Budget 2013 - Stop International Tax Evasion Program
Notice to the reader
The legislative changes consequential to this measure have received Royal Assent.
The Offshore Tax Informant Program (OTIP), announced in Economic Action Plan 2013 as the Stop International Tax Evasion Program, was launched on January 15, 2014. For more information, go to Offshore Tax Informant Program.
The budget announces the CRA's intention to launch an initiative to encourage individuals to provide relevant information identifying international tax evasion and avoidance. Under the initiative, the CRA will enter into a contract with an individual where information is provided to the CRA that leads to the assessment and collection of additional taxes arising from major international tax non-compliance. A payment for a percentage of the federal taxes collected will be made to the individual, subject to certain conditions.
Does the CRA currently accept information related to tax evasion?
Yes. The CRA currently accepts information, including information provided anonymously, related to suspected tax evasion and ensures that it is reviewed and provided to the appropriate compliance program. The CRA does not pay for the information that it currently receives.
What will be different under the initiative?
Under the new initiative, the CRA will enter into a contract with an individual where information is provided to the CRA that leads to the assessment and collection of additional taxes arising from major international tax non-compliance. A payment for a percentage of the federal taxes collected will be made to the individual, subject to certain conditions. Anonymous submissions will not be accepted under this initiative.
Will the CRA continue to accept all information concerning suspected tax evasion?
Yes. While the initiative is being launched to encourage individuals to provide the CRA with information related to major international tax non-compliance, the CRA will continue to accept all information related to suspected tax evasion.
Why is the CRA considering making payments for information that identifies major international non-compliance?
Aggressive international tax evasion and avoidance is recognized as a significant ongoing problem, which is often difficult to identify and address. The CRA is evolving our approach and developing new tools to effectively combat tax evasion and avoidance. Furthermore, other tax administrations have encountered success in detecting international non-compliance by paying individuals for this information.
What is considered major international tax non-compliance for the purposes of the initiative?
Under the terms of the contract, the information related to the non-compliant activity must lead to the assessment or reassessment of additional federal taxes that exceed $100,000. Payments will be made only where the non-compliant activity involves foreign property or property located or transferred outside Canada, or transactions conducted partially or entirely outside Canada.
What are the other conditions that must be met before a payment is made under the initiative?
Under the terms of the contract, a payment will be made if certain conditions have been met, including the following:
- all objection and appeal rights associated with the assessed tax have expired;
- the federal tax, for which a payment is being issued, has been collected; and
- the information is not related to tax evasion for which the individual has been convicted.
Will the payment be taxable?
A payment under the initiative will be included in taxable income in the year it is received. Individuals who are not resident in Canada for tax purposes at the time the payment is received will also be subject to tax on the payment.
Will the identity of the individual who enters into a contract with the CRA be revealed?
Unless the individual provides the CRA with consent to release his or her identity, the CRA has a legal obligation not to disclose any identification information. The CRA will protect the confidentiality of the individual's identity to the extent possible under the law.
How much will the CRA pay for information that leads to the assessment and collection of additional taxes?
A graduated payment rate from 5% to 15% of the federal tax collected will be used to determine the payment based on the quality and extent of information provided. No payment will be made in respect of penalties and interest or provincial taxes.
How long will the entire process take before a payment is received?
There are many factors that affect the length of time that it will take the CRA to evaluate a file and each case will be different. The CRA is prohibited from disclosing information concerning the progress of files, but an individual will be informed once they are eligible for a payment.
When will this initiative start and how will a submission be made?
The CRA will be making an announcement concerning the initiative with these details in the coming months. The announcement will include information concerning the process to follow if an individual wants to provide information under this initiative.
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