Budget 2013 - International Tax Evasion and Aggressive Tax Avoidance

Notice to the reader

The legislative measures below have received Royal Assent.

Effective tax planning occurs when the results of tax reduction arrangements are consistent with the intent of the law. Those who practice aggressive tax avoidance or who undertake abusive tax planning reduce taxes in a way that is inconsistent with the overall spirit and intent of the law. Both specific and general anti-avoidance provisions have been introduced to address these abusive arrangements.

Tax evasion is an illegal practice where a taxpayer avoids paying taxes or reduces taxes by the misrepresentation of the taxpayer's activities. For example, those participating in tax evasion may underreport taxable income or claim expenses that are non-deductible or overstated. They might also attempt to evade taxes by refusing to comply with legislated reporting requirements.

The Canada Revenue Agency (CRA) takes abuse of Canada's tax laws very seriously. When an individual or business does not fully comply with tax legislation, an unfair burden is placed on law-abiding taxpayers and businesses and the integrity of Canada's tax base is jeopardized.

The budget proposes a package of measures to strengthen the ability of the CRA to address international aggressive tax avoidance and to combat international tax evasion. With these tools, the CRA will be better able to maintain and protect Canada's tax base.

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