The courts have again convicted yet another proponent of a debunked tax evasion scheme taught by a Chilliwack-based group.
Debbie Arlene Anderson was a senior “educator” in Paradigm Education Group, which taught paying students that income tax is a violation of human rights, and is optional for individuals who declare themselves “natural persons.”
In BC Supreme Court in Chilliwack on Nov. 3, Judge Neill Brown convicted Anderson of all four charges she faced: tax evasion and making false statements under the Income Tax Act (ITA), failure to make GST payments under the Excise Tax Act (ETA), and counselling others to commit fraud under the criminal code.
Brown said Anderson’s argument to defend her teachings “has no basis in law, is meritless, and must be dismissed.”
The “natural person” theory posits that income tax only applies to the artificial or legal person created in law. If one declares oneself to be a natural person, and enters into specially designed contracts to be paid for services, income tax can be ignored.
The problem routinely outlined by the courts is that this is, simply, wrong.
Anderson’s mentor was Russell Porisky, the founder of Paradigm Education Group (PEG) who was sentenced on July 29, 2016 to four years in jail and fined $260,000. His partner Elaine Gould was sentenced to one day in jail and was fined $38,242. The duo’s fraudulent counselling to more than 800 students resulted in an estimated $11 million in income tax evasion.
Anderson had as many as 100 students, the court heard, who typically paid seven per cent of money earned as a fee for the educational materials that outlined how to arrange financial affairs so as to not pay taxes. She, herself, earned at least $165,000 over 2005, 2006 and 2007, and declared zero income for the first two years and did not file an income tax return for 2007.
In YouTube videos posted in 2008, and that are still online, Porisky says the reality is that “income tax is nothing more than an internal federal excise tax which is only mandatory for those who choose to work as a legal representative, under an implied contract of service, for the benefit of a federally created legal (artificial) person known as a ‘taxpayer.’”
The argument behind Porisky’s scheme has been repeatedly rejected by the courts, which have said his teachings are nothing more than counselling illegal tax evasion.
Another Porisky follower, Michael Spencer Millar, who also represented himself, was sentenced Feb. 28 to two-and-a-half years in jail for following the debunked theory.
For her part, Anderson took Porisky’s scheme to another level using a “shuffled card” version that Brown said still was “clothed in the natural person concept.”
In speaking to the charges in her own defence, Anderson argued that income tax only applies to what she repeatedly called “office holders.”
“Income tax is a tax on the privilege of being a holder of an office in the federal jurisdiction only,” Anderson said, reading from 84 pages of closing submissions in July.
Brown pointed out this is wrong and is not the correct definition of office holder from the Income Tax Act. Rather, the judge explained, income tax has to be paid by “every person or resident in Canada at any time of the year.”
In convicting Anderson of the one criminal charge, Brown found that it was bad advice telling students there was a nominal risk of being charged with tax evasion using the “grossly incorrect theory of which she was aware.”
“That’s a very seriously misleading statement,” he said.
As soon as Brown finished reading his decision, Anderson said she planned to appeal the conviction. It was explained to her that she first needed to be sentence, or an adjournment applied for after a sentencing hearing.
Anderson is scheduled to be sentenced on Jan. 22.