The CRA promises rewards of between 5 and 15 per cent of the additional federal tax collected as a result of a tip.Getty Images/iStockphoto
Not a single dollar has been paid to informants under a tip line and reward program the federal government announced more than three years ago to catch tax cheats.
In an update provided to The Globe and Mail, the Canada Revenue Agency insisted the program has been effective and that it takes time for an investigation and any potential legal appeals to play out before a final arrangement can be reached on a reward.
The Conservative government's 2013 budget announced several measures aimed at cracking down on tax cheats, including a pledge to offer rewards to individuals who help expose major international tax schemes that lead to federal assessments of at least $100,000. Under the Offshore Tax Informant Program, the CRA said it has entered into a number of contracts with informants and others are in process.
"However, no rewards have been paid to date," CRA spokesman David Walters said. "It may take several years from the date of entering into a contract with the CRA until the additional federal tax is assessed, the taxpayer's appeal rights have expired and the amount owing is collected."
The CRA promises rewards of between 5 and 15 per cent of the additional federal tax collected as a result of a tip. Individuals who previously have been convicted of tax evasion are not eligible.
As of March 31, 2016, the CRA said it had received 782 calls from potential informants, and 315 written submissions. The agency said it has entered into more than a dozen contracts with informants. The Globe reported on Friday that the total package of tax enforcement measures announced in the 2013 budget – at a cost of $15-million – brought in $1.57-billion in the 2014-15 fiscal year, according to the CRA. That is more than $1-billion beyond the $550-million a year the federal government had expected in 2013.
The CRA said the extra revenue was largely because of a small number of "very large" tax files, but it did not provide further detail. The House of Commons finance committee will launch a study this week on the CRA's tax enforcement efforts.
The 2016 budget included $444.4-million in new money for tax enforcement measures that the Liberal government projects will generate $2.6-billion in new revenue over five years.
Mostafa Askari, the assistant Parliamentary budget officer, said government departments need to do a better job of explaining how they come up with such revenue estimates.
"When an amount is booked in the budget – whether it's the CRA, or an asset sale or something else – more information needs to be provided to Parliament so that Parliament has some confidence in those numbers," he said. "If you don't have any details, how do you know if those numbers are good or bad or reliable or not?"
Revenue Minister Diane Lebouthillier has been asked to appear in May before the finance committee to discuss the agency's plans and to answer questions about its handling of what it calls "an offshore tax avoidance scheme" involving clients of the KPMG accounting firm.
The CBC reported in March that the CRA offered amnesty to multimillionaire KPMG clients as part of an investigation related to the Isle of Man. The CRA has said the KPMG case is an active file and that further comment could jeopardize ongoing legal action.
NDP MP Pierre-Luc Dusseault said he will use the committee review of the CRA to press for answers as to how the agency decided when to grant amnesties as part of its investigations.
"My main concern right now is the fact that they are giving amnesty to some taxpayers," he said. "The strategy of the government is basically just putting more money into CRA, but there's a lot that can be done also in a legislative way and that's something that's still missing."
Chloé Luciani-Girouard, a spokeswoman for the revenue minister, said in a statement that a lot of work must still to be done to address the use of offshore tax havens by wealthy individuals.
"This is not fair and it needs to change," she said. "To make sure these [budget] investments deliver results, the CRA will embed legal counsel within investigation teams, so that cases can be quickly brought to court."
Bill Curry