Offshore Tax Informant Program v 3.0

Compliance Programs Branch
High Net Worth Compliance Directorate

On this page

• Overview & Privacy Impact Assessment Initiation (PIA)
• Summary of the project, initiative or change
• Risk identification and categorization

Overview & Privacy Impact Assessment (PIA) Initiation 

Government institution

Canada Revenue Agency

Government official responsible for the PIA

Adrianna McGillivray
Director General
High Net Worth Compliance Directorate
Compliance Programs Branch

Head of the government institution or Delegate for section 10 of the Privacy Act

Lia Jackson
Director
Access to Information and Privacy Directorate

Name of program or activity of the government institution

Reporting Compliance

Standard or institution specific class of record:

International, Large Business, Offshore, and Aggressive Tax Planning Income Tax Audits and Examinations
CRA CPB 415

Standard or institution specific personal information bank:

Offshore Tax Informant Program
CRA PPU 411
TBS Registration: 20180023

Legal authority for program or activity

Subsection 220 (1) of the Income Tax Act

“The Minister shall administer and enforce this Act and the Commissioner of Revenue may exercise all the powers and perform the duties of the Minister under this Act.”

Subsection 275 (1) of the Excise Tax Act

“The Minister shall administer and enforce this Part and the Commissioner may exercise all the powers and perform the duties of the Minister under this Part.”

The minister of national revenue has a mandate to administer and enforce the Income Tax Act and part IX of the Excise Tax Act.

Summary of the project, initiative or change

Overview of the Program or Activity

The Government of Canada is committed to protecting Canada's tax base and ensuring public confidence in the fairness and integrity of the tax system. Investments outside the country are not illegal. Canadians who invest outside the country are in compliance with Canada's tax laws, as long as they report all of the income earned outside Canada.

However, the Government of Canada and Canadian tax administrators are concerned about international financial transactions and mechanisms to avoid or evade Canadian tax. 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 system is jeopardized.

Launched as part of the Canada Revenue Agency's efforts to fight international tax evasion and aggressive tax avoidance, the Offshore Tax Informant Program allows the Canada Revenue Agency to offer financial rewards to individuals who provide information related to major international tax non-compliance that leads to the collection of taxes owing.

The Offshore Tax Informant Program’s main objective is to encourage the participation of the public in the identification of major international tax non-compliance. The program will do this by offering graduated incentive rewards from 5% to 15% of additional federal tax assessed and collected. The rewards will be offered to individuals who come forward with credible information that leads directly to the assessment and collection of additional taxes. Among other requirements, there is a basic threshold: To qualify for a reward, a lead must result in the collection of at least $100,000 in additional taxes. The program criteria are:

• whether information identifies major international tax non-compliance
• whether information has a potential to recover additional federal tax greater than $100,000
• whether an informant is eligible to participate

The information provided must have merit and include enough specific and credible facts that will allow the Canada Revenue Agency to verify an allegation. Information cannot already be known to the Canada Revenue Agency or be speculative.

Only individuals can participate in the Offshore Tax Informant Program. You are not eligible for this program in certain situations, including if:

• you have been convicted of tax evasion concerning the situation of non-compliance you are reporting
• you are a Canada Revenue Agency employee
• you are or were a federal, provincial, or municipal employee, official, or representative, and got the information in the course of your employment duties
• you are or were a contractor and got the information in the course of your duties for a federal, provincial, or municipal government
• you have been convicted of an offence listed in section 750 of the Criminal Code
• you are the taxpayer involved in the non-compliance
• you are an authorized representative of the taxpayer involved
• you are legally required to disclose the information to the Canada Revenue Agency
• you are providing the information anonymously
• the program determines that an ineligible individual gave you the information, no reward will be offered

Informant information is collected directly from an informant in a written submission. If we enter into contract, identity of the informant must be verified. If they are a Canadian resident, the information is compared to information in the Canada Revenue Agency systems. If the informant is not a Canadian resident, the Offshore Tax Informant Program relies on identification such as a passport or driver’s licence. In some cases, an informant may have to provide a certificate of non-conviction from a local law-enforcement office to prove that they have not been convicted of tax evasion relating to the non-compliance or fraud being reported.

The Offshore Tax Informant Program is similar to the Informant Leads Program, but with a specific international focus and a contract-based incentive reward.

Information concerning the Offshore Tax Informant Program is available on the Canada Revenue Agency’s website at: canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/compliance/offshore-tax-informant-program.

What’s New

The Offshore Tax Informant Program procedures have been updated to reflect changes to the program retention rules, and due to the inclusion of the Offshore Tax Informant Program’s specific 1-800 public contact number in the National Leads Program telephone services. Procedures regarding open-source research and its use were also developed.

The Offshore Tax Informant Program onboarded onto a workload management system in 2022. The system provides a better way to transmit, manage and monitor information. Using that system will help guard against accidental disclosure.

A new enhanced system will be implemented in 2025 and use of the existing system will be discontinued.

The program’s privacy notice on Canada.ca was updated to be more transparent for informants providing information.

Scope of the Privacy Impact Assessment

This PIA is limited to activities that relate to:

• the collection of information from informants:
• checking to assess the merits of a lead
• deciding if information meets program criteria
• determining the eligibility of an informant for a reward
• developing recommendations for review by an oversight committee of senior CRA managers
• starting contracts with informants
• sharing information with program areas
• monitoring the progress of OTIP files through established CRA review processes, such as audits, non-filer and enforcement actions, which may result in (re)assessments, appeals, or collections.

Excluded from the scope of this PIA are established programs and activities related to audits, non-filers and investigations, which do the detailed reviews of approved leads. In other words, OTIP-initiated reviews of taxpayer files will be processed in the same way as any other taxpayer file. Also out of scope is the Leads Program for which a separate PIA has been completed.

Risk identification and categorization

• A) Type of program or activity
  

  Criminal investigation and enforcement / National Security  

  Level of risk to privacy: 4

  Details:

  Information provided to the Canada Revenue Agency (CRA) in the context of this program is used to identify and follow up on instances of alleged tax non-compliance. An informant’s personal information will be used to determine their eligibility for the Offshore Tax Informant Program (OTIP). Even among the small number of leads that meet all of the program criteria and qualify for reward payments, most will be treated as civil audits. While a small number of leads could be referred to the CRA criminal investigations programs, the OTIP is intended to focus mainly on programs and activities that have administrative consequences. Nevertheless, the risk has been categorized at the highest level based on the possibility of criminal enforcement activity.

• B) Type of personal information involved and context

  Sensitive personal information, including detailed profiles, allegations or suspicions, bodily samples and/or the context surrounding the personal information is particularly sensitive.

  Level of risk to privacy: 4

  Details:

  Personal information about an alleged non-compliant taxpayer

  Most of the personal information about an alleged non-compliant taxpayer would probably fit into risk category 3 since it is sensitive information that relates to assets, financial transactions, property, etc. However, a fraction of the personal information provided by an informant about a taxpayer could qualify as risk category 4 on the basis that it is essentially a suspicion or allegation about a taxpayer’s non-compliance conveyed to the CRA in confidence by another party. The unauthorized disclosure of such allegations or findings could cause harm to a taxpayer’s reputation.

  Personal information about the informant

  Information that identifies or provides clues to the identity of an informant in the context of the OTIP could be extremely sensitive personal information, particularly in rare cases where the safety of the informant is at issue. In extremely rare cases, injury might include severe physical harm or even loss of life.

  Personal information about others

  Information provided by informants could include information about business associates, family members and friends of the subject taxpayer including information that could implicate them in the non-compliance and adversely affect reputations.

  Informant information is collected directly from the informant. If we enter into contract, we will confirm the identity of the informant. If they are a Canadian resident, the information is compared to information in the CRA systems. If they are not a Canadian resident, OTIP relies on identification such as a passport or driver’s licence. In addition, the informant may have to provide a certificate of non-conviction obtained from a local law-enforcement office to make sure that the informant has not been convicted of tax evasion relating to non-compliance or fraud.

  Taxpayer information is collected indirectly from the information sent by the informant and also from the CRA systems.

• C) Program or activity partners and private sector involvement

  Within the institution (amongst one or more programs within the same institution)

  Level of risk to privacy: 1

  Details:

  Program activities are largely confined to Offshore Tax Informant Program (OTIP) employees. Information will be shared on a need-to-know basis with other program groups within the Canada Revenue Agency (CRA), such as, but not limited to, Audit, Non-Filer, and Criminal Investigations.

  The first analysis of leads will be done in the High Net Worth Compliance Directorate (HNWCD) by a small number of designated employees. This analysis may involve consultations with subject matter experts, such as foreign investment and high net worth individuals auditors. These consultations will be done without sharing an informant’s identity. However, the taxpayer’s identity may be shared in certain circumstances - for example, in a discussion about the workload development of various sections to establish the audit potential.

  Each informant who provides a lead will be notified in writing that regardless of whether the information provided ultimately results in a contract with the CRA or a payment under the program, the CRA can use the information that has been provided by an informant to carry out its mandate to ensure all taxpayers pay the correct amount of tax under the law.

  A recommendation report to the OTIP Oversight Committee will be comprised of a summary of the information provided by the informant, including a description of the alleged international tax non-compliance. The OTIP officer’s analysis of the lead as well as the informant’s eligibility for the program, and the OTIP’s recommendation to proceed to the contracting stage will be included. This will not include the informant’s identity except in rare circumstances where the committee has a need to know considering the case particulars and the informant’s identity is required in order to carry out tasks effectively, such as for a high-profile informant. OTIP officers follow the need-to-know principle which states that the information is shared only if needed to accomplish the work, for instance, to decide to go to contract with an informant. Acceptance by the Oversight Committee triggers the OTIP to arrange a contract with the informant. Limited personal data related to informants in approved lead case files will be used to set up a contract with the informant. The involvement of Legal Services will be on a case-by-case determination. OTIP employees are given guidance and instruction in the OTIP Information Security Policy.

  Limited information on approved lead case files may be routed for review/action by other CRA specialists. Case information will be routed to established CRA program divisions including, but not limited to: Non-Filer, Audit, and a small number to Criminal Investigations. Regardless of whether these review activities are organized within the OTIP or not, such as the Leads Program forwarding an OTIP lead to Business Intelligence and Quality Assurance, the program will not share information about informants except in extremely rare cases and in accordance with strict criteria that satisfy section 8(2) of the Privacy Act and section 241 of the Income Tax Act. The processes have been created and agreed to between each of the sections. There are still some sections within the CRA which the OTIP has not dealt with so similar criteria will be created when different sections are approached.

  All of the above-described activity is internal to the CRA.

• D) Duration of the program or activity

  Long-term program

  Level of risk to privacy: 3

  Details:

  The OTIP is a permanent continuing CRA program with no scheduled end/sunset date

• E) Program population

  The program affects certain individuals for external administrative purposes.

  Level of risk to privacy: 3

  Details:

  The program will affect a small number of taxpayers who are the subjects of the information provided to the CRA by informants under the OTIP program. The population will include individual and business taxpayers as well as individuals associated with businesses that are the subject of allegations provided by informants. The program may affect a taxpayer’s family members and business associates. Also affected would be the confidential informants who provide information to the CRA under the program and, in some cases, their representatives.

• F) Technology & privacy

  1. Does the new or modified program or activity involve the implementation of a new electronic system, software or application program including collaborative software (or groupware) that is implemented to support the program or activity in terms of the creation, collection or handling of personal information?

     Risk to privacy: Yes

  2. Does the new or modified program or activity require any modifications to IT legacy systems and/or services?

     Risk to privacy: No

  3. Does the new or modified program or activity involve the implementation of one or more of the following technologies?

     Enhanced identification methods - this includes biometric technology (i.e. facial recognition, gait analysis, iris scan, fingerprint analysis, voice print, radio frequency identification (RFID), etc.) as well as easy pass technology, new identification cards including magnetic stripe cards, "smart cards" (i.e. identification cards that are embedded with either an antenna or a contact pad that is connected to a microprocessor and a memory chip or only a memory chip with non-programmable logic).

     Risk to privacy: No

     Use of Surveillance - this includes surveillance technologies such as audio/video recording devices, thermal imaging, recognition devices, RFID, surreptitious surveillance/interception, computer aided monitoring including audit trails, satellite surveillance etc.

     Risk to privacy: No

     Use of automated personal information analysis, personal information matching and knowledge discovery techniques - for the purposes of the Directive on PIA, government institutions are to identify those activities that involve the use of automated technology to analyze, create, compare, identify or extract personal information elements. Such activities would include personal information matching, record linkage, personal information mining, personal information comparison, knowledge discovery, information filtering or analysis. Such activities involve some form of artificial intelligence and/or machine learning to uncover knowledge (intelligence), trends/patterns or to predict behavior.

     Risk to privacy: Yes

• G) Personal information transmission

  The personal information is transferred to a portable device or is printed  

  Level of risk to privacy: 3

  Details:

  Based on the importance of protecting the identities of confidential informants, the program collects information using mostly non-automated modes. Information is transmitted within the Canada Revenue Agency (CRA) based on the Security Requirements for Handling Protected CRA Information.

  The CRA’s electronic data, including data in the CRA tax files of an alleged non-compliant taxpayer and other aggregate risk assessment data, will be analyzed and compared to verify and validate information received from an informant. Protected B information is shared using CRA secure servers within password-protected folders with limited access and via the internal system.

  If the information is Protected C, only the informant submission is temporarily transferred to an encrypted USB key in order to be moved to a stand-alone computer in a secure room. The USB key is formatted and re-encrypted after each use. Furthermore, the sharing of Protected C information is paper-based and is hand delivered to an auditor. These processes are aligned with the Agency Storage of Protected and Classified Information and Assets Standards.

• H) Potential risk that in the event of a privacy breach, there will be an impact on the individual or employee

  Details:

  Not all information received, used, and transmitted internally will be information that could identify an informant. However, it is still possible that disclosing such details could have very serious consequences such as severe injury to an informant, and in rare cases possibly even death.

  It is expected that most of the information the program will receive can be carefully safeguarded as Protected B. In cases where an informant expresses fear for their physical safety or otherwise could be at risk of retribution (for example if related to organized crime), the program will safeguard this information as Protected C, based on the Security Requirements for Handling Protected CRA Information.