Tax cheaters face big penalties

Wednesday, 11 November 2009 05:00

November 11, 1920. The bill for 150,000 Canadian income tax payers is expected to average about $230 each (at least $35 million in total) in 1920, and cheaters will face "almost staggering" penalties, the Montreal Star reports.

A closer system of checking up and the imposition of penalties are producing results… It will be a very expensive thing to make a return that proves to be false. Next year when returns are made in respect of 1920 income, the new provisions of the Act will be operative. For example, a person who makes a return showing an income of three thousand [dollars] where really it was ten thousand, will be liable to pay to the government the whole seven thousand deficiency plus the tax on the ten thousands, besides he or she will be prosecuted for the act of making a false return. Experience has demonstrated the need of heavy penalties and they are being made stiffer each year.

A good deal of adjustment is necessary. Where the income is from a straight salary it is easy, but where it comes from various sources these have to be checked up. If the returns of a professional man are suspected, his books are examined and in several cities prosecutions have been instituted and heavy fines imposed. In many instances inspectors have accepted explanations that the defective return was a clerical error.

Next year the operation of the Act will be automatic, and when a false return is disclosed the penalty will be on the severe lines above indicated. It will not be necessary to hale people before the court.

Among those who have lined up for the income tax is a bootlegger who was assessed as making $15,000 last year and has admitted and paid the tax.