|Canada plans to crack down on international tax cheats
Canada is cracking down on international tax evasion and will pay informants who identify the tax cheats, National Revenue Minister Kerry-Lynne Findlay announced Wednesday.
"Hiding income and assets in foreign jurisdictions to avoid taxes is a serious issue that undermines the integrity and fairness of Canada's tax system," Findlay said in launching the Offshore Tax Informant Program (OTIP).
Similar to a program run by the United States Internal Revenue Service, OTIP will reward people who provide the Canada Revenue Agency (CRA) with information about offshore tax avoidance totalling more than C$100,000.
If the information provided contributes to the collection of Canadian federal tax, the informant will receive between 5 percent and 15 percent of the tax collected. But the CRA says it "may take several years" before the informant is paid since the government must first assess the amount owing, collect it and allow the taxpayer to exhaust his or her rights to appeal.
It is estimated Canada loses up to C$8 billion dollars in tax revenue every year as a result of international tax avoidance, but the CRA has claimed it has collected billions of dollars from offshore account holders who have taken advantage of the agency's tax amnesty program.
Last November, Canadian Auditor General Michael Ferguson reported the CRA had audited 46 families identified by an informant in 2007 as having offshore bank accounts in Liechtenstein and reassessed 23 of them, identifying nearly C$24.7 million in taxes owed to Ottawa.
However, in his fall report, Ferguson warned the CRA was "not prepared for the growing workload," regarding offshore tax evasion -- a problem that will be exacerbated by cuts expected to hit the agency's staff and budget by 2018.
OTIP is part of a C$30-million, five-year initiative the Canadian government has launched to combat international tax evasion and "aggressive" tax avoidance.
From next year, the CRA will require banks and other financial institutions to report international electronic funds transfers worth more than C$10,000 dollars to help identify international non-compliance.
CRA employees and anyone convicted of tax evasion are excluded from OTIP. --Xinhua