As the Canadian government continues to announce various programs aimed to help businesses and workers during the COVID-19 pandemic, this week questions were raised regarding what, if any, help companies that engage in tax avoidance practices would receive.

Government Statements

Earlier this week, while delivering an address to the House of Commons in French, Prime Minister Justin Trudeau stated that companies that need help will get it, but that those businesses that evade or avoid taxes will not receive the same aid.

However, a day later, when asked whether he would commit to excluding companies registered in tax havens from receiving COVID-19 funds, Trudeau responded in English:

“Since 2015, we have made significant investments in the CRA to fight against tax avoidance and tax evasion. That is something that we have taken very seriously as a country and there will always be strong consequences for anyone who avoids to pay their fair share of taxes. At the same time, we’ve been investing to ensure that Canadians get the supports they need regardless of whether they work for a small or large company.”

Existing Penalties for Misuse of Government Funds

While the above question remains unanswered, the Canadian Government has announced penalties for the misuse of some of their existing COVID-19 related programs.

For instance, penalties were written in to the legislation enacted for the Federal Government’s wage subsidy program.

The wage subsidy plan allows Canadian employers whose business has been affected by COVID-19 to apply for a subsidy of 75% of employee wages for up to 12 weeks, retroactive from March 15, 2020 to June 6, 2020. It will provide up to $847 a week per employee.

However, tough penalties were also announced in relation to the wage subsidy plan. Among them, employers and business owners who are found to have misused the funds could face up to five years in prison and heavy fines, which may include having to pay 225% of what they received. 

Additionally, there can be consequences for Canadians who apply and receive funds through theCanada Emergency Response Benefit (“CERB”), but were not eligible to receive the money. For instance, someone who receives funds through CERB but is later found not to have been eligible will have to pay back the money. This would be the case for people who are actively choosing not to work.

Get Advice

Mark Feigenbaum brings together many years of litigation experience with a deep knowledge of tax law, corporate law, accounting, finance, and other related practice areas. Mark can help you avoid the biggest risks that may arise in tax disputes.

Prior to founding his law firm, Mark worked in the cross-border tax department of an international Big 4 firm, and held accounting management positions across a variety of sectors in both Canada and the United States.

With tax legislation in constant flux on both sides of the border, Mark takes great care to stay current on all relevant developments in law and policy. He carefully considers all solutions available to craft a response that proactively considers the policies and best practices of a given tax authority.

If you are involved in a tax dispute or related litigation, contact Mark Feigenbaum for exceptional representation and guidance. Mark’s many years of interdisciplinary knowledge in law, tax, accounting, and finance and significant cross-border experience make him uniquely positioned to assist you. Mark offers services to clients in the U.S., Canada and around the world. Contact Mark online or call him at (905) 695-1269 or toll-free at (877) 275-4792 to book a consultation.