Offshore Compliance Advisory Committee – Minutes – November 17, 2017

Friday, November 17, 2017

List of Participants

OCAC Members

Colin Campbell

Kimberley Brooks

Committee Members

  • Catherine Brown
  • Larry Chapman


Committee Member
Daniel Thornton

CRA Attendees

Bob Hamilton

Assistant Commissioner, International, Large Business and Investigations Branch
Ted Gallivan

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

Director General, Agency Change and Innovation Directorate
Mireille Éthier

Director, Accelerated Business Solutions Lab
André Patry

Manager, Strategic Research and Tax Gap
Michelle Gouchie

Principal Policy Analyst
Stephanie Gan

Acting Director General, International and Large Business Directorate
Alexandra MacLean

Acting Director, Abusive Tax Avoidance and Technical Support Division
Len Lubbers

Manager, Related Party Initiative
Maggie Moscovoy

Senior Technical Specialist
Dawn Dannehl

Director General, Offshore and Aggressive Tax Planning Directorate
Gina Jelmini

Senior Technical Advisor, International and Large Business Directorate
Maureen O'Leary

1. Opening Remarks

The Commissioner welcomed all members to the meeting and thanked them for their work to date.

The Commissioner opened by noting that offshore compliance is an issue of global concern. He then touched on some of the key actions stemming from the OECD/G20 Base Erosion and Profit Shifting project, including Country by Country Reporting, the exchange of tax rulings, and improving tax treaty-related dispute resolution. In addition, the Commissioner spoke about the Common Reporting Standard, the new global standard for the reciprocal exchange of information, and the fact that Canada will undertake the first exchange of information in September 2018.

The Commissioner noted that the OCAC would be discussing the tax gap. He indicated that the CRA would welcome the committee's input on the upcoming study on the international tax gap, which will be released in the summer of 2018.

The Commissioner also thanked the OCAC for their recent letter on the topic of big data; the CRA is carefully reviewing the recommendations. He observed that it is important for CRA to examine ways to better use data, including through advanced analytics, so that it can focus on the high risk issues.

2. Update - OCAC Letter to Minister

Lisa Anawati informed members that their letter had been received positively by both the Commissioner and Minister's offices. CRA is currently looking at how to respond and implement the recommendations.

3. Tax Gaps

The CRA gave a presentation on the tax gaps, starting with a review of keys concepts and the experiences of other tax jurisdictions. The CRA then presented its tax gap reports to date (GST/HST and domestic T1) and its approach to the international T1 tax gap report that is expected to be released in June 2018. Committee members then discussed the three questions that had been submitted to them:

  1. Does the Committee have any views about the usefulness of tax assured to tax administrators as a compliance indicator and whether publishing such an indicator informs the discussion around tax gap? The OCAC supported the use of tax assured as a compliance indicator.
  2. Does the Committee have any views about the benefits and challenges related to random audit programs? While the OCAC acknowledged that there are additional costs and compliance burden associated with random audit programs, they felt that the information was important and necessary to support tax gap estimations.
  3. Do you have views on whether tax revenue loss related to aggressive tax avoidance should be part of the tax gap and how it should be estimated? The OCAC noted that the subjective and interpretive nature of certain tax avoidance issues could make this aspect more difficult to estimate. Some members noted the approach taken by the HMRC to account for aggressive tax avoidance in tax gap estimation could be an interesting option.

4. Non-resident Trusts

The CRA gave a presentation on its compliance approach for non-resident trusts, including identification, audit strategy, audit challenges, and future objectives. The OCAC then discussed possible improvements to CRA forms and processes to identify non-resident trusts.

5. Related Party Initiative

Note that Mr. Chapman recused himself from this presentation.

The CRA gave a presentation on its Related Party Initiative (RPI), including background of the program, current program structure and results, and the RPI program strategy. The CRA also provided a copy of its RPI audit questionnaire to members, as well as information about the RPI's planned letter campaign. The OCAC then discussed risk indicators, wealth estimation, and possible refinements to the RPI audit questionnaire and campaign.

6. Next steps

OCAC members and CRA officials discussed the nature and format of OCAC's input to the day's presentations, the next topics for OCAC to consider, as well as the timing of the next meeting. OCAC members were also asked to consider a potential one-year extension of the Committee's mandate.

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

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