Question Period Note: COMBATTING TAX AVOIDANCE AND TAX EVASION: CRA ACTIONS REGARDING PANAMA, PANDORA, AND PARADISE PAPERS

Compared to its international counterparts, why has the CRA not demonstrated as much progress in addressing data leaks known as the Panama, Pandora, and Paradise Papers?

• The Canada Revenue Agency (CRA) is firmly committed to responsible enforcement to uphold the integrity of Canada’s tax system and protect the interests of the Crown.

Panama, Paradise, and Pandora Papers:
- Insights learned from the Panama, Paradise, and Paradise Papers leaks guide the CRA’s approach to managing future data leaks.

• The CRA analyzes data as it becomes available, integrating intelligence into its risk assessment and analytical tools. It also collaborates with international partners to pool resources and information.

• To enforce compliance the CRA uses various tools to collect the information it needs, including third-party information requests, compliance order applications to the court, and other legislated measures under the Income Tax Act and other statutes.

• Audits resulting from data leaks often require lengthy, complex information-gathering processes and can take years to complete.

Collections and Compliance
- Once a debt is established, the CRA takes progressive action from payment arrangement to legal action and exhausts all available measures to ensure compliance.

• Information on how the CRA acts on offshore data leaks is available on Canada.ca (How we combat tax evasion and avoidance - Canada.ca).

If pressed:
- The presence of a person’s name in a data leak does not necessarily mean tax non-compliance.

The CRA is well positioned to identify risks of tax non-compliance and ensure wealthy Canadians pay the taxes they owe. To do so, the CRA:
- uses tools, such as enhanced business intelligence and advanced data analysis
- leverages increased international collaboration, such as the Joint International Taskforce for Shared Intelligence and Collaboration’s Data Leaks Group
- has information sources, such as electronic funds transfer (EFT) data, the Common Reporting Standard, and the Offshore Tax Informant Program (OTIP) that support compliance actions

With respect these offshore data leaks, while they can contain useful information about activities of taxpayers, it is important to highlight that holding an offshore bank account or offshore assets does not necessarily mean a taxpayer has committed any tax wrongdoing. We review this information to identify income and assets that were not disclosed for tax purposes and our results are to date are below (please note these data have not yet been posted online):

Panama Papers:
- Analyzing the Panama Papers was time consuming and complex given the absence of financial information in the data leak, and the fact that some taxpayers created complex structures to deliberately hide their assets.

• Since the release of the Panama Papers, approximately 900 Canadian individuals, corporations, and trusts with a potential connection to Canada from the Panama Papers have been identified for evaluation and review, to identify those with the highest risk of tax non-compliance. Over 60% of Canadians linked to this data leak were found to have complied with their tax reporting obligations.

• As of March 2025, the Panama Papers have led to over 330 audits resulting in more than $119 million in federal taxes and penalties assessed. Approximately 110 audits are ongoing.

Paradise Papers
- Since the release of the Paradise Papers, approximately 2,790 Canadian individuals, corporations, and trusts with a potential connection to Canada from the Paradise Papers have been identified for evaluation and review, to identify those with the highest risk of tax non-compliance. Over 80% of Canadians linked to this data leak were found to have complied with their tax reporting obligations.

• As of March 2025, the Paradise Papers have led to approximately 40 audits resulting in more than $6.8 million in federal taxes and penalties assessed. Approximately another 35 audits were ongoing. In addition, the CRA has also completed audits of approximately 40 Economic Groups linked to the Paradise Papers in the course of its existing large business audit program.

Pandora Papers
- As of March 2025, for the Pandora Papers, the CRA has been analyzing the two datasets released in December 2021 and May 2022, and is continuing work on risk assessment. Approximately 430 individuals and corporations with a potential connection to Canada have been linked to this data leak, and risk assessment and compliance actions are ongoing. There are over 20 audits ongoing.

In addition to conducting audits, the CRA investigates individuals and businesses involved in suspected cases of tax evasion and other tax crimes, both domestically and internationally. This work is carried out by the Criminal Investigations Program.

As of March 31, 2025, there have been six criminal investigations of tax evasion related to offshore data leaks:
• Three cases were discontinued at the investigation stage
• Three cases are currently ongoing.

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