A number of large-scale corporations in Canada may be deliberately overpaying their annual tax returns in order to receive higher interest rates, it has been claimed.
The allegation was made by the country's Auditor General Sheila Fraser, who suggested that several companies may be taking advantage of the high interest rates available to them through CRA-managed accounts.
Speaking at a press conference on May 13, Ms Fraser explained:
"The [Canada Revenue] Agency has a responsibility to ensure that it does not make large interest payments that could be avoided."
"The agency did try to return the money (in deposits) to them but they declined," she added, continuing:
"No one asked the corporations or tried to determine what the motivation was, but I think we can probably arrive at that conclusion."
Fraser added that the companies in question knew they were unlikely to ever need their tax returns reassessed. Instead, they were preferring to take advantage of the generous 5-7% interest rate offered by CRA accounts which ordinary bank accounts could not match.
Such activities have been suspected since 1991, although little has been done to address the issue.
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