CBSA investigating alleged immigration tax scam in Vancouver
The Canada Border Services Agency is investigating an alleged immigration scam in Vancouver that involved out-of-country employees paying their own salaries so they could maintain their Canadian residency status and qualify for tax benefits.
The alleged scam was revealed in a court ruling released Tuesday. The Canada Revenue Agency went to court seeking documents seized last year by the CBSA during raids of a local immigration consultant, Xun Wang, and two company offices in Vancouver and Richmond.
B.C. Supreme Court Associate Chief Justice Austin Cullen granted the application by the CRA to gain access to the documents.
The court noted that under the alleged scheme, one of Wang’s corporations would “hire” a client, allowing the client to be classified as an employee of a Canadian corporation who worked outside Canada.
If this was accepted by Citizenship and Immigration Canada, the client would maintain permanent resident status without actually living in Canada for two of the past five years, as required, because employment by a Canadian corporation outside of Canada also counts towards the two-year requirement.
It is alleged the client would pay money to Wang’s corporations, which would use the money to pay the client’s “salary.”
The court documents say one of Wang’s corporations, acting as employer, allegedly would withhold source deductions — federal and provincial income taxes, employment insurance and Canada Pension — and the client would receive a “paycheque.”
The corporation allegedly would remit the source deductions to the CRA and issue T4 slips to the clients at the end of the year.
Clients would be paid between $14,000 and $30,000 a year, low enough to enable the taxpayer to receive a refund of most or all of the taxes remitted by the corporate employer.
In the court documents, the CRA also alleged the employees “may also be paid benefits such as working income tax benefit, GST credits, child credits, universal child care benefit and climate action rebates.”
The court ruling says the CBSA is investigating allegations that Wang, New Can Consultants (Canada) Ltd. and another company, 12 Wellong International Investments Ltd., violated the Immigration and Refugee Protection Act between Jan. 15, 2007 and Aug. 14, 2012.
The allegations have not been proven in court.