Determining whether you go to prison for making a mistake on your taxes depends on the context. If, for instance, it was an honest mistake and you own up to that mistake (such as making a miscalculation or having a simple misunderstanding of the rules), you will not go to prison. This is because the CRA typically understands when it comes to honest mistakes.

However, if the CRA can prove that the individual or business in question has made an intentional mistake on their taxes, the consequences can be quite severe. Making a deliberate mistake is known as tax evasion. This can include falsifying records and claims, intentionally not reporting income or inflating expenses.

Monetary Consequence – One of the more common repercussions of tax evasion pertains to a financial cost. If you are convicted of tax evasion, you can be expected to pay back the amount in full, plus any interest owed and any civil penalties the CRA may deem reasonable. On top of that, the courts may fine you north of 200% of the taxes you evaded.

Criminal Consequence – Criminal consequences are not as common. However, they can occur for more severe offences. For example, S. 238(1)(b) of the ITA imposes an imprisonment term of up to 12-months for failing to file or make a return as required under s. 238(1). Under s. 239(2)(b), a taxpayer may be subject to imprisonment not exceeding five years if charged with an offence under s. 239(1).

In conclusion, prison is reserved for the most serious tax offences. The CRA isn’t actively looking to arrest taxpayers and put them behind bars. Ultimately, what the CRA is after is to hold tax evaders accountable and correct their wrongs by making them pay back the money they owe on top of interest fees.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only and is a general discussion of certain legal matters. It is not, and should not be taken as legal advice. You should not rely on or take or fail to take any action based on this information. If you require legal advice, we would be pleased to discuss resolutions to specific legal concerns you may have.