Who is Teresa Wallace? CRA reportedly pays out bogus $5 million income tax refund to British Columbia businesswoman; Check how tax authorities responded after erroneous payout

Teresa Wallace, a businesswoman from British Columbia (BC), has come under the spotlight after the Canada Revenue Agency (CRA) reportedly issued her a $5 million income tax refund by mistake. The payout is believed to have been based on a 'bogus' return that allegedly included falsified details, raising serious questions about how such a large claim was processed and approved. The episode has also triggered wider concerns about oversight, verification processes, and the effectiveness of safeguards within Canada’s tax system.

Ironically, court records obtained by 'CBC's The Fifth Estate' reveal that the CRA issued a refund of $4,958,716.63 in May 2025 to a woman from British Columbia who reportedly earned just $54,000 a year operating her hemp and grain processing business in the West Kootenay region.

“Upon review by the senior program officer at (refund examination headquarters) it was determined (that one of the forms on file) was invalid, and the resulting $4.9-million refund from the erroneously allowed slip was unwarranted,” the CRA said in court document as quoted by Toronto Sun.


According to court records, as reported by the media outlet, the woman allegedly reported $9,999,999 in foreign income for the 2023 tax year and claimed a $5 million overpayment. Despite stating that she had paid the same amount in taxes to the Canada Revenue Agency - effectively implying a 100% tax rate - the claim was not flagged for further review, raising concerns about oversight.

Months earlier, CBC News reported a similar case in Quebec, where a $4.9 million refund went to a body shop over a questionable tax claim with no supporting records. Both cases highlight a wider issue at the Canada Revenue Agency, where large refunds were issued with minimal checks, even when flagged for manual review.

HOW CANADIAN TAX AUTHORITIES RESPONDED AFTER ERRONEOUS PAYOUT

As per court records, a Canada Revenue Agency affidavit reveals the agency identified the error roughly two months after issuing the $5 million cheque, yet no corrective steps were taken even after it was flagged for human review. Investigators now believe the woman paid no taxes that year and that her claim of nearly $10 million in foreign income - allegedly from the United Nations - was entirely fabricated.

The CRA has since ruled that she owes $7.9 million, including interest and penalties, though only $4.2 million has been frozen so far. Authorities secured a court order in January to seize assets, and recovery efforts continue.

According to CBC Canada, the CRA informed the Federal Court of Canada that Wallace filed another tax return using similar documentation after receiving the $5 million payment, but it was not approved.

Responding to the CRA’s claims in court, Wallace argued there was no evidence she planned to withdraw the funds or move money overseas. She requested that the asset freeze be modified to allow her to carry out limited, routine business activities.

The controversial payout followed earlier scrutiny, when former revenue minister Marie-Claude Bibeau and ex-CRA commissioner Bob Hamilton were called before a parliamentary ethics committee to testify over similar refund cases.