Better data and approaches help the Canada Revenue Agency identify Canadians trying to hide their assets overseas
November 13, 2018 Ottawa, Ontario Canada Revenue Agency
Canada is committed to combatting offshore tax evasion and aggressive tax avoidance. Strong international partnerships are key to success. Thanks to historic investments in the last three federal Budgets, better tools and approaches in our compliance activities are helping us get more data, allowing us to better identify tax evasion and aggressive tax avoidance.
The Common Reporting Standard (CRS) was implemented in Canada in 2017 and includes the participation of more than 100 jurisdictions. It provides the Canada Revenue Agency (CRA) with information on Canadians’ overseas financial accounts. Under the CRS, Canadian financial institutions are required to identify non-residents’ financial accounts and to provide account details annually to the CRA. The CRA then shares this information with foreign jurisdictions and in turn, the CRA receives the same type of information from other jurisdictions.
Under this initiative the CRA expects to receive information from more than 80 international partners and has committed to sending information to more than 60. The number of exchange partners is expected to increase in the coming years. Information received will help the CRA identify financial accounts held in other jurisdictions to ensure that tax residents of Canada are meeting their Canadian tax obligations.
Participating in the CRS honours Canada’s commitment to its Organisation for Economic Co-operation and Development (OECD) and Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) partners to share more data in the fight against offshore tax evasion and aggressive tax avoidance.
Canada continues to be a leader in international collaboration as a member of the expanded Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC). This network of 38 countries works closely and actively with other tax administrations to coordinate tax compliance activities across the spectrum of international tax risks. This expertise has allowed the CRA to participate and lead JITSIC expert working groups, including the development of a strategy to identify and stop promoters of abusive tax schemes.
"International cooperation is key to fighting tax evasion and aggressive tax avoidance. By participating in the Common Reporting Standard initiative, we have access to information that will help us identify cases where Canadians may hide money abroad to avoid paying taxes, improving Canada’s ability to protect its tax base."
-The Honourable Diane Lebouthillier, Minister of National Revenue
Information collected and provided to the CRA under the CRS includes names, addresses, account numbers, balance and interest payment amounts. More than 100 jurisdictions are participating in this initiative that will help the CRA to increase voluntary compliance with Canada’s tax laws.
Canadians who have financial accounts in jurisdictions that are CRS partners with Canada will now have their account details shared annually with the CRA. Receiving this information will help identify instances where Canadian tax residents are hiding money and investments in other jurisdictions to avoid paying their fair share of tax in Canada.
Through the OECD Forum on Tax Administration (FTA), 50 jurisdictions work together to deal with international risks, improve compliance and efficiency of tax administrations. Canada is the vice-chair of the FTA with the goal of promoting tax compliance and improving tax certainty for tax administrations and large multinational enterprises. The CRA also leads the OECD’s large business and international programme.
In June 2018, Canada completed its first exchanges under the Country-by-Country (CbC) Reporting initiative. This compliance tool provides Canada with more information to risk assess multinationals who may be inappropriately shifting profits offshore.
Since January 2015, the CRA has been automatically accessing all international Electronic Funds Transfers (EFTs) of more than $10,000 entering or leaving the country. As of March 31, 2018, teams have analyzed more than 187,000 EFTs amounting to more than $177 billion, related to eight jurisdictions or financial institutions of concern. Reviewing these transfers helps identify transactions on which taxes should potentially have been paid, and better risk-assess individuals and businesses.
Office of the Minister of National Revenue
Canada Revenue Agency
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