False invoices: Two Montréal construction firms guilty of tax evasion

MONTREAL, June 8 /CNW Telbec/ - Two Montréal construction firms, Terramex Inc. and Chagnon (1975) Ltd., pleaded guilty to tax evasion charges at the Montréal courthouse. The companies were fined respectively $59,280 and $15,548, which represents 100% of the federal tax they tried to evade.

The Canada Revenue Agency (CRA) investigations revealed that, for the 2002 to 2004 tax years, both companies voluntarily contravened the Income Tax Act by deducting false expenses on their income tax returns: $280,112 for Terramex Inc. and $62,552 for Chagnon (1975) Ltd. These expenses were based on false invoices provided namely by Les Clôtures Arboit Inc., which was found guilty in 2007 in a similar scheme.

False invoicing is a scheme through which subcontractors bill companies for fictitious work or services not rendered. The false invoices are then used by the offending company to unduly reduce its revenues, claim tax refunds to which it would not be entitled or generate liquid assets for off-the-books salaries or for personal gain.

In addition to the fines imposed by the Court, the companies will have to pay the full amount of taxes owing plus related interest and any penalties that apply.

The CRA actively pursues tax evaders to maintain public confidence in the integrity of the tax system. The Government is committed to protecting Canada's tax base and continues to take action against the underground economy.

Individuals who have not filed returns for previous years, or who have not reported all of their income, can still voluntarily correct their tax affairs. They will not be penalized or prosecuted if they make a full disclosure before the CRA takes any action or starts an investigation concerning them. These individuals will only have to pay the taxes owing, plus interest. More information on the Voluntary Disclosures Program can be found on the CRA Web site at www.cra.gc.ca/voluntarydisclosures.

The information in this news release was obtained from the court records.

Additional information on convictions can be found on the Media page of the CRA Web site at www.cra.gc.ca/convictions.

For further information: Kareen Dionne, Communications Manager, [phone], ext. 8288, Toll-free: 1-800-292-3430, ext. 8288