BUSINESS TAX 101: Legal Consequences of Tax Evasion
Posted by on Jun 15, 2017 in Blog, Commercial Law
As a business owner or employer, you are obligated to fulfill certain requirements set out by the Canada Revenue Agency (CRA). Among these responsibilities are remitting payroll deductions, paying all relevant goods and services tax (GST) and running your finances in an ethical manner. Refusing to abide tax laws or abusing loopholes is known as evasion or avoidance– both carry severe punishments such as fines and imprisonment. Are you concerned about your business tax liabilities? First read Heritage Law’s guide below, then contact or visit us as soon as possible!
INCOME REPORTING
Whether your business qualifies as a sole proprietorship, a partnership or a corporation, all business income must be reported to the CRA and any income tax owing must be paid. Failing to report income is punishable by law and could set back any success your business has achieved thus far. Don’t risk serious fines or up to a year in prison, ensure your business follows all tax laws.
PAYROLL DEDUCTION/REMITTANCE
If you pay a staff of any size, you are required to deduct Canada Pension Plan (CPP) and Employment Insurance (EI) amounts from their paycheques. Then, the business must remit these to the government– if they fail to do so, fines may be applied to any outstanding amount. Payroll deduction and remittance are governed by very serious laws to protect the average Canadian citizen.
GST/HST
If your business invoices clients and receives payments, you must charge goods and services tax and remit it to the government (in some provinces you also charge harmonized sales tax). There are various deadlines and regulations, but failing to meet them results in fines and a freeze on any rebates.
EVASION/AVOIDANCE
Tax evasion is failing to pay taxes, no matter if by ignorance or on purpose. Tax avoidance is the abuse of loopholes in tax code for your or your business’ benefit. When it comes to punishment, the difference is negligible– both tax evaders and avoiders end up paying fines or serving time in prison.
As you can see, business tax is a very serious matter that the federal government prioritizes and manages very carefully. Always be sure to meet your tax obligations, but if you have any concerns about the legal ramifications– rely on the pros here at Heritage Law!