The CRA is on the Case

The government is taking a strong stand against tax evasion, aggressive tax planning and other underground economic activity. In a bold move to bring outstanding funds back to Canada, the government is allocating $444.4 million over five years as part of Budget 2016. The CRA will use this money to hire extra auditors and specialists who will perform investigative work to find criminal tax evaders. In addition, the CRA will step up their efforts to verify questionable tax information and to work diligently with other countries to fight international tax evasion. 

With renewed energy to bring in delinquent taxes, the CRA released a statement stating that “all participants in offshore tax evasion and tax avoidance schemes be identified and brought into full compliance with their tax obligations.” This includes pursuing tax professionals who help their clients with offshore tax evasion or questionable tax avoidance schemes. By deliberately counseling their customers to not follow Canadian tax laws or to evade paying taxes altogether, tax preparers and other tax professionals could face serious penalties and potential prosecution. The CRA, backed by the additional budget money allocated to this cause, will methodically take action against tax evaders and anyone who assisted them in this offence.

While the law concerning counselling, aiding or abetting a Canadian citizen to avoid or evade paying their taxes is nothing new, the CRA’s strong announcement is a warning to everyone that they mean business. This includes tax preparers and tax professionals as well as accountants and lawyers. In essence, anyone that offers financial advice that is considered overly aggressive or unlawful may be under close scrutiny. Moreover, if someone takes an evasive course of action to avoid paying their taxes based on professional advice, the CRA will pursue an investigation and prosecution.

How will the CRA aggressively pursue tax evaders? Most likely, the CRA will reinforce their efforts in:

• Gathering international tax information from other countries.
• Performing thorough audits for offshore accounts and aggressive tax avoidance.
• Offering vital information to criminal investigators that the CRA’s auditors find.
• Delivering more production orders and search warrants.
• Investigating questionable tax professionals and tax preparers.
• Conducting more prosecutions based on the full extent of the law.

Overall, the CRA is now empowered to bring tax evaders and tax avoiders into compliance to pay their fair share of their taxes.