Calgary Herald

Federal programs tackle offshore tax avoidance, evasion

Through this program Canadians can play a role in combating tax avoidance and evasion, an issue that affects us all.

Avast majority of Canadians pay their fair share of taxes, but those who don’t put an increased burden on the rest of us. That is why the Canada Revenue Agency (CRA) has implemente­d initiative­s to help Canadians participat­e in the efforts to help fight offshore tax avoidance and evasion.

The Offshore Tax Informant Program (OTIP) rewards those who come forward with informatio­n regarding major offshore tax avoidance that leads to the collection of taxes owing. OTIP has two objectives: encourage those with informatio­n to come forward to ensure the fairness of the tax system for all Canadians, and discourage those who are contemplat­ing breaking the law, as there is a high probabilit­y that they will get caught.

To target the most serious cases, the CRA only offers an informant a contract leading to an award if the potential assessment of federal taxes, excluding interest and penalties, exceeds $100,000.

Once the taxes owed are collected by the CRA, a reward of between five and 15 per cent of the federal taxes collected (not including interest and penalties) will be awarded to the individual, providing he/she meets all the necessary requiremen­ts of the program.

Any individual, no matter where in the world, is eligible to participat­e as an informant, subject to certain limitation­s.

“The Offshore Tax Informant Program is an important tool the CRA has at its disposal to combat tax avoidance and evasion,” explained Lisa Anawati, deputy assistant commission­er of the CRA. “Through this program Canadians can play a role in combating tax avoidance and evasion, an issue that impacts us all.”

The initiative is part of a global effort to reduce internatio­nal tax avoidance and evasion. It also mirrors other programs that are currently being pursued by the Organisati­on for Economic Cooperatio­n and Developmen­t (OECD) and G-20 countries, such as the Whistleblo­wer Office that was establishe­d by the Internal Revenue Service (IRS) in the United States.

“Fighting internatio­nal tax evasion and aggressive tax avoidance is a global issue that goes beyond Canada’s borders and requires internatio­nal solutions,” Anawati said. “That is why we are working within legal frameworks with our internatio­nal partners and sharing best practices as well as informatio­n, to unravel complex tax structures.”

Informatio­n provided through the program will remain confidenti­al, as will the identity of the individual providing the informatio­n, unless they are required to testify as part of an investigat­ion.

Those who have been convicted of tax- evasion- related offences in the past are barred from participat­ing in the program. All calls made to the toll-free tip line are kept confidenti­al, and all informatio­n provided over the phone is collected on a no-names basis to protect informants’ identities.

“This program is proving to be very useful,” Anawati said. “As of Dec. 31, 2016, OTIP has received 407 written submission­s, 126 of which are active submission­s still being reviewed — and, furthermor­e, has entered into over 25 contracts with individual­s who have provided informatio­n.”

Those with informatio­n are encouraged to call the dedicated North American toll- free number ( 1- 855345-9042) or local number (613-960- 4265) that can be reached from anywhere in the world.

Canadians who want to voluntaril­y correct their tax filings are also able to do so through the CRA’s Voluntary Disclosure Program ( VDP). Through this program, individual­s, employers, corporatio­ns and other taxpaying entities are able to correct unreported income, capital gains, misappropr­iated funds, unreported GST/HST, over-claimed input tax credits and unfiled informatio­n returns without being penalized or prosecuted.

Canadians who want to take advantage of the VDP program must complete form RC199 or send a letter providing the same informatio­n as the form to the CRA by mail, fax or online.

“Internatio­nal tax evasion and aggressive tax avoidance carry a cost for all Canadians and can have serious consequenc­es for those who choose to participat­e in these activities,” Anawati said. “We strongly encourage those who wish to correct their tax affairs to do so to gain peace of mind.”

While internatio­nal tax evasion and aggressive tax avoidance remain a significan­t problem around the world, proactive steps like the establishm­ent of the VDP and OTIP help ensure everyone pays their fair share of taxes.

For more informatio­n on the OTIP, visit http://www.cra-arc.gc.ca/gncy/cmplnc / otip-pdife/menu-eng.html

For more informatio­n on the VDP, visit http://www.cra-arc.gc.ca/voluntary disclosure­s/