$8.1 million GST scam involving businessman and phantom cars

According to a Canada Revenue Agency news release, a BC man was sentenced by the Supreme Court of British Columbia after being convicted on seven counts of Goods and Services Tax (GST) fraud and failure to remit GST. He was sentenced to two years less a day in prison and fined $6.9 million.

According to the CRA, an investigation found that as a Director an automative dealership, the man received or attempted to receive $8.1 million in GST refunds as part of an auto export scam. Over 1,600 brand new vehicles were claimed to have been purchased at cost plus GST from an unrelated company. According to the CRA, "the key to the scam was that the vehicles did not actually exist; the transactions were created on paper only."

The company would then “re-sell” the fictitious vehicles back to the other company without charging GST, claiming they were destined for export, filing GST returns requesting credits for the amount of GST paid for the purchase of the vehicles. These returns resulted in sizable refunds.

"When people or corporations are convicted of tax evasion, in addition to any fines imposed by the courts, they are still obligated to pay the full amount of federal and provincial taxes owing, plus interest and any civil penalties that may be assessed by the CRA."

For more information, please see the full news release at:
http://www.cra-arc.gc.ca/newsroom/releases/2007/august/nr070828-e.html