GST/HST numbers, tax fraud, and tax evasion: What you need to know about fraud when paying invoices

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Taxes – we may not enjoy paying them, but they are necessary and deliberately avoiding taxes is both problematic and illegal. Tax fraud and tax evasion is a concern, as it can result in widespread higher costs to Canadians, as well as negatively impact both the economy and welfare of our country. The Conference Board of Canada estimates tax evasion and avoidance cost the federal government between $8.9 billion to $47.8 billion every year in tax revenue.1

What is a GST/HST number?

A GST/HST account number is part of a business number (BN). A business number is a 9-digit number that is unique to a particular business.

Generally, a business is only required to register for a GST/HST account with the Canada Revenue Agency if it sells taxable goods or services and it is not a small business. One is considered a small business if the total amount of all revenue (before expenses) is $30,000 or less in any single calendar quarter and in the last four consecutive calendar quarters; however, if the business is not registered and revenues total more than $30,000 in any four consecutive quarters, the business will be required to register for GST/HST. If the business does not register, they will still have to pay GST/HST on business expenses.2

What is tax evasion and tax fraud?

Tax evasion is a criminal offence under the Canadian Income Tax Act and the Excise Tax Act.

Examples of tax evasion and tax fraud are:

  • falsifying records and claims
  • purposely not reporting income
  • inflating expenses
  • claiming a fraudulent refund or benefit3

Tax fraud is an offence under the Criminal Code. Like tax evasion, tax fraud involves using deceit, falsehoods, and any other fraudulent means to defraud a person or the public of money or anything else of value.

Individuals who engage in tax fraud or tax evasion are subject to investigation, litigation, criminal charges, and other serious consequences.

Tips for making invoice payments in Canada:

  • Issue payment to only the business, using its proper name. Beware of individuals letting on they are acting on behalf of the business.
  • Don’t be afraid to ask questions -- if you require clarification on invoicing, contact the business directly to confirm.
  • Only pay businesses who supply proper and matching GST/HST numbers that can be validated.
  • Use the GST/HST Registry Search prior to issuing payment. The GST/HST Registry Search is a free, online tool available on Canada Revenue’s website. This tool may help you confirm if the business’ GST/HST number is accurate.

     

1 Shell Game: How Offshore Havens, Loopholes, and Federal Cost-Cutting Undermine Tax Fairness, A Survey | The Professional Institute of the Public Service of Canada, https://pipsc.ca/shell-game-how-offshore-havens-loopholes-and-federal-cost-cutting-undermine-tax-fairness-survey

2 Register for a GST/HST account, https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/account-register.html

3 Tax evasion, understanding the consequences, https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/combat-tax-crimes.html; Confirming a GST/HST account number, https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/confirming-a-gst-hst-account-number.html#h1

The content in this article is for information purposes only and is not intended to be relied upon as specific professional or expert advice. Aviva Canada accepts no responsibility for action taken as a result of reliance on any information contained in this article.