The Honourable Diane Lebouthillier, Minister of National Revenue, at a news conference to announce: Action on aggressive tax avoidance and offshore tax evasion

Speech

National Press Theatre, Ottawa
April 11, 2016

I would like to start by thanking the members of the media for coming out for today's announcements.

You won't be surprised to learn that I'm here to talk about tax cheats. There has been a lot of talk again in recent days about individuals and corporations who move their money offshore to hide income and avoid their tax obligations.

The Government of Canada is committed to wiping out tax evasion. Most middle-class Canadians pay their fair share of taxes, but some wealthy individuals avoid paying taxes by hiding their money in offshore tax shelters. This is not fair and it needs to change. These wealthy Canadians should not be able to buy their way out of paying the income tax that they owe.

We want to control tax avoidance and wipe out tax evasion. That's a priority for our government. It was part of our electoral platform last fall. And it's also in my mandate letter as Minister of National Revenue. Today, we're announcing a historic investment of $444 million, as set out in the Budget on March 22, to improve the Agency's ability to detect, audit and prosecute tax evaders in Canada and abroad.

The Government of Canada is as determined as the public to ensure that all Canadians meet their tax obligations. It's only just and fair. Tax revenues fund the programs that Canadians count on – from health care and pensions, to transportation, immigration and other Crown functions, to tax incentives for industrial innovation. Everyone must pay their fair share, everyone must pay THEIR share. Millions of law-abiding taxpayers deserve that.

Allow me to describe how we plan to use the money from the last Budget, and to give an update on some of the measures that we're taking to strengthen our tax actions.

First, the CRA will use some of those new funds to hire additional auditors and specialists to conduct investigations. But it's more than just a matter of hiring more people: the CRA is now even more able to target high-risk taxpayers and adopt new approaches, as we're announcing today.

For example, the CRA will be increasing the number of auditors who focus on those who create tax schemes, from 2 to 25.

We will be hiring another 100 senior auditors to investigate high-risk multinationals.

The CRA is also developing robust business intelligence infrastructure for gathering and analyzing information that will help detect the growing volume of tax evasion and avoidance activities.

That will allow the CRA to better target promoters of illegal schemes, increase its audit activities, and improve the quality of investigative work focusing on criminal tax avoiders.

We foresee an increase in revenues of $2.6 billion over five years. Our investment should therefore provide a significant return.

Secondly, I am announcing the acceleration of 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. The CRA will target other jurisdictions and will review all electronic funds transfers made by individuals that are more than $10,000. It will also undertake compliance measures targeting all high-risk taxpayers. The CRA will target another jurisdiction in the coming weeks and will target up to four per year from now on, without any prior warning. The trap is closing.

Beginning this month, the CRA will contact about 350 individuals and 400 businesses that have conducted transactions on the Isle of Man. Over 60 audits related to those taxpayers are underway, with more to come.

We know that offshore non-compliance is an issue that involves billions of dollars. But I'm proud to be able to say that the Canada Revenue Agency is very active in combatting this problem and is already achieving significant results.

But clearly, we need to do more to catch taxpayers who are willing to push the limits and cross the line. So we're putting them on notice. Budget 2016 clearly indicated that offenders will be tracked down. The government's position is unequivocal.

Thirdly, I'm announcing the creation of an independent advisory committee to examine offshore tax evasion and aggressive tax planning. The committee will be chaired by Mr. Colin Campbell, an Associate Professor of Law at Western University. The results of that committee's work will be made public.

The committee will advise the CRA on current and future strategies and on approaches for combatting offshore tax evasion and tax avoidance.

That advice will be related, among other things, to the application of penalties, settlement agreements, criminal investigation functions, voluntary disclosures and communications.

That brings me to my fourth and final announcement. The CRA will play a lead role in estimating the tax gap. Those efforts, like creating the committee of outside experts, are just some examples of what we're doing to foster openness, transparency and communication.

Estimating the international component of the tax gap is a highly complex task. To our knowledge, no country currently publishes estimates of its offshore tax gap. There are many estimates of the gaps related to the underground economy that the CRA requested from Statistics Canada. The OECD, within which the CRA plays a key role, has prepared other types of estimates in relation to the tax gap.

The CRA will continue to work closely with its domestic and international partners to find the best way to conduct that review. It has a long history of cooperating with other tax administrations to protect the integrity of Canada's tax system and tax base.

We're well aware that our success will also depend on international cooperation, as no country can succeed alone in in cracking down on tax avoidance and wiping out tax evasion. The Prime Minister said it again last week: global problems require a global solution and all countries around the world must work together to combat tax evasion and encourage greater transparency.

To that end, Canada has one of the world's largest treaty networks, having entered into 92 tax treaties and 22 tax information exchange agreements. Moreover, we recently ratified the multilateral Convention on Mutual Administrative Assistance in Tax Matters, which further expands its international tax information-sharing network.

Canada is also a participating member of the Organisation for Economic Co-operation and Development and its Joint International Tax Shelter Information Centre network. In fact, the Information Centre is meeting later this week in Paris to coordinate measures concerning the information related to the Panama affair, and the CRA will be there.

In terms of cooperation here in Canada, I'm pleased to tell you that Revenu Québec has assured us of their full cooperation in our mutual efforts.

Today's announcements mean there will be no safe place in the world for Canadians to freely engage in tax evasion and tax avoidance schemes. Those who hide income and assets offshore, or who evade or avoid the taxes they owe, will be identified and will face the consequences.

Our government has promised Canadians a fair tax system that meets their needs. Thanks to our historic investments and tough new measures like these, we'll ensure that the Canadian tax system works as intended and contributes to an economy that benefits everyone.

Thank you for your attention.

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