Cross Border Transaction: Avoiding Tax Fraud

While third parties are subject to criminal sanction for participating in tax evasion, they were generally not subject to civil penalties. Given the fact that the onus on the Crown to prove a criminal infraction is quite high, relatively few third parties are prosecuted under the criminal sanctions. Applicable after June 28, 2000, third party civil penalties were introduced in the 1999 federal budget to provide for civil penalties against those who knowingly or in circumstances amounting to gross negligence make false statements or omissions in respect of another person’s tax matters. This legislation was deemed necessary to discourage behavior considered unacceptable but that was not serious enough to warrant criminal prosecution.