CRA conducting 750 audits in crackdown on international tax evasion

National Post


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 as a founding member of the Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) network. JITSIC, consisting today of 36 of the world’s national tax administrations, was originally established in 2004 as the Joint International Tax Shelter Information Centre to combat cross-border tax avoidance. JITSIC offers a forum to enable its members to actively collaborate and share relevant experience, resources and expertise to tackle common tax compliance issues.

“Hiding income and assets in foreign jurisdictions to avoid paying taxes is a serious issue that robs all hard-working Canadians of important services. By increasing our collaboration with our international partners, Canada is taking an active role in ensuring a fairer tax system, where tax cheats face consequences for their actions,” Lebouthillier said in a press release. “This government has promised to pursue tax cheats and with the help of our international partners and concrete action at home, I can say that we are closing in on them.”

The CRA announced that it 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 CRA announced that it has several ongoing audits and is pursuing criminal investigations in some cases.

In 2015, the CRA launched its 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. This includes transfers involving Panama and “other jurisdictions of concern.” 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, approximately 350 individuals and 400 entities have been contacted, with 60 audits currently underway.

Earlier this year, 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 the 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 “assist in auditing high-risk multinational corporations and unravelling complex offshore schemes to crack down on tax cheats.”

In 2013, the CRA announced the launch of its offshore tax informant program (OTIP), which can provide financial awards to individuals who provide information related to major international tax non-compliance that leads to the collection of taxes owing. As of July 31, OTIP has received 868 calls from potential informants and an additional 361 written submissions. As a direct result of this program, over 180 taxpayers are currently under audit.