Auto-financing company fined $152K for tax evasion

A Winnipeg auto-financing company has been slapped with a large fine for years of tax evasion.

Barbara Reimer Auto Financing Ltd. was fined $152,000 in provincial court this morning.

Barbara Reimer, as director of the company, entered guilty pleas on its behalf to Income Tax Act violations for evading paying federal income tax between December 2005 and July 2009.

The company also failed to remit GST amounts between September 2006 and February 2009.

Reimer, 50, and her common-law husband, Donald Duncan, 51, also face tax-related charges.

They’ll be dropped, however, if the company’s fine is paid off in full by next spring, Judge Robin Finlayson was told.

“There’s a difference between tax avoidance and tax evasion,” Crown prosecutor Jeremy Akerstream told court.

“And that line was very, very clearly transgressed … It’s a substantial amount of money,” he said.

Canada Revenue Agency (CRA) investigators and the Crown found themselves confronted by an unusual and complex scenario.

A Winnipeg auto dealership hired Duncan as a subcontractor in April 2005 to arrange vehicle financing for individuals and First Nations communities, with Duncan receiving a 30 per cent commission, according to Akerstream.

A few months into the job, Duncan learned he was facing “collection action” by another government department.

He arranged to have Reimer become the recipient of commission income he received from the dealership, court heard.

Later, in September 2006, Barbara Reimer Auto Financing Ltd. was created and began receiving that income, Akerstream said.

Neither Duncan, Reimer nor the company filed tax returns over the life of the scheme.

Between 2006 until the end of 2008, Canada Revenue Agency investigators found the corporation had undeclared income of $417,888.

Reimer’s overall undeclared income from 2005 through 2008 amounted to $655,630, said Akerstream.

She continued to file her regular income tax from her day job, he said.

Things came to a head when the owner of the dealership Duncan worked for found himself interviewed by the CRA in February 2009.

When Duncan was asked why the CRA was investigating his spouse, he cut ties to the business, court heard.

Reimer told the CRA she had no books or bank statements relating to the income.

She said Duncan prepared the invoices and delivered them to the dealership to be paid.

Ultimately investigators found Reimer “appropriated” the income, said Akerstream.

The money was either put into a business bank account or a personal account used by her and Duncan.

They used it for living expenses like haircuts, gas, groceries and restaurants, said Akerstream.

The Crown noted the scheme was put in motion after Duncan had been approached regarding debt collection.

A bankruptcy judge dubbed Reimer an “unsophisticated businesswoman” in 2013, said defence lawyer Ryan Rolston.

There was no evidence she’d accumulated any significant assets as a result of the tax evasion, Rolston said.

At that time, Reimer didn’t own her own vehicle or a home.

Instead, she laboured under a “very serious” gambling addiction which saw her plunk up to $300 a day into VLT machines, said Rolston.

Once things for the company began going well, she and Duncan were frequently gambling, Finlayson was told.

“That just snowballed… got out of control for both of them,” Rolston said.

The couple split for a time but have since reunited and have “substantially” changed their ways, said Rolston.

The company is to pay $70,000 of its fine within the next two weeks, with the rest to be paid off by May 1, 2015.