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Preet Banerjee, B.Sc., FMA, DMS is a former stockbroker and financial advisor in Toronto. Information on this site is for entertainment purposes ONLY. Always seek individual professional advice before making any financial decisions.

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Proceeds of Crime are Taxable

March 15th, 2009 • Related • Filed Under
                                                         
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I was browsing through the CRA’s website (Canada Revenue Agency) and stumbled upon an interesting page that indicated that the proceeds of crime are taxable. Upon doing some more digging I found some material which seemed to indicate that there are special liaisons between the CRA and law enforcement agencies who coordinate to ensure that known criminals engaging in illegal activities are taxed on any income received – primarily to minimize the funds and property accumulated by criminals.

Apparently, many years ago the courts ruled that illegal income was considered business income and was therefore taxable. Must be an interesting job being one of those investigators – can’t imagine there are easily decipherable paper trails to go through…

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There Are 7 Responses So Far. »

  1. Comment by Mr. Cheap on 16 March 2009:

    And the big question is: if proceeds of crime are taxable, can you deduct expenses like bribing police officers or purchasing firearms to protect your illicit operations? :-)

  2. Comment by Ink-Stained Gorilla on 16 March 2009:

    The irony in this is that the CRA is really the least of your worries if you’ve been found to have a criminal enterprise.

    However it does provide the CRA the ability to tax you on income if income can be proved but maybe not the illegal source of income.

    Bottom line – after you’ve laundered your income sources don’t skimp on hiring a good tax-planner.

  3. Comment by Patrick on 16 March 2009:

    I think this is really a technicality so they can nab you on tax evasion.

  4. Comment by Preet on 16 March 2009:

    @ Cheap: that is exactly what I was thinking, I was going to include a line in the post wondering if you’d write off a hit, since that could be considered the cost of doing business… :P

    @ Ink: And make sure to guard him well. Capone’s one mistake… (well there were plenty I suppose)

  5. Pingback by Canadian Personal Finance Blog » Blog Archive » Random Thoughts: March Hoops Madness on 20 March 2009:

    [...] Crime may not pay in the long run, but you had better make sure you pay taxes on what you are paid, points out Preet at Where Does All My Money go in Proceeds of Crime are Taxable. [...]

  6. Comment by Duncan Erasmus on 20 March 2009:

    In New Zealand, drug dealers and their ilk can declare tax based on their illegal income, and do it without fears of repercussions as our Privacy Act protects them. Typical. At least they contribute I guess.

  7. Comment by Preet on 20 March 2009:

    @Duncan: Thanks for sharing that insane tidbit. I don’t know what would make a drug dealer (or other criminal) decide to obey some laws, but not others…? :)

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