Better results: The CRA at work for you

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Introduction

Canada has one of the highest voluntary tax compliance rates in the world, but there’s still a small minority choosing not to pay what they owe.

Tax evasion and aggressive tax avoidance deprive our country of important revenues that help fund essential programs and services such as health care, childcare, education and infrastructure.

Recent budget investments have resulted in the Canada Revenue Agency (CRA) having better tools and approaches to help receive and analyze more data to find more of those not paying their fair share. Better data and better approaches are leading to better results to improve the integrity and fairness of our tax system.

Stopping tax cheating: Getting results

Focusing resources on the highest risk files means the CRA is tightening the net on those high net-worth individuals, promoters, corporations and entities who try to avoid paying their fair share of taxes. This work is having an impact and the CRA is committed to giving Canadians access to the results of the important work the CRA is conducting to tackle tax evasion and aggressive tax avoidance.

Criminal investigations

Over the past few years, changes were implemented to strengthen the CRA’s ability to target and investigate the most serious cases of tax evasion and fraud, reinforcing the CRA’s efforts to target areas of high risk.

Since these cases are increasingly more complex and take more time to complete, the number of cases convicted are fewer. Nonetheless, the strategic shift is resulting in tougher court sentences being awarded by the courts, as evidenced by an increase in the average jail time per jail sentence.

These changes have resulted in the CRA investigating more significant cases involving larger amounts of taxes evaded.

We are, in effect, getting fewer convictions but on more significant amounts of tax evaded, with stricter court sentences.

In addition, the current inventory of cases under investigation has increased along with the number of cases referred to the Public Prosecution Service of Canada (PPSC) for prosecution. These cases are complex and can take years to complete. Find out more about the criminal investigations process.

Our Results
Description 2014-2015 2015-2016 2016-2017 2017-2018
Fiscal Impact - Agency $11.7 billion $12.7 billion $12.5 billion $13.6 billion
Fiscal Impact - Large business, international, offshore, aggressive tax planning $7.8 billion $8.0 billion $8.0 billion $7.9 billion
Fiscal Impact - Abusive tax avoidance & aggressive tax planning $1.4 billion $2.0 billion $1.8 billion $2.9 billion
# of files received for application of General Anti-Avoidance Rule (GAAR) (cumulative since inception) 1,267 1,333 1,392 1,472
% of cases where General Anti-Avoidance Rule was recommended for application 78% 79% 79% 79%
# of international exchanges under legal instrument 1,212 1,075 892 1,838
# of offshore audits completed 98 185 223 235
# of potential informant calls to Offshore Tax Informant Program (OTIP) 350 262 244 196
# of written submissions to OTIP 144 115 110 93
$ in federal tax and foreign reporting penalties assessed through information received through OTIP N/A $10,148 $1.6 million $31.5 million
# of Electronic Funds Transfer (EFT) transactions analyzed for jurisdiction projects N/A 3,095 38,194 145,842
$ of EFT transactions analyzed for jurisdiction projects N/A $867 million $11.4 billion $164.8 billion
Total number of alternative compliance treatments (e.g. nudge letters) resulting from jurisdiction projects N/A N/A 4,544 4,670
Number of taxpayers identified for audit resulting from jurisdiction projects N/A N/A 142 123
$ of Third Party Penalties on promoters and tax preparers (all programs) $36.7 million $212,914 $44.3 million $48.9 million
# of cases referred for criminal investigation 244 377 335 269
# of search warrants executed 39 100 123 172
# of cases referred to the Public Prosecution Service of Canada (PPSC) 21 17 28 36
# of files where criminal charges were laid under the Income Tax Act, Excise Tax Act, and/or Criminal Code 30 19 32 52
# of investigations as a result of joining forces operations with other law enforcement agencies 1 13 12 12
Conviction rate 96% 88% 89% 95%
# of convictions for tax evasion 95 50 37 27
$ of federal tax evaded related to convictions $12.5 million $16.4 million $32.7 million $45.4 million
# of taxpayers sentenced to prison terms Footnote 1 34 22 24 14
# of years of prison terms imposed 57.6 44.5 50.6 40.7
Average jail term (in months) per jail sentence 20.3 24.3 25.3 34.9
$ of court fines imposed $9.7 million $4.1 million $10 million $3.1 million

How you can help the CRA

You can be eligible to be paid when you tell the CRA about offshore tax avoidance by using the Offshore Tax Informant Program (OTIP). Having paid informants has already proven successful with more than 370 taxpayers identified for offshore non-compliance audits. As of March 31, 2018, the CRA has identified more than $33 million in additional federal taxes and penalties as a result of the program. If you are aware of deliberate international tax avoidance, let the CRA know.

You can reduce the impact of previous errors in your own tax returns. Under the Voluntary Disclosures Program (VDP) taxpayers can correct errors in their tax affairs. Recent changes make it tougher for those who intentionally avoid their tax obligations to benefit from the VDP, while maintaining the program for Canadians looking to correct tax filing mistakes.

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