Senator accuses CRA of doing little to fight offshore tax evasion
In this file photo, the Canada Revenue Agency headquarters in Ottawa is shown on Friday, November 4, 2011. (Sean Kilpatrick/THE CANADIAN PRESS)
Jordan Press, The Canadian Press
Published Tuesday, November 7, 2017 2:13PM EST
Last Updated Tuesday, November 7, 2017 5:43PM EST
OTTAWA -- About one-fifth of a group of wealthy Canadians who took part in a federal government survey last year didn't believe that a proposed advertising campaign about a federal crackdown on tax cheats would do anything to deter people from using overseas tax havens.
There was a similar response from "high net worth" respondents who took part in the survey, conducted last December but released only recently. About one quarter of respondents didn't believe that the Canada Revenue Agency ads would deter people from taking part in the underground economy.
The agency used the results of the research as it worked to figure out how best to push the message that the federal government was going to go after people who tried to use offshore accounts to lower their tax bill back home. Most of the 567 respondents to the online survey agreed in the end that the campaign would make the CRA's intentions clear.
The final report on the campaign, dated September 2017, cost the government $54,240 and arrived just prior to a spiralling flurry of media reports laden with revelations about the widespread use of offshore trusts and accounts.
Tax avoidance measures involving offshore trusts are legal, provided that the trust is genuinely managed offshore and that Canadian taxes are paid on any Canadian contributions. And there may be other legitimate reasons for setting up an offshore account, including if you're a contractor doing work in a particular country.
But the depth of their use in Canada -- with reporting by the Toronto Star and CBC indicating there are more than 3,000 Canadians named among 13.4 million records dubbed the "Paradise Papers" -- fuelled more opposition calls Tuesday for an end to legal loopholes that could be costing the federal treasury billions in lost tax revenues each year.
With Prime Minister Justin Trudeau travelling overseas, defending the government fell to Revenue Minister Diane Lebouthillier, who insisted throughout question period that the $1 billion the government has promised to spend on the problem over five years is proof positive that the Liberals are taking the issue seriously.
The Canada Revenue Agency, too, was under fire Tuesday as independent Liberal Sen. Percy Downe, a longtime thorn in the agency's side, accused it of misleading Canadians about the depth of its efforts to combat offshore tax evasion.
Downe, who has been pushing for a crackdown on wealthy individuals and corporations who stash their money overseas, said the CRA has been hiding behind "weasel words" to disguise the fact that it's actually doing little to remedy the problem.
He pointed to CRA spending figures tabled in the Senate that showed it spent an estimated $35 million of the $40.1 million budgeted for enforcement for the fiscal year ended March 31, a fraction of the $1 billion total the government has said it's willing to spend on the problem.
The agency has also created a full-time unit dedicated to offshore tax evasion and avoidance, but Downe said the unit was formed by reorganizing existing parts of the CRA and was not provided with any additional budget.
Between April 2011 and March 2016, the CRA got convictions on 42 Canadians who used offshore tax havens to hide $34 million in tax payments. The convictions resulted in $12 million and 734 months of jail time, the agency said.
That's likely a tiny fraction of the estimated value of tax revenues that the federal government loses out on every year from people hiding cash in tax havens -- a sum the CRA apparently doesn't track, said Downe. One report from the Conference Board of Canada pegged the so-called "tax gap" at as much as $47 billion a year.
Lebouthillier said the government plans to release a report on the international tax gap next year.