In a continuing effort to crack down on some wealthy Canadians’ use of offshore vehicles to evade tax and "buy their way out of paying what they owe," Minister of National Revenue Diane Lebouthillier gave an update last week on the Canada Revenue Agency’s progress to "to identify and curb tax schemes and to bring those who choose to participate in such tactics to justice."
Lebouthillier highlighted Canada’s participation in the Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) network. JITSIC, consisting today of 36 of the world’s national tax administrations, a body originally established in 2004 to combat cross-border tax avoidance. JITSIC offers a forum to enable its members to share relevant experience, resources and expertise to tackle common tax compliance issues.
CRA is currently conducting audits on more than 750 taxpayers and criminally investigating 20 cases of tax evasion specifically linked to offshore tax havens. As for the Panama Papers, the agency announced that it has several ongoing audits and is pursuing criminal investigations in some cases.
Last year, CRA launched an electronic funds transfer (EFT) initiative to crack down on international tax evasion and aggressive tax avoidance. Under this regulation, certain financial intermediaries, including banks, have had to report to the CRA both incoming and outgoing international EFTs of $10,000 or more, including transfers involving Panama and other areas. Specifically regarding the Isle of Man, 3,000 EFTs totaling $860 million in one 12-month period were reviewed. These involved approximately 800 taxpayers and, as a result, 60 audits are currently underway.
This year's, the federal budget included a proposed investment of $444.4 million over five years for the CRA to enhance its efforts to crack down on tax evasion and combat tax avoidance. The money will allow CRA to hire additional auditors and specialists, develop robust business intelligence infrastructure, increase verification activities and improve the quality of investigative work that targets criminal tax evaders. Beginning this fall, the CRA will begin the hiring process to add new tax professionals to its audit team to help in the crackdown.
