Question Period Note: TAX EVASION AND AVOIDANCE – OVERVIEW

Can the Minister tell us more about Canada Revenue Agency’s efforts to combat tax evasion and avoidance?

• Tax evasion and aggressive tax avoidance are complex matters of global concern.

• The Canada Revenue Agency (Agency) is acquiring new tools and leveraging better data and new approaches for better results.

• The Agency is making progress in its efforts to combat tax evasion and avoidance in the following ways:

Country-by-country reporting
• Country-by country reporting provides access to annual information about multinational enterprises, giving the Agency a better picture of the operations of these large companies.

High Net Worth Taxpayers

• The Agency’s audit function devotes significant attention to multinational enterprises and high net worth individuals; In 2019-2020, over $8.6 billion in taxes earned by audit came from audits of large multinational enterprises and high net worth individuals.

Criminal Investigations

• As of June 1, 2020, there were more than 60 ongoing criminal investigations with an offshore element. As these cases progress, the Agency expects that the convictions will increasingly reflect this focused approach.

International cooperation

• International cooperation is key to these efforts, and the Agency plays key leadership roles with the OECD’s Forum on Tax Administration, JITSIC, and the J5.

The Canada Revenue Agency (Agency) has increased its focus on aggressive non-compliance through increased audit coverage, better data, and new approaches to identifying and targeting compliance efforts.

The majority of Canadian taxpayers are compliant and pay their fair share of taxes, and expect others to do the same. Meanwhile, a minority of taxpayers make small, unintentional errors in their tax returns, which the Agency addresses through education and services. However, a small segment of the population knowingly challenges and tests the limits of the Canadian tax system.

The Agency has increased collaboration with international partners and has a leadership role in a number of initiatives of the Organization for Economic Co-operation and Development (OECD) Forum on Tax Administration (FTA). The Agency is working with G7 and G20 and the OECD’s Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC), to exchange information that will help tackle tax avoidance and harmful tax practices. In addition, the Agency’s Commissioner is currently vice chair of the OECD FTA and sponsors the Large Business and International Programme.

The communication and transparency of the Agency’s compliance work has also improved; Tax Gap reports were released, the number of media responses and interviews increased, and pre-judgment releases of information related to criminal tax evasion cases were initiated.

Canada, Australia, China, France, Germany, Korea, Japan, the United Kingdom, and the United States are members of a joint task force to increase collaboration and coordinate information about abusive tax transactions. The JITSIC constitutes a very important tool for the Agency in its domestic and international work in addressing abusive tax avoidance schemes. JITSIC's key function is to gather and share information concerning a specific taxpayer or set of taxpayers.

Canada, Australia, the Netherlands, the United States and the United Kingdom, are members of the Joint Chiefs of Global Tax Enforcement (J5). They are committed to combatting transnational tax crime through increased enforcement collaboration. The J5 work together to gather information, share intelligence, and conduct operations while investigating, and prosecuting cases involving enablers and promoters of significant international tax evasion schemes.

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