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The Canada Revenue Agency (CRA) has reassessed more than CAD1m (USD1.07m) in federal tax and foreign reporting penalties as a result of information submitted to the Offshore Tax Informant Program (OTIP).
Replying to parliamentary questions, Revenue Minister Diane Lebouthillier said that as of November 30, 2016, the date to which current figures are available, the OTIP has received 398 written submissions.
Of these, 127 are active submissions. The CRA has entered into more than 20 contracts with informants and is reviewing the remaining submissions. The CRA has not paid any awards to date. Lebouthillier said that, "if the CRA assesses and collects more than CAD100,000 in additional federal tax, the amount of the reward will be between five percent and 15 percent of the federal tax collected, not including interest or penalties."
Lebouthillier added that of the 271 cases that did not qualify under the OTIP, 94 have been closed and 177 were referred to other areas within the CRA for possible compliance action.
Of the leads received in part through the OTIP, the CRA has completed or is currently conducting audits involving more than 218 taxpayers.
Lebouthillier also explained that, "while the CRA is unable to confirm the amount recovered, to date, the CRA has reassessed more than CAD1m in federal tax and foreign reporting as a result of information submitted to the OTIP. As these are multi-year audits, this represents a small number of the over 218 taxpayers that were or are currently under audit."
From January 2014 to November 2016, the CRA's operating costs for the OTIP were CAD1.9m.
The OTIP was launched in January 2014 and enables the CRA to make financial rewards to individuals who provide information related to major international non-compliance if the CRA's investigation leads to the collection of owed taxes. The CRA will offer an informant a contract leading to an award only if the potential assessment of federal taxes, excluding interest and penalties, exceeds CAD100,000. The payment process begins once CAD100,000 of federal tax relating to the assessments has been collected and all recourse rights associated with the assessments have expired.
Lebouthillier said of the process: "An OTIP analyst will consider the information provided by the informant, evaluate the merits of the case, and make a recommendation about inclusion in the program. If a case is recommended for inclusion in the program, it is referred to an oversight committee of senior management representatives for approval to enter into a contract."
"Once approved, the informant and the CRA will enter into a contract. A payment can be denied and a contract can be terminated in certain situations. The CRA works to conclude the process as efficiently as possible. However, 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."
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