Canadian Revenue Agency to hand over records for tax avoidance probe Canadian Revenue Agency to hand over records for tax avoidance probe

Canadian Revenue Agency to hand over records for tax avoidance probe
21 Feb 2018

The Canadian Revenue Agency (CRA) has agreed to hand over data to the parliamentary budget office so that it can calculate the amount of revenue lost by Ottawa through tax avoidance schemes.

The deal follows a five-year struggle by the budget office to access the information, according to The Canadian Press. Despite being threatened with legal action, the CRA had refused to provide the required data on the grounds that tax records were confidential.

Announcing the deal in the Canadian House of Commons last week, Prime Minister Justin Trudeau said: "An agreement has been concluded with the parliamentary budget officer and will provide this data in a way that will ensure the protection of personal information of Canadians by the end of the month.”

It follows an ultimatum from parliamentary budget officer Jean-Denis Frechette who threatened to pursue other options if the CRA failed to comply by 28 February. He welcomed the Agency’s decision but warned that he has still not ruled out going to court if what is handed over is not what has been agreed.

"So, yes, that would be something that could be considered, depending on the outcome of February 28," Frechette said.

Under the agreement, the information will be anonymised to protect taxpayers’ personal information.

Once the budget office has the data it needs, Frechette believes it will take between six and 10 months to work out the ‘tax gap’, or difference between how much tax revenue should have been collected in a year versus the amount that was actually gathered. But he also pointed out that the format in which he receives the information will affect the speed at which his office can process it.

"If they send me...paper version of all their files in boxes, of course it will take a long time," he said. “It's difficult for me to guess.”

The Conference Board of Canada estimates that tax evasion and tax avoidance cost the federal treasury between CA$8.9 billion (US$7.09 billion) and CA$47.8 billion (US$38.1 billion) each year.

But following the Paradise Papers scandal, which revealed that hundreds of billions of dollars from sources around the world were hidden in offshore tax havens, the Government has been under pressure to produce a more accurate estimate of how much the tax gap costs the Canadian Treasury. Unlike the UK and US, which have published tax gap estimates for some time, Canada has never done so.

But now, the Trudeau government has pledged almost CA$1 billion (US$797 million) over two years to tackle offshore tax evasion. Frechette pointed out that international tax havens were not the only cause of shortfalls, however, referring to Canadians who purposely fail to declare their true income plus others who make honest mistakes when filing tax returns.

Gill Oliver

Gill Oliver is a business and property journalist who has written for The Daily Mail/Mail Online's This is Money, The Press Association and many national and regional newspapers and magazines.

The Canadian Revenue Agency (CRA) has agreed to hand over data to the parliamentary budget office so that it can calculate the amount of revenue lost by Ottawa through tax avoidance schemes.

The deal follows a five-year struggle by the budget office to access the information, according to The Canadian Press. Despite being threatened with legal action, the CRA had refused to provide the required data on the grounds that tax records were confidential.

Announcing the deal in the Canadian House of Commons last week, Prime Minister Justin Trudeau said: "An agreement has been concluded with the parliamentary budget officer and will provide this data in a way that will ensure the protection of personal information of Canadians by the end of the month.”

It follows an ultimatum from parliamentary budget officer Jean-Denis Frechette who threatened to pursue other options if the CRA failed to comply by 28 February. He welcomed the Agency’s decision but warned that he has still not ruled out going to court if what is handed over is not what has been agreed.

"So, yes, that would be something that could be considered, depending on the outcome of February 28," Frechette said.

Under the agreement, the information will be anonymised to protect taxpayers’ personal information.

Once the budget office has the data it needs, Frechette believes it will take between six and 10 months to work out the ‘tax gap’, or difference between how much tax revenue should have been collected in a year versus the amount that was actually gathered. But he also pointed out that the format in which he receives the information will affect the speed at which his office can process it.

"If they send me...paper version of all their files in boxes, of course it will take a long time," he said. “It's difficult for me to guess.”

The Conference Board of Canada estimates that tax evasion and tax avoidance cost the federal treasury between CA$8.9 billion (US$7.09 billion) and CA$47.8 billion (US$38.1 billion) each year.

But following the Paradise Papers scandal, which revealed that hundreds of billions of dollars from sources around the world were hidden in offshore tax havens, the Government has been under pressure to produce a more accurate estimate of how much the tax gap costs the Canadian Treasury. Unlike the UK and US, which have published tax gap estimates for some time, Canada has never done so.

But now, the Trudeau government has pledged almost CA$1 billion (US$797 million) over two years to tackle offshore tax evasion. Frechette pointed out that international tax havens were not the only cause of shortfalls, however, referring to Canadians who purposely fail to declare their true income plus others who make honest mistakes when filing tax returns.

Gill Oliver

Gill Oliver is a business and property journalist who has written for The Daily Mail/Mail Online's This is Money, The Press Association and many national and regional newspapers and magazines.

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