How Does the Canadian Revenue Agency Enforce Tax Rules?


Quick Answer

The Canadian Revenue Agency enforces tax laws by instituting penalties such as seizures, third-party claims, criminal prosecution, and fines. As of 2015, individuals who don't file tax returns may receive fines ranging from $1,000 to $25,000 along with a prison term of up to 12 months, according to the agency. In addition, those who fail to file are responsible for paying unpaid taxes with interest.

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Full Answer

Under the Voluntary Disclosures Program, taxpayers may make voluntary disclosures before they are aware of any adverse action the agency is taking against them. In doing so, the taxpayer can avoid penalties and prosecution, though he is still responsible for paying taxes he owes with interest, notes the agency.

Under some circumstances, individuals may not have to pay taxes, explains the agency. Individuals without taxable income or who do not owe taxes due to source deductions may not be responsible for tax payment, but not filing a return may cause an individual to be ineligible for certain benefits such as the Canada Child Tax Benefit.

The Canadian Revenue Agency does not have the authority to implement new taxes, to raise or lower taxes, decide how tax money is used, or impose new taxes. The Department of Finance is responsible for creating federal tax policy and any tax changes must first be passed by the House of Commons and the senate before becoming law, states the agency.

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