
• $5,602 per year ($466.83 per month) for each eligible child aged 6 to 17

The CRA’s Position

The CRA claims the man in question filed for CCB returns for more than 40 fictitious children, apparently filing multiple claims using children who had the same name and birthday.

The CRA declined to comment further on the matter when contacted by the media, saying only that the confidentiality provisions of the Income Tax Act prevent them from discussing individual taxpayers.

However, when the CRA investigates suspected cases of tax evasion, fraud, and other violations of tax laws it can then recommend cases it believes can merit criminal charges to the Public Prosecution Service of Canada (PPSC) for criminal prosecution.

The PPSC then decides whether or not to prosecute the case based on a number of factors including the likelihood of obtaining a conviction and the public interest in initiating a prosecution

What Now?

The man’s trial is scheduled to begin on August 8 in Chatham, Ontario. His lawyer says the man has entered a plea of not guilty and the central issue at trial will be whether or not the man did what is alleged, and whether such actions constitute tax fraud.

How Can Feigenbaum Law Help?

We will continue to monitor this matter as it proceeds.

In the meantime, if you are involved in tax litigation contact Feigenbaum Law.

Our team will take the time to understand the facts of your case to develop the best possible legal solution. Our approach is always personalized.  When approaching your problem, we carefully consider all administrative solutions available to craft a response that proactively takes into account the policies and best practices of a given tax authority.

We offer services to clients in the US, Canada and around the world. Contact us to learn more about how we can help or call us at (416) 777-8433 or toll free at (877) 275-4792.