CEO.CA Chairman's Briefing

OTTAWA, ONTARIO--(Marketwired - March 5, 2017) - Canada Revenue Agency

The Honourable Diane Lebouthillier, Minister of National Revenue, delivered the following statement to update Canadians on the important efforts and progress made by the Government of Canada to crack down on tax cheats and ensure a tax system that is fair and responsive for all Canadians. The Minister also took the opportunity to clarify our Government's efforts in relation to the KPMG file which was the subject of recent media reports: 

Most middle-class Canadians pay their fair share of taxes, but some wealthy individuals participate in complex tax schemes to avoid paying their fair share. That is unacceptable and it needs to change. The Government of Canada is working hard to crack down on offshore tax evasion and aggressive tax avoidance in order to ensure a tax system that is fair and responsive for all Canadians.

In relation to the KPMG file, the CRA continues to take action on a number of fronts, including actively seeking further information through the courts. Going further, by analysing additional information, the Agency has uncovered a number of additional tax schemes set up in the Isle of Man. The CRA is analysing these additional structures to identify any similarities with the KPMG scheme, and, where appropriate, will take all necessary compliance actions.

The recent media reports continue to characterize the CRA's actions as offering "amnesty". However, as I previously stated, there was no amnesty. I would like to clarify that, when deciding whether to pursue compliance orders or other actions before the courts, as a result of audits, the CRA consults the Department of Justice. Early dispute resolution, where appropriate, is in the public interest. Litigation is costly for everyone and the outcome of complex, tax-related litigation processes may be unsuccessful.

The suggestion that any wrongdoing occurred as part of the CRA's handling of the KPMG file ignores the results of an independent third-party review. The review, conducted by Kimberley Brooks, Associate Professor and former dean of the Schulich School of Law at Dalhousie University, found that the specific compliance measures taken by the CRA were in accordance with established CRA policies and procedures, and were reasonable and supported by evidence.

In the last year, the Government of Canada has taken significant action on several fronts to identify and deal with tax cheats. Supported by the investment of $444 million announced in Budget 2016, our Government is focussing resources in areas of highest risk both domestically and internationally. With increased information gathering capabilities and better tools at its disposal, the CRA now has access to more information than ever before.

It is clear that a lot of work is already underway. With these increased efforts, the CRA is already seeing signs of success. But there remains much to do.

Tax cheating remains a significant, global multi-billion dollar concern. As part of its commitment to cracking down on aggressive tax avoidance and evasion, the CRA will continue to build its capacity to detect and crack down on tax cheats. Furthermore, the Agency is committed to transparently communicating its activities and results to Canadians - to not only inform and improve its approaches over time - but to ensure a tax system that is responsive and fair for all.

The CRA's domestic and offshore audit activities have put our Government on pace to raise assessments of over $13 billion this year.

In addition, to build on these assessments, in the last year the CRA has:

• increased the number of auditors reviewing offshore tax schemes, promoters and large multinational corporations.
• begun reviewing all taxpayers in certain segments of the population identified as high risk. The Agency is using external data and publically available information to maximize its efforts to identify non-compliance.
• expanded its promoter centre specifically geared towards intermediaries, and making promoters a focus of our criminal investigations, with several underway.
• toughened its response to "leaked lists" of taxpayers with offshore holdings. For example, with the Panama Papers, the CRA has over 76 taxpayer audits underway and extensive data is currently being reviewed. The CRA also executed search warrants and several criminal investigations involving both participants and facilitators, are ongoing.
• audits of the highest-risk taxpayers moving money between Canada and four offshore jurisdictions are underway, with more to come. So far, a total of 41,000 transactions have been analysed, totaling over $12 billion.
• established specialist collection teams and added technical and legal expertise throughout its enforcement teams.

Let me be clear: tax cheats can no longer hide. We take these matters very seriously and those who choose to participate in these schemes, must face the consequences of their actions. This is what middle-class Canadians who pay their fair share of tax expect.

Related links:

Government of Canada cracks down on tax evasion

Government of Canada participates in meeting of tax administrations to share findings on Panama Papers

Government Response to the Sixth Report of the Standing Committee on Finance

Cracking down on offshore tax evasion and aggressive tax avoidance

Statement from the Canada Revenue Agency

Summary Findings: Independent review of the CRA's Management of the KPMG Offshore Tax Scheme

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