In the summer of 2023, Canadian taxpayers logged into their Canada Revenue Agency accounts and falsely amended their previous tax returns, falsely claiming they suddenly owed more than $40 million in refunds.
Sources said the Canada Revenue Agency then approved the payments without reviewing the newly filed tax invoices and immediately began making the first installment.
CBC investigation fifth estate And Radio-Canada has learned that this scam may have never been detected, except for one thing.
CIBC was alerted when it became aware that the Canadian government had deposited an unusually large amount of $10 million into a customer’s bank account.
The bank contacted the CRA to confirm the mistake.
It was only then, sources said, that authorities realized they had been fooled.
fifth propertye and Radio-Canada are not identifying the sources as they are not authorized to speak publicly.
Fifth Estate and Radio-Canada investigation reveals hackers accessed thousands of Canada Revenue Agency accounts, changed direct deposit information, filed false tax returns, and pocketed tens of millions of dollars in fake refunds. It became clear that he had entered.
“The CRA has to clean up its act,” Andre Lareau, an associate tax professor at Laval University in Quebec City, said in an interview. fifth estate/Radio Canada.
Lareau said the CRA has a mission to “evaluate and assess the veracity” of tax returns, and that “it cannot fulfill that function by simply refunding the amounts claimed.” He said this is especially true when taxpayers amend multiple tax returns.
call for investigation
Opposition parties on Monday called for an investigation into revelations that the CRA paid out hundreds of millions of dollars in fake refunds. fifth estate/Radio-Canada reported that tens of thousands of taxpayers’ CRA accounts have been hacked since 2020.
In response to a request from Conservative MP Adam Chambers on Monday, the Federal Privacy Commissioner announced on Tuesday that it would conduct an “investigation into whether the CRA complies with privacy laws”.
Mr Chambers also called on Revenue Minister Marie-Claude Bibeau to introduce the RCMP.
“Over $190 million has been improperly paid to fraudsters due to Canada Revenue Agency privacy violations. Will the Minister… intend to call the RCMP over this privacy violation so that taxpayers can be repaid?” he asked. asked.
Canadians have been largely kept in the dark about the extent of the loss to public funds and the CRA’s weaknesses in detecting the scheme in the first place. fifth estate/A Radio-Canada investigation revealed this.
The scheme discovered by the CRA was widely used
Officials said that after CIBC raised a red flag about an unusual $10 million deposit into a customer’s bank account, the agency immediately tried to recover the people’s funds.
Of the funds fraudulently disbursed by the CRA, $4 million had already been transferred to other banks or used for purchases. But officials also had to scramble to stop another $10 million payment that was due to be paid automatically just three days later, and another $20 million the following week.
Eventually, the agency learned that it had been fooled by many other scammers in 2023 using the same fake T4A scheme.
Sources say the CRA quickly realized it had few or no policies in place to verify the legitimacy of these tax bills, even if the refunds amounted to tens of millions of dollars. .
The Canada Revenue Agency said in an email Monday that it became aware of a scheme in 2023 that used “fake T4A slips” and resulted in “unwarranted refunds.”
The CRA said it was aware of the participants in the fraud scheme and “took swift action” to shut it down.
The agency said it is “taking all enforcement actions to return these funds.”
simple scam
Sources say the scam itself was breathtakingly simple in retrospect.
Scammers went online, filed T4A slips used to report certain types of income, and amended multiple past tax returns to claim fake refunds.
The tax bill did not list any new income and included a large tax deduction, even though no taxes were paid in the first place.
Shortly after the $10 million CIBC deposit was discovered, the CRA changed its policy and sought to ensure that refunds of this type over $50,000 would be subject to special oversight, according to officials.
CIBC declined to comment.
“Canadians deserve a full explanation of what went wrong.”
NDP revenue critic Niki Ashton said in a statement it was “shocking” that so many Canadians had their personal data compromised and fake refunds paid to fraudsters. Mr Ashton said there should be a parliamentary inquiry into the CRA’s “mismanagement of tax evasion and tax fraud”.
“Canadians deserve a full explanation of what went wrong, how this happened and how we can prevent it from happening again.” ” she said.
“Wrongdoing is clearly unacceptable, but I believe the agency has strong systems in place,” Finance Minister Bibeau said during a scrum outside the House of Commons early Monday.
He noted that fraudsters often rely on personal information obtained from outside the CRA.
“We are constantly working to improve our systems and have the ability to detect and block them.”
Bibeau said taxpayers affected by the violation will be notified “as soon as possible.”
“We always want to do better, but we still have a strong system.”
In a statement, the CRA said it takes abuses of Canada’s tax laws seriously.
“The trust and confidence that individuals and businesses have in the CRA is the foundation of the Canadian tax system.”
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