Tax Scheme Fined for Tax Evasion

The Canada Revenue Agency (CRA) announced that, Dr. Peter Balogh of West Vancouver, was sentenced in the Provincial Court of British Columbia (Robson Square) on July 6, 2021, to a $578,885 fine and an 18-month conditional sentence.

Tax protestor scheme bites West Vancouver dentist with an 18-month conditional sentence and a $578,885 fine for tax evasion

July 9, 2021

Vancouver, British Columbia

Canada Revenue Agency

The Canada Revenue Agency (CRA) announced that, Dr. Peter Balogh of West Vancouver, was sentenced in the Provincial Court of British Columbia (Robson Square) on July 6, 2021, to a $578,885 fine and an 18-month conditional sentence. In addition to the court imposed fine, which represents 100% of the taxes evaded, Dr. Balogh is required to pay the full amount of tax owing, plus related interest and any penalties assessed by the CRA.

Dr. Balogh was found guilty on August 9, 2016, of one count of making false statements and five counts of failing to report taxable income under the Income Tax Act. Following the verdict, the Court stayed the proceedings (based on the Jordan Court decision) for a failure to be tried within a reasonable time. The stay was overturned on appeal to the British Columbia Supreme Court. On March 20, 2020, the British Columbia Court of Appeal dismissed Dr. Balogh’s appeal to  restore the stay of proceedings.

A CRA investigation revealed that beginning in 2005, Dr. Balogh began invoicing his dental practice for services rendered, opting to receive income in the form of contractor payments, as opposed to a salary, as he had in previous years. Dr. Balogh was an adherent of the Paradigm Education Group which promoted the pseudo‑legal notion that a person can self‑classify as a “natural person”, and thereby be exempt from the payment of income tax. Dr. Balogh wrote cheques to himself and instructed the company’s accountant to record all payments to him as contractor fees, despite repeated warnings from his accountant that his claim to be a natural person was not supportable. It was found that Dr. Balogh underreported his income for the 2005 and 2006 tax years, and failed to file his 2007 to 2009 income tax returns. In total, Dr. Balogh failed to report $2,177,000 in taxable income, and evaded $578,885 in income tax for the 2005 to 2009 tax years.

All case-specific information above was obtained from the court records.

Tax protesters support the false notion that they do not have to pay tax on income they earn. Participating in a tax protester scheme can have serious consequences including criminal prosecution, jail time and fines. Between April 1, 2016, and March 31, 2021, there were 26 convictions related to tax protesters, leading to a total of $2.75 million in court-imposed fines and 53 years of jail time. To learn more, visit Tax Protesters – Questions and Answers.

The CRA remains dedicated to maintaining the integrity of Canada’s tax system, as well as the social and economic well-being of Canadians during these unprecedented times. The CRA continues to aggressively pursue tax evasion and false claims with all tools available to them.

The CRA is continuously working towards making sure that individuals and businesses report income earned and eligible losses, and claim benefits to which they are entitled, so that important benefit programs can be administered to those who need them. As a result of COVID-19, we are seeing the increased importance of these benefits, and are working to make sure that they continue to be available to Canadians. Any individual or business who underreports income, or claims losses or benefits to which they are not entitled, including ineligible claims for COVID-19 benefits, may have to repay the benefit amounts and may be subject to other possible action.

The CRA has set up a free subscription service to help Canadians stay current on the CRA’s enforcement efforts.