Taxman entitled to criminals’ profits

“It’s common knowledge, no matter what the activity, you have to pay your tax"

Cam Fortems – Kamloops This Week

Even criminals are required to hand over a piece of their profits to the taxman.

An Ontario tax lawyer said a recent decision by the Tax Court of Canada that required the operator of a grow-op to pay taxes based on revenues calculated by an expert is a well-understood area of law.

Robert Hole appealed a decision by the Minister of National Revenue to the Tax Court of Canada. Justice David Graham determined the Clearwater resident did not declare several hundred thousand dollars in revenue from a marijuana grow as well as income from a logging business.

“It’s common knowledge, no matter what the activity, you have to pay your tax,” said lawyer Alex Klyguine.

“People should be aware Canada Revenue Agency [CRA] doesn’t distinguish between what is legal and illegal.”

A review of cases heard at the Tax Court of Canada shows people who have profited from both marijuana grow-ops and cocaine trafficking have been assessed tax penalties by CRA.

The federal Liberal government is expected to introduce legislation next year to allow sale of recreational marijuana in a structured system.

While illegal growers may compete with legal sales, Klyguine said those black-market growers will face the same tax penalties as today’s contraband farmers if they flout the law.

“I think they should expect the same treatment as today…. What matters is if it meets the definition of a business and if it’s a business, it’s going to be taxed.”

 

Marijuana growers also face the prospect in some cases of civil forfeiture by provincial authorities, who can seize assets including homes and vehicles even in the absence of a criminal conviction.