Taxman reminds crooks to declare their income

Criminals take note — if you haven't done your taxes yet, the deadline is midnight tonight.

According to the Canada Revenue Agency, all citizens earning money — even drug dealers and money-launderers — are required to declare their income.

The principle was underlined in a recent Tax Court case involving two Regina drug dealers.

After police raided a number of marijuana grow houses, the city couple was charged with trafficking in marijuana, money laundering and other offences.

They both got prison terms — and then the taxman came calling.

It's entirely appropriate they should pay income tax on the money they made, ruled Tax Court judge Robert Hogan.

"It is well established that a taxpayer is subject to tax on his income regardless of its source," Hogan said in his written decision.

"A taxpayer must keep reliable books and records for all of his income, including income from illegal sources."

In this particular case, the judge ended up reducing amount of taxable income the convicted drug dealers would have to declare to about $190,000.

According to Canada Revenue Agency spokeswoman Debbie Johnson, it's only fair that criminals file their tax returns along with the rest of us.

"Law-abiding citizens who are paying their taxes don't want to see people profiting from illegal activity, and they certainly don't want them getting away with not reporting income," she said.

'Law-abiding citizens who are paying their taxes don't want to see people profiting from illegal activity, and they certainly don't want them getting away with not reporting income.'—CRA spokewoman Debbie Johnson

The agency says it often gets tips from the police and the public about convicted money-launderers and drug dealers who may or may not be reporting their income.

If they don't declare their ill-gotten gains, they could face fines, penalties, or even more jail, Johnson said.

In addition to fairness, taxing criminals also helps to send the message that crime doesn't pay.

"It also helps to reduce the profit from crime and to counter the lure that profit might have for motivating criminal activity," she said.

Johnson noted there's a spot on the tax form called "Other" where proceeds from crime can be reported. She didn't know how many criminals actually do so, however.

Midnight Tuesday is the deadline for most individuals who owe taxes to submit their tax forms without penalty.