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INCOME TAX - Administration and enforcement - Offences - Tax evasion

Thursday, May 17, 2018 @ 8:35 AM  

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Appeal by the accused from his sentence on two counts of tax evasion. The accused was involved in a scheme to market fraudulent tax write-offs as a form of alternative investment. He was convicted of one count of tax evasion under the Income Tax Act in relation to $2,200,000 in unpaid tax and one count of tax evasion under the Excise Tax Act in relation to $166,367 in unremitted GST. Both the accused and his co-accused pleaded guilty. They were each sentenced to three years' incarceration, concurrent on each count, a fine of $1,000,000 for the tax evasion and $88,183 for the unremitted GST. The sentencing judge ordered that the fines be paid immediately and, in case of default, that each serve one additional year of incarceration, consecutive to the three years' incarceration. Both the accused and the co-accused had declared bankruptcy. They had no funds to pay any of the taxes or fines or to compensate the contributors for their losses. At the time of sentencing, the accused was 41 years of age and was married with two children. He had no prior record. Following his arrest, he moved to the US and began a similar investment scheme. The accused and his wife had since separated and he had sole care of the two children. The accused appealed his sentence on the grounds that the sentencing judge erred in his weighing of the evidence, sentencing factors and circumstances; that the sentencing judge imposed a sentence that was unduly harsh; and that he was prejudiced as a result of being represented by the same lawyer as his co-accused. The Crown did not file a cross-appeal, but it argued that the sentencing judge erred by imposing fines less than the minimum, by imposing victim fine surcharges and by not offering the accused time to pay.

HELD: Appeal dismissed. The sentence was not unfit. This case involved a large-scale fraud utilizing a sophisticated and planned scheme resulting in over $1,000,000 in losses that involved numerous contributors. The sentence imposed was at the lower end of the sentencing range for a major fraud or tax evasion scheme. The circumstances of this case warranted a greater sentence than the range of a conditional sentence to one year of incarceration, which was the range for tax evasion involving significant amounts, but less than $1,000,000. The sentencing judge considered and referred to the various mitigating factors, including the letters of support, the lack of prior record, and the accused’s alleged lesser role in the offence than his co-accused. The judge was aware of and considered the different roles played by the accused and the co-accused, the accused's significant involvement in the scheme and his status as a successful businessman. Those factors did not support the assertion that the accused was less culpable than his co-accused or that it was unreasonable to give the two accused the same sentence. The imposition of a penitentiary sentence was consistent with the jurisprudence. However, the sentencing judge erred in not giving the accused the option of paying the fine over a period of time upon his release from prison. This was corrected, with the consent of the Crown, by offering the accused the option of time to pay. There was no factual basis to support the accused's assertion of ineffective assistance of counsel. As both the Income Tax Act and the Excise Act required the imposition of a fine equal to the amount of taxes evaded, the fines were set aside and fines of $2,366,367 were substituted. The victim fine surcharge was set aside. Sentence: Three years' incarceration and fines totaling $2,366,367 for two counts of tax evasion -- Income Tax Act, s. 239(1)(a); Excise Tax Act, s. 327(1)(a).

R. v. Dyck, [2018] M.J. No. 88, Manitoba Court of Appeal, H.C. Beard, D.M. Cameron and J. leMaistre JJ.A., April 5, 2018. Digest No. TLD-May142018007