The Canada Revenue Agency has hauled in $1-billion more than they anticipated by cracking down on tax-cheats in 2014-2015.
The 2013 Conservative budget predicted Ottawa would collect $550 million in additional revenue as a result of new tax evasion measures, but the Canada Revenue Agency has revealed the figure was almost three times higher: $1.57-billion.
In an emailed statement, current Revenue Minister Diane Lebouthillier says she is “pleased” the CRA was able recover funds from tax-evaders, but added “there is still a lot of work to be done to ensure that all Canadians pay their fair share.” The Minister said a big problem remains wealthy Canadians who avoid paying taxes by hiding their money in offshore tax havens. “This is not fair and it needs to change,” she said.
Budget 2016 invested $444.4 million over five years to crack down on tax evasion. The Minister says that money will allow the Canada Revenue Agency to closely examine five times as many “high-risk” taxpayers – from 600 per year to 3,000 per year. The new funding will also help bring in 100 additional auditors to investigate multinational corporations. Additionally, the CRA will embed lawyers within the investigation teams so that cases can be quickly brought to court.
On Friday, Finance Minister Bill Morneau was asked, given the huge windfall of tax revenue the CRA recouped, whether he would expand efforts beyond what has been already announced in the budget.
“With this investment we will make sure that those Canadians, and those companies that owe taxes in Canada, pay those taxes,” he responded. “We will prosecute people to the full extent of the law if they don’t do what they are expected to do which is pay their fair share.”
It’s a growing problem. Canadians for Tax Fairness, an independent tax watchdog group, estimates that last year alone, corporations poured $40-billion more into off-shore tax havens than they had the year before – an increase of 17 per cent over 2014. Offshore accounts are not illegal, but Canadian residents are required to pay taxes on income gained from those investments. The tax watchdog crunched the numbers and found that in 2015 Canadian corporations invested more than $270 billion in the top 10 tax havens –including the Cayman Islands, Barbados and the Bahamas.
“It is a lot of money. And the United States have been much more aggressive about going after tax haven related tax abuse. Finally I think Canada is trying to catch up to what other countries are doing. There is a lot of potential revenue there,” said Dennis Howlett, executive director of Canadians for Tax Fairness.
Conservative MP Ziad Aboultaif, the party’s national revenue critic, says the huge increase in off-shore money is a result of Liberal fiscal policies.
“Money is fleeing outside the country. Corporations are showing their non-confidence in the current government.”
He added the government should continue to crack down on tax cheats because the relatively small Conservative investment in the 2013 budget reaped huge results.