Canada Revenue Agency’s
New and Aggressive Tax
Enforcement Powers
How You Can Protect Yourself
Gowlings at a Glance
• One of Canada’s largest
law firms
• Over 750 professionals
across 10 offices
worldwide
• Recognized...
Gowlings at a Glance
www.gowlings.com
3
New Whistleblower
Rewards to be
Offered by the CRA
4
Whistleblower Rewards
• The new Stop International Tax Evasion Program
will allow the CRA to pay individuals with
knowledg...
Why the Rewards?
• The 15% reward will apply only to tax assessments
or reassessments on international transactions over
$...
New Reporting
Requirements for
Financial Institutions
7
New Reporting Requirements for Financial Institutions
• New reporting requirements will require banks, credit
unions, co-o...
New Reporting Requirements for Financial Institutions
• This needs to be reported to the CRA no later than
five working da...
Additional Reporting
Requirements for
Taxpayers with
Foreign Assets
10
Additional Reporting Requirements - Foreign Assets
• Currently, individuals, corporations, trusts and
certain partnerships...
Additional Reporting Requirements - Foreign Assets
• The proposed reassessment period for 2013 and
subsequent taxation yea...
Increasing Relevance
of the Voluntary
Disclosures Program
13
Voluntary Disclosures Program (VDP)
• The VDP is a program administered by the CRA that
allows taxpayers to proactively co...
Conditions for a Valid Voluntary Disclosure
• For a voluntary disclosure to be valid, four
conditions must be met
• The di...
Limits on the Relief Offered Under the VDP
• The CRA only has jurisdiction to grant relief for a
period going back ten yea...
Practical Tips on Completing Voluntary Disclosures
17
• Almost always start voluntary disclosures on a
no-names basis, whi...
Defending Tax
Evasion
18
Defending Tax Evasion
• Tax evasion prosecution is a criminal prosecution
• A tax evasion case is prosecuted under section...
Q&A
20
Thank You
montréal  ottawa  toronto  hamilton  waterloo region  calgary vancouver  beijing  moscow  londo...
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Canada Revenue Agency's New and Aggressive Tax Enforcement Powers: How You Can Protect Yourself

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Canada Revenue Agency's New and Aggressive Tax Enforcement Powers: How You Can Protect Yourself

  1. 1. Canada Revenue Agency’s New and Aggressive Tax Enforcement Powers How You Can Protect Yourself
  2. 2. Gowlings at a Glance • One of Canada’s largest law firms • Over 750 professionals across 10 offices worldwide • Recognized expertise in Business Law, Advocacy and Intellectual Property Law 2
  3. 3. Gowlings at a Glance www.gowlings.com 3
  4. 4. New Whistleblower Rewards to be Offered by the CRA 4
  5. 5. Whistleblower Rewards • The new Stop International Tax Evasion Program will allow the CRA to pay individuals with knowledge of major international tax non-compliance up to 15% of the federal tax collected as a result of the information provided • According to Statistics Canada, Canadian funds in the world’s biggest tax havens grew to a record $170 billion in 2012 5
  6. 6. Why the Rewards? • The 15% reward will apply only to tax assessments or reassessments on international transactions over $100,000 • The federal government has convicted only 44 people of offshore tax cheating since 2006 and the total amount of fines levied in that time were $6.8 million (less than the $7.7 million in taxes that were evaded) • This new reward system will bring Canada in line with major countries such as the United States, Germany and the United Kingdom 6
  7. 7. New Reporting Requirements for Financial Institutions 7
  8. 8. New Reporting Requirements for Financial Institutions • New reporting requirements will require banks, credit unions, co-ops, caisse populaires, trust companies, loan companies and certain Crown agents to report to the CRA • Incoming and outgoing electronic funds transfers, where those transfers are $10,000 or more (same as reporting standards for FINTRAC - the Financial Transactions and Reports Analysis Centre of Canada) 8
  9. 9. New Reporting Requirements for Financial Institutions • This needs to be reported to the CRA no later than five working days after the transfer date • Reporting will be required as of the start of the 2015 calendar year 9
  10. 10. Additional Reporting Requirements for Taxpayers with Foreign Assets 10
  11. 11. Additional Reporting Requirements - Foreign Assets • Currently, individuals, corporations, trusts and certain partnerships that own specified foreign investment property costing more than $100,000 must file a Form T1135 • Reassessment period • Generally, the CRA is prevented from reassessing for additional tax after the normal reassessment period 11
  12. 12. Additional Reporting Requirements - Foreign Assets • The proposed reassessment period for 2013 and subsequent taxation years • The budget proposes to extend the reassessment period for a taxation year by three years if • The taxpayer has failed to report income from a specified foreign property on their income tax return; and • The Form T1135 was not filed on time by the taxpayer, or a specified foreign property was not identified, or was improperly identified, on the Form T1135 12
  13. 13. Increasing Relevance of the Voluntary Disclosures Program 13
  14. 14. Voluntary Disclosures Program (VDP) • The VDP is a program administered by the CRA that allows taxpayers to proactively come forward and disclose any past non-compliance • If a voluntary disclosure is accepted, only the unpaid tax must be paid • Penalties get waived • Interest assessed on the tax gets reduced • Any potential criminal prosecution gets waived 14
  15. 15. Conditions for a Valid Voluntary Disclosure • For a voluntary disclosure to be valid, four conditions must be met • The disclosure must be voluntary, meaning that it must be started before any enforcement action from the CRA is commenced • The disclosure must be complete, meaning that all outstanding tax issues must be reported • There must be a penalty that could be assessed • The disclosure must include information that is at least one year past due 15
  16. 16. Limits on the Relief Offered Under the VDP • The CRA only has jurisdiction to grant relief for a period going back ten years • Although the scope of the VDP is wide, some tax filings do not qualify for VDP relief • For example • The CRA would not accept income tax returns with no taxes owing or expected refunds • “Elections” are not accepted (an election is a provision in a tax statute that allows a taxpayer to choose or elect a particular treatment or approach) 16
  17. 17. Practical Tips on Completing Voluntary Disclosures 17 • Almost always start voluntary disclosures on a no-names basis, which allows the disclosure to be started right away • The CRA will usually grant an extension of at least 30 days; however, if there are too many delays in completing a disclosure, the CRA may reject it • Determining how many years to include • This can depend on what records are available and whether the taxpayer made any misrepresentation attributable to carelessness, negligence or wilful default, or commit any fraud when the tax returns were filed
  18. 18. Defending Tax Evasion 18
  19. 19. Defending Tax Evasion • Tax evasion prosecution is a criminal prosecution • A tax evasion case is prosecuted under section 239 of the Income Tax Act • There are two possible ways for the prosecution to proceed • By summary conviction, which carries a possible penalty of a fine of not less than 50%, and not more than 200%, of the amount of the tax that was sought to be evaded and imprisonment for a term not exceeding two years • By indictment, which carries a possible penalty of a fine of not less than 100%, and not more than 200%, of the amount of tax that was sought to be evaded and imprisonment for a term not exceeding five years 19
  20. 20. Q&A 20
  21. 21. Thank You montréal  ottawa  toronto  hamilton  waterloo region  calgary vancouver  beijing  moscow  london Visit www.gowlings.com Email: stevan.novoselac@gowlings.com glen.jennings@gowlings.com john.sorensen@gowlings.com

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