As the story goes, notorious gangster, Alphonse (Al) Capone, who engaged in a wide variety of criminal activity was finally captured, not for the bootlegging, prostitution, or extortion, but for tax evasion. Didn’t he know that he had to report his gains for the purpose of income tax?
In Canada, the CRA (Canada Revenue Agency) makes sure that we understand that the proceeds of crime must be reported as income in the year it was received.
Really.
Under section 1.30 of Income Tax Folio S3-F9-C1, it states:
Gains from theft or embezzlement as well as cash or property received as a result of extortion, blackmail, bribery, or other similar acts are income from a source and as such these funds or property are taxable in the hands of the recipient. The cash or fair market value of property received will be added into the recipient’s income in the year of receipt.
It does not say what line to enter it on. I’m guessing, Line 130, “Other Income.”
Hazel Fluke, Financially Speaking 