OTTAWA: The Canadian minister responsible for tracking down on tax evaders here and around the world is warning the “net is tightening” and it will get tighter.
“The government of Canada’s position on tax evasion and tax avoidance schemes is unequivocal — all participants must be identified, and they have to be brought into full compliance with all their tax obligations,” National Revenue Minister Diane Lebouthillier told lawmakers on Thursday.
The Canada Revenue Agency “systemically pursues cases of non-compliance,” she told members of the House of Commons finance committee.
“The CRA is very active in combatting this problem and is already achieving significant results. But we know that we need to do more,” Lebouthillier said.
“Wealthy taxpayers must pay the taxes that they owe. It is a question of fairness,” she said. “The net is tightening.”
The fallout from revelations of questionable tax schemes offered by accounting giant KPMG on the Isle of Man, as well as the exposure of a global web of hidden personal and corporate bank accounts contained in the so-called Panama Papers, has put pressure on governments to do more to fight money laundering and other illegal means used by tax cheats.
Speaking to the finance committee, Lebouthillier said the federal government’s 2016-17 budget increased CRA funding by $444 million over the next four years. Ottawa expects those new efforts to bring in an additional $2.6 billion in tax revenue.
“The CRA will use some of these new funds to hire additional auditors and specialists to conduct investigations,” Lebouthillier said.
The agency’s chief executive Andrew Treucsh told the finance committee earlier this month the funds would help to increase the number of auditors to more than 6,400 — up 20 per cent from 2006.
“CRA is also accelerating its offshore compliance measures related to the activities of some Canadians — measures taken based on information gathered concerning electronic funds transfers of more than $10,000,” Lebouthillier added. “We have also received over 17 million records of such transfers into and out of Canada. Using that information, the CRA will target up to four jurisdictions a year without any warning.”
The first target of the increased fight against tax cheats will be the Isle of Man, where the CRA is looking at 350 individuals and about 400 companies that have conducted financial transaction on the island off the coast of England.
“Over 60 audits are underway, with more to come,” Lebouthillier said.
“The KPMG offshore tax avoidance scheme was discovered through the efforts of the CRA, and that legal action is underway to obtain the identities of participated KPMG clients who have not yet been exposed or have come forward voluntarily.”
The minister denied media reports that KPMG has been offered some form of amnesty by the CRA concerning its tax activities on the Isle of Man.
“The word ‘amnesty’ is not part of the vocabulary used by the CRA,” she said.
“There was not one, there will not be any amnesty. Each file is looked at and dealt with on a case-by-case basis. The goal of the CRA is to recovery the money that is due to the state.”
