Revenue Canada rolls illegal pot growers for taxes

For pot growers in B.C., the taxman cometh. Police are now working closely with Canada Revenue Agency auditors, who calculate how much money busted growers would have been making in their operations, and levy taxes accordingly.

“Every single grow-op that we now take down we actually refer that to Canada Revenue, and then they’ll do their own investigation,” said RCMP Sgt. Stu Seib of the Clearwater detachment, 120 kilometres north of Kamloops. “They will often backdate and see how much . . . money would’ve been made off the crops. They will charge for unclaimed revenue. People are making quite good profit off the proceeds of crime, and this way they’re held accountable.”

RCMP detachments across B.C. report serial grow-op offenders to the CRA, said B.C. RCMP spokeswoman Cpl. Annie Linteau.

“If there’s evidence of previous crops, then generally they are referred,” Linteau said.

Clearwater Mounties have pursued pot growers aggressively, initiating property seizures for forfeiture. Three properties found with grow-ops have been forfeited to the province in civil court, and one is under court proceedings.

But if authorities can’t prove a property owner was aware of a grow-op operated by a renter, police cannot seek forfeiture. Tax laws and charges of theft of electricity can be used to extract money from growers, whether they rent or own, Seib said.

The City of Surrey in 2009 submitted a report to Parliament’s justice committee, asking for legislation to require police agencies and municipalities to report to the CRA anyone “prosecuted for or suspected of conducting an illegal marijuana grow.”

Surrey officials calculated that in 2008, the 277 grow-ops found in the city would have generated nearly $97 million in income. Taxes, if paid, would have amounted to $28 million for the federal government and $14 million for the province. The report used an RCMP estimate of 20,000 grow-ops in B.C. to conclude growers evaded $3 billion in taxes annually.

The CRA accepts taxes on illegal income, said CRA spokesman Dave Morgan.

“Our concern is that individuals are reporting income regardless of their source,” Morgan said.

“If a person reported on their tax returns that their income was earned from selling marijuana, we could not generally disclose this to the police. When police have laid criminal charges, the CRA can disclose taxpayer information when it can be demonstrated that the taxpayer information requested is linked to the accusations.”

The tax agency uses its Special Enforcement Program to audit people suspected of evading taxes on illegal income.

“We would look at all forms of taxation, whether it’s income tax or GST/HST,” Morgan said.

A breakdown by province and type of criminal income was not available, Morgan said.

For 2009 - 2010 the SEP completed 928 audits across Canada, plus 1,999 actions to obtain tax returns, and 216 people were convicted of tax offences with 34 of them sentenced to prison, said a CRA report to Parliament.

Tax Videos
Tax Rates
Tax News
Tax Articles
IRS Tax Forms
Historical Tax Rates
Global Average Tax Rates
Tax Rates

Tax > Tax News


© 2009-2012
2011 - 2012 Tax Rate Guide and Tax Help Website