Offshore Compliance Advisory Committee – Minutes – August 3, 2016

Wednesday, August 3, 2016

List of Participants

OCAC Members

Colin Campbell

Kimberley Brooks

Committee Members

CRA Attendees

Deputy Assistant Commissioner, International, Large Business and Investigations Branch
Lisa Anawati

Special Advisor, International, Large Business and Investigations Branch
Alexandra MacLean

1. Welcome and opening remarks

The Chair welcomed all members to the meeting and stated that he looked forward to the OCAC's deliberations.

2. Minutes of June 15, 2016 meeting

The minutes of the June 15, 2016 meeting were approved by the Committee.

3. Voluntary Disclosures Program (VDP)

The focus of the meeting was to discuss various aspects of the Canada Revenue Agency's Voluntary Disclosures Program. Specifically the Committee considered the following points:

  1. Should the VDP be available to repeat offenders (see paragraph 46 of Information Circular 00-1R4)?
  2. Should the VDP apply where the only non-compliance is the failure to file information returns? For example, if a taxpayer has reported all the offshore income but did not file a T1135, is VDP the appropriate mechanism to waive the associated penalty?
  3. Should the VDP apply where the penalty in question is a transfer pricing penalty under subsection 247(3) relating to a related-party cross-border transaction?
  4. Should there be a requirement for taxpayers to pay all associated tax and estimated interest within a certain time period when they make a voluntary disclosure? It was noted that this is an important element to consider from a perception of fairness perspective.
  5. The Committee discussed the issue of incomplete records as noted in paragraph 45 of the OECD report. Are taxpayers claiming not to have records beyond a certain point in time to limit their tax liability?
  6. Should there be degrees of relief available under the VDP depending on the type of disclosure (and underlying non-compliance issue)?
  7. Should taxpayers be allowed to file a Notice of Objection that relates to a matter that is the subject of a voluntary disclosure?

The following questions were identified for follow-up by CRA officials:

  1. Q1. To what extent do VDP participants cause problems from a collections perspective?
  2. Q2. Are taxpayers required to disclose advisors used for non-compliance as part of the VDP process?
  3. Q3. Does VDP participants' retention of objection rights cause issues or concerns for the CRA: e.g. how common is it for VDP participants to object?
  4. Q4. How are taxpayers who fail to file an information return such as a T1135 currently treated outside of VDP?
  5. Q5. What is the level for sign-off on a VDP acceptance (in various circumstances, if relevant)?

4. VDP recommendations – next steps

CRA committed to obtaining answers to questions the Committee had about VDP operations and will consider possible options for point f) above.

In addition, the Committee discussed the format and approach for its first report, with input from CRA representatives.

5. Future topics and date of next meeting

It was proposed that the next in-person meeting would be held in October. At that meeting, the Chair proposed that a draft report with VDP recommendations be reviewed and the discussions on the next topic (settlement and litigation issues) begin. The Committee will receive reading material in advance of that meeting. Prior to the meeting, there will be conference call discussions relating to the VDP recommendations.

6. Closing remarks

The Chair thanked everyone for their participation and adjourned the meeting.

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