Canadian tax authorities expect to track down $400 million this year they say are owed as part of a campaign to crack down on tax evasion by big international companies and wealthy individuals, particularly those using offshore tax havens, a top official says.
The Liberal government provided extra cash to the Canada Revenue Agency in last year’s budget to pursue wealthy tax cheats. The agency is “ahead of plan” in terms of hitting its target, says Ted Gallivan, assistant commissioner at CRA’s compliance programs branch.
“I don’t think raising the revenue is going to be a challenge for us because we have a strong record of generating tax revenue by identifying non-compliance,” Gallivan said.
The $400 million is a small fraction of the $13 billion CRA is expected to recover from its audits in this fiscal year, but it is expected to grow.
The 2016 federal budget included $444.4 million over five years to help the agency crack down on wealthy tax cheats. The program is expected to garner $2.6 billion in extra tax revenue over that period.
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CRA also said there will also be additional assessments above the $2.6 billion for provincial tax, interest and penalties.
The extra money in the budget has been used to hire staff and start building the information technology infrastructure to review large international transfers of money in real time.
Gallivan says CRA has been careful in spending the extra money, adding to the ranks of auditors for large multinational companies, targeting promoters of illegal tax schemes and beefing up the criminal investigation teams with lawyers at the earliest stages.
“It allowed us to ramp up the pressure in many areas without decreasing the pressure in other areas,” he said.
University of Ottawa tax law professor Vern Krishna called the $400 million remarkable, but expressed skepticism regarding the figure, noting that the appeal process at CRA can take a long time.
CRA said there will be appeals, litigation and collections issues that will result in some of the funds not making their way into federal coffers, but noted that the budget in 2016 also included money to enhance the CRA’s collection capacity.
Gallivan said the agency is also reviewing its voluntary disclosure rules with an aim to tighten that program. The program can reduce penalties for those who notify authorities when they have failed to pay their taxes.
CRA estimates the program will help identify $1 billion in income that might otherwise have been hidden this year.
Gallivan noted the changes being looked at include whether to continue allowing Canadians to use the program more than once.
“Should you really kind of have a second kick at the can?” Gallivan asked.
“Somebody who does it twice, deliberately and with a lot of legal advice and thinking around it, that’s not really what we want.”
He said the payment requirements when someone makes a disclosure under the program are also being reviewed.
Public consultations on the changes are expected to start in the spring with recommendations seen ready for the fall.
National Revenue Minister Diane Lebouthillier accepted Thursday the recommendations regarding tax evasion in a report by the House of Commons finance committee.
Among the recommendations in the report is a comprehensive review of the voluntary disclosure program and a review of guidelines used to determine whether to pursue litigation or seek a settlement with tax evaders.
The report also recommended the minister strengthen protections for informants.