BC accountant sentenced to 2 years due to tax evasion
A Surrey, B.C. accountant has been sentenced to a two-year conditional sentence followed by two years of probation after pleading guilty to tax evasion, the Canada Revenue Agency (CRA) announced. Aeddy Leung, who served as the bookkeeper for the Quality Hotel Airport (South) and the Coast Vancouver Airport Hotel from 2014 to 2018, deliberately filed false GST/HST returns and failed to submit required tax filings during that period.
According to the CRA, these actions led to the evasion of $987,863 in GST/HST owed by the hotels. Leung admitted to willfully evading remittance taxes and making false statements on GST/HST returns. His sentence was delivered in Vancouver Provincial Court on April 15, 2025.
The CRA credited the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) for playing a key role in the investigation that resulted in Leung's guilty plea. "Combatting tax evasion and other financial crimes is essential to protecting Canada's tax system," the CRA stated. "Most Canadians meet their tax obligations. To keep the system fair, we ensure those who avoid taxes are held accountable."
In addition to legal penalties, individuals convicted of tax evasion are required to repay all owed taxes, along with applicable interest and penalties. Leung's conditional sentence—two years less a day—will be served in the community rather than in custody. It remains unclear whether Leung or the hotels are liable for repaying the evaded taxes.
What is tax evasion?
Tax evasion generally refers to the illegal act of violating tax laws to avoid paying taxes. The specifics of what constitutes tax evasion are outlined in sections 238 and 239 of the Income Tax Act (ITA) and section 327 of the Excise Tax Act (ETA).
Under section 239(1) of the ITA, a person commits an offence if they:
- (a) Make false or misleading statements in any return, certificate, or document submitted to the Canada Revenue Agency (CRA);
- (b) Destroy, alter, hide, or dispose of records to evade tax;
- (c) Falsify or omit taxpayer records;
- (d) Willfully evade or attempt to evade compliance with the ITA;
- (e) Conspire with others to commit any of the above actions.
A person convicted under these provisions may face a fine of up to 200% of the evaded tax and/or up to two years of imprisonment upon summary conviction. Under section 239(2), if prosecuted by indictment, the penalty may increase to up to five years in prison. Section 327(1) and (2) of the ETA mirrors these provisions.
Additionally, section 238(1) of the ITA states that failure to file tax returns as required is also an offence, punishable by a fine of up to $25,000 and/or imprisonment for up to one year upon summary conviction.
In more serious cases involving deliberate and significant deception, individuals may be charged with fraud under section 380 of the Criminal Code, which carries a maximum penalty of up to 14 years in prison.
Voluntary Disclosures Program: A Path to Avoid Tax Evasion Prosecution
Tax evasion is a serious offence that can lead to substantial fines and imprisonment. However, taxpayers who have made errors or omissions in their tax filings may be eligible to correct them voluntarily through the Canada Revenue Agency's Voluntary Disclosures Program (VDP).
A VDP application is a formal request submitted to the CRA to disclose previously unreported or incorrectly reported tax information. This could include:
- Undisclosed income
- Incorrect expense claims
- Missed GST/HST filings
- Failure to declare offshore assets on form T1135 or failure to report offshore income
- Failure to file returns
- Unreported crypto income
To qualify, the disclosure must meet five key conditions:
- Voluntary – The CRA must not have contacted you about the issue.
- Complete – You must provide all relevant information.
- Penalty Involvement – The disclosure must relate to a situation involving a potential penalty.
- At Least One Year Old – In most cases, the information must be at least one year past due.
- Payment – You must include full payment of the estimated taxes owed, or make arrangements to pay.
If accepted under the VDP, taxpayers may receive:
- Relief from prosecution for tax offences
- Partial or full relief from penalties
- Reduced interest charges
- Peace of mind, knowing the issue has been resolved proactively
There are two tracks within the program: the General Program and the Limited Program. The General Program offers broader relief (including penalty and partial interest relief), while the Limited Program provides protection from prosecution but not penalty relief, and applies in more serious cases of non-compliance.
Pro tax tips – Taxpayers with underreported income should file a voluntary disclosure application to avoid penalties and prison sentence
Although taxpayers who committed tax evasion are subject to severe penalties and jail time, they can still correct their errors by filing a voluntary disclosure application and avoid the penalties before the CRA catches them.
Taxpayers should also be aware that the CRA still has the discretion to decide whether to accept a voluntary disclosure application; therefore, it is highly recommended that a taxpayer seek help from an experienced Canadian tax lawyer to maximize the chance.
FAQ
What is the penalty for tax evasion?
If found guilty of tax evasion, a taxpayer is liable on summary conviction to a fine of up to 200% of the tax that was to be evaded and/or imprisonment for a term of up to two years.
What's the benefit of a voluntary disclosure application?
The voluntary disclosure has two tracks: the general program and the limited program. Taxpayers accepted under either program will be exempt from any criminal prosecution. The general program also offers 100% penalty relief and 50% interest relief (other than for the most recent 3 years).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
