CRA Provides Update On Tax Avoidance Crackdown
Canada’s Revenue Minister has provided an update on the progress made by the Government in addressing tax evasion and aggressive tax avoidance.
The update concerns the recommendations on tackling tax avoidance and evasion made by the House of Commons Standing Committee on Finance (FINA) in October 2016, and the actions taken by the Canada Revenue Agency (CRA) on this front. It follows the publication of a separate update in June 2017 and the Government’s official response in February.
Among the recommendations covered in the update is the suggestion that the Revenue Minister establish a regular reporting program for the CRA, to facilitate the public availability of statistical information about enforcement efforts. The update stated that the CRA has now reviewed its departmental performance reporting and established a dedicated section in its annual Departmental Results Report (DRR) containing the requested statistical information.
These results will be made available to the public within the DRR by the end of 2017. The new reporting structure will include data on the number of audits, referrals to criminal investigations, search warrants, charges laid, convictions, and court rulings. It will also contain information on the fiscal impact of the CRA’s activities, referrals to the General Anti-Avoidance Rule (GAAR) Committee, and applications of the GAAR and third party civil penalties.
The CRA has also released preliminary results for the 2016-17 financial year, which show that 335 cases were referred for criminal investigations, 123 search warrants executed, 32 criminal charges laid, and 37 convictions secured. The CRA secured CAD10m (USD8.3m) in court fines. It also completed 111,712 audits. Between the inception of the GAAR in 1988 and March 31, 2017, there were 1,392 files received for the application of the GAAR, with the GAAR applied in 1,093 of these cases.
In addition, the CRA intends to update its results throughout the year in a series of newly created web pages dedicated to describing its offshore activities. It will set up a free subscription service to help those interested stay informed.
Another report made by FINA was that the Government review Canada’s tax and tax information exchange treaties to ensure that they do not facilitate non-compliance with tax laws. The update explained that two of Canada’s tax treaties have been identified as not meeting the required international standards.
The Department of Finance intends to contact Trinidad and Tobago before the end of 2017, with a view to renegotiating the exchange of information provision, to prohibit bank secrecy and domestic tax interest being used as a reason for declining an exchange request. Canada will also continue in its efforts to renegotiate the tax treaty with Malaysia, and will insist on an exchange of information provision that is in line with the international standard.
Revenue Minister Diane Lebouthiller said: “Hard-working Canadians who pay their fair share of taxes expect our Government to do its part to crackdown on tax cheating and to make public our results. Today, I send a strong signal to all Canadians, that we are delivering on our investments and that the noose is tightening for those who break the law.”
“Together we are building a stronger and fairer tax system, and one where those who don’t play by the rules, face the consequences.”