The massive dump of the Panama Papers – some 11.5 million documents from Panamanian law firm Mossack Fonseca – details how everyone from world leaders, dictators, business people and even a soccer star are tied to offshore accounts and shell companies used to hide wealth.
And, there are some 350 Canadians whose names were reportedly listed in the trove of leaked documents.
It’s not illegal for a Canadian to set up an offshore account or business, but you do have to comply with Canada’s tax laws and declare taxable income transferred outside of Canada, foreign taxable income and foreign property worth more than $100,000.
WATCH: In an international data leak that has linked world leaders, business people and celebrities to offshore accounts in Panama, 350 Canadians have been identified.
Howlett said he was aware the investigation by the International Consortium of Investigative Journalists — a collaboration between some 100 international news organizations including the CBC and the Toronto Star — but he was surprised by the breadth of it.
Using data from Statistics Canada, Canadians for Tax Fairness suggests federal and provincial governments lose $7.8 billion in tax revenues a year because of money stored offshore. But that’s an estimate and Howlett hopes this revelation will push the federal government to conduct a “tax gap study” to come up with more accurate figure
Given the Canadian government collected $175.1 billion in personal, corporate and non-resident income tax in 2014-15, that $7.8 billion may not seem like much.
“The revenue that government loses is things the government can’t do in terms of providing public services,” Howlett said. “Or it means going further into deficit than they would need to.”
The federal government projected a whopping $29.4-billion deficit in the 2016 budget dropped March 22.
What happens if people get caught hiding money in tax havens?
Howlett said Barbados is one of the biggest destinations for wealthy Canadians and Canadian corporations to stash assets, with $71 billion of Canadian cash and assets going to the Caribbean island nation.
The use of offshore tax havens to hide money obviously costs the Canadian government big money in lost tax revenue, but it also has to spend money to combat offshore tax evasion.
A team of 70 people works for the CRA’s Offshore Compliance Division. So keeping tabs on Canadians who keep their money offshore also costs Canadian taxpayers.
Global News requested details of the division’s operational costs, but CRA did not respond in time for publication.
Howlett said the CRA could likely use even more resources to combat offshore tax evasion, but he said the agency has made a “good start” at tackling the problem.
The CRA also has an Offshore Tax Informant Program that rewards tipsters. On its website, the CRA boasts convictions of 62 people who avoided paying a total of $20 million in taxes over an eight-year period between April 1, 2006 and March 31, 2013.
Those convicted of evading taxes by stashing their money and assets offshore can face steep fines and possibly time behind bars. From those 62 convictions, courts ordered tax evaders to a pay total of $12 million in fines and spend a total of 701 months in jail.
Global News asked CRA for the total amount of rewards paid out through the Offshore Tax Informant Program. A response was not received in time for publication.