Another Canada Revenue Agency AML enforcement

Ottawa dentist sentenced for tax fraud and laundering proceeds of crime

January 17, 2019                Ottawa (Ontario)                 Canada Revenue Agency

The Canada Revenue Agency (CRA) announced that, on January 17, 2019, Kin Tung Fong (Fong) of Ottawa, Ontario, was sentenced in the Ontario Court of Justice in Ottawa to a conditional jail sentence of two years less a day, including 12 months of house arrest, and curfew for the remainder of the sentence. Fong pleaded guilty on the same day to one count each of tax fraud and laundering proceeds of crime under the Criminal Code. This marks the first time in Canada that the Criminal Code’s money laundering provisions have been successfully applied to a tax evasion conviction.

A CRA investigation revealed that Fong used his spouse to transfer unreported income to Costa Rica under “Private Contracts” to him. These funds were used for the purchase of land owned by one Costa Rican corporation related to Fong and to make payments to various related beneficiaries.

For the years 2008 to 2012, Fong reported income from his dentistry practice totalling $2,045,572 on his individual tax returns, but then wrongfully deducted the entire amount as a business expense, thereby evading federal tax totalling $538,061.

This tax evasion scheme was promoted by a tax protestor organization known as the Paradigm Education Group, whose seminars Fong attended in 2003 and 2004. Based on Fong’s falsely declared family net income, Fong and his spouse also received a total of $34,432 in Goods and Services Tax Credits and Canada Child Tax Benefit payments to which they were not entitled. Since 2016, Fong has complied with the terms and conditions of repayment of the entire amounts owed to the CRA.

The CRA would like to acknowledge the significant contribution of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to this investigation.

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. From April 1, 2013, to March 31, 2018, the courts convicted 307 taxpayers for tax evasion of $134 million in federal tax. These convictions resulted in sentences totaling approximately $37 million in court fines and 2,949 months(246 years) in jail.

All Canadians should be wary of “tax protesters” who try to convince the public that they do not have to pay tax on earned income. For those involved in tax protester schemes, the CRA will reassess income tax, calculate interest and impose penalties. The court can also impose a fine between 50% and 200% of the tax evaded and a jail term of up to five years. More information on tax protester schemes is available on CRA’s website at Canada.ca/tax-alert.

The CRA has set up a free subscription service to help Canadians stay current on the CRA’s enforcement efforts.

Link:

Canada Revenue Agency notice

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