The Standing Committee on Finance is recommending that federal authorities step up the fight against tax evasion by requiring tax advisors to register tax products with the Canada Revenue Agency (CRA). It also recommends bolstering protections for informants and enhancing enforcement, among other measures.
The House of Commons committee issued a report on Oct. 26, setting out 14 recommendations for strengthening the fight against tax evasion and offshore tax avoidance. The report recommends that the CRA review its voluntary disclosures program, and that the minister of national revenue review the advance tax ruling process to find ways to improve timeliness and efficiency.
The report also calls for the revenue minister to strengthen protections for informants, to ensure that these programs are “properly incentivized,” and ensure that credible tips are investigated properly.
The committee recommends improved coordination between the CRA and Department of Justice Canada in the investigation and prosecution of tax evasion. And it calls for enhanced public reporting on the CRA’s enforcement efforts. The report says that the minister should report on the status of audits stemming from the “Panama Papers” revelations by June 2017.
Revenue Minister Diane Lebouthillier said that her department would review and respond to the report’s recommendations. She stressed that it has increased funding for the CRA’s efforts to combat offshore tax evasion.
“The CRA will continue to address the very serious issues of tax avoidance and tax evasion using more sophisticated business intelligence, hiring additional experts from many disciplines, and stronger international collaboration to crack down on those taxpayers who don’t pay what they owe,” she said.
Additionally, the report says that the government should accelerate a review of the tax system to reduce complexity and eliminate incentives for tax evasion.
In response to the report, the Chartered Professional Accountants of Canada (CPA Canada) particularly welcomed the recommendation to reduce complexity in the tax rules. “CPA Canada has long called for the simplification of the tax code to assist taxpayers with compliance,” said Joy Thomas, president and CEO of CPA Canada.
The group also said that it supports the increased funding for the CRA to crack down on tax cheats. “Canadians are right to demand a fair and equitable tax system and we strongly support the government’s efforts to address the issues that exist,” Thomas said. “Ensuring that the public interest is served by Canada’s tax system is a paramount consideration for Canadians and for our profession.”
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