Canada Revenue Agency Scammed Out of $37 Million by Toronto-Area Company

Alleged $37M tax scam by Toronto firm Gold Line Telemanagement highlights vulnerabilities in Canada's tax system, raising concerns about CRA's ability to detect and prevent illegitimate refunds.

Sakchi Khandelwal
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Canada Revenue Agency Scammed Out of $37 Million by Toronto-Area Company

Canada Revenue Agency Scammed Out of $37 Million by Toronto-Area Company

The Canada Revenue Agency (CRA) was tricked by alleged scammers who made off with $37 million of taxpayers' money through sham transactions by a Toronto-area company called Gold Line Telemanagement, according to a once-sealed affidavit filed with the Tax Court of Canada and obtained by The Fifth Estate.

The CRA alleges that Gold Line made material misstatements on tax returns and was part of a group of companies that participated in sham transactions, allowing the company to claim and receive $37 million in sales tax refunds. The affidavit alleges that Gold Line, which has been in the long-distance telecommunications business for decades, claimed to be buying and selling international call time, but the CRA says these were "false" transactions.

The CRA claims to have wrongly dispersed a total of $100 million in what it calls illegitimate tax refunds through these "carousel schemes" - a type of fraud involving complicated supply chains filled with fake companies and invoices. The CRA believes Gold Line either intentionally participated in the scheme or was "extremely negligent" in its dealings with unregistered Canadian suppliers that had no proper telecommunications licenses or business premises.

Why this matters: This case highlights the vulnerability of Canada's tax system to fraudulent schemes and the need for robust measures to combat such activities. The alleged scam by Gold Line Telemanagement raises concerns about the CRA's ability to detect and prevent illegitimate tax refunds, potentially costing taxpayers millions of dollars.

Gold Line has rejected the CRA's allegations, stating there was no deceit in its filings and that it was genuinely engaged in the long-distance telecom business. The case is currently being heard in the Tax Court of Canada, with Gold Line arguing that the tax credits it claimed were based on taxes it paid to its Canadian suppliers, though the CRA has concluded the purchase and sale transactions were fraudulent. The affidavit was kept off the public record for 10 months until The Fifth Estate petitioned the court for its release.

Key Takeaways

  • CRA alleges $37M in tax refunds paid to scammers via sham transactions by Gold Line Telemanagement.
  • CRA claims $100M in illegitimate tax refunds dispersed through "carousel schemes" involving fake companies.
  • Gold Line denies deceit, says transactions were genuine, but CRA concluded they were fraudulent.
  • Case highlights vulnerability of Canada's tax system to fraud and need for robust anti-fraud measures.
  • Affidavit detailing allegations was kept sealed for 10 months until obtained by The Fifth Estate.