The Government of Canada has committed to crack down on tax evasion and tax avoidance. Most middle class Canadians pay their fair share of taxes, but some wealthy individuals avoid taxes by hiding their money in offshore tax havens. This is not fair and it needs to change. These wealthy Canadians should not be able to buy their way out of paying the income tax that they owe.
Today, the Minister of National Revenue, Diane Lebouthillier, announced that the Government of Canada will invest over $444 million to enhance the Canada Revenue Agency’s (CRA) ability to detect, audit, and prosecute tax evasion – both at home and abroad.
Since January 2015, the CRA has collected information on all international funds transfers over $10,000. Building on this new capability, Budget 2016 provides the Agency with the ability to more fully examine potential tax evasion across an entire jurisdiction. The first to be investigated will be the Isle of Man – additional jurisdictions will follow.
Audits and Investigations
In order to combat tax evasion and tax avoidance, the CRA will create a special program dedicated to stopping the organizations that create – and promote – these tax schemes for the wealthy. This will result in a twelve-fold increase in the number of tax schemes examined by the CRA. This team will apply penalties and refer cases for criminal investigation, where appropriate.
The federal investment will give the CRA the ability to hire more auditors and specialists. This will increase the number of examinations focused on high-risk taxpayers – from 600 per year to 3000 per year – and will bring in $432 million in new tax revenue. In addition, the new government funding will help the CRA bring in 100 additional auditors to investigate high-risk multinational corporations, a strategy that will collect an additional $500 million in revenue over five years.
Penalties and Prosecution
To make sure these investments deliver results, the CRA will embed legal counsel within investigation teams, so that cases can be quickly brought to court. Taken together, the CRA will use the latest investigative tools and technology, paired with larger investigative teams, to detect more cases of tax evasion that result in the appropriate charges, fines, and penalties.
In addition to this unprecedented investment, the Minister also announced a number of concrete steps that the CRA will take, including:
- bolstering international collaboration to fight tax evasion,
- creating an independent advisory committee on offshore tax evasion and aggressive tax planning; and
- beginning work to estimate the tax gap, so that Canadians and Parliamentarians have confidence in the fairness of the tax system.
The Prime Minister, Justin Trudeau, made a commitment during the campaign to strengthen the CRA and its ability to crack down on tax evaders. Today’s announcement delivers on that promise.
Source: Canada Government