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Canada Launches New Anti-Avoidance Program

by Mike Godfrey,, Washington

17 January 2014

The Canada Revenue Agency (CRA) is to begin offering financial rewards to those who help it tackle major international tax non-compliance, after controversial plans entered into force this week.

Under the Offshore Tax Informant Program (OFTP), the CRA will pay individuals that hand over information on international tax evasion and avoidance a percentage of the federal tax collected as a result of the data provided. The evidence must contain "specific and credible details."

The CRA will enter into a contract with the informant if the potential additional assessment of federal tax, excluding interest and penalties, is more than CAD100,000 (USD91,245). Payment will only occur after the debt has been collected and all recourse rights associated with the assessed tax have been exhausted. Anyone convicted of an evasion offence related to the information given will be ineligible for the remuneration.

A payment can be denied and a contract terminated if the CRA has already received the material from another source, the tax due or collected is ultimately less than CAD100,000, or the accused is successful in an administrative or judicial appeal.

The CRA says it is committed to protecting the identity of informants to the fullest extent possible, but warns that it may not be able to pursue its investigations fully without revealing their identity if the case is taken to a trial in which the informant is considered a vital witness. It also admits that it may take several years for the additional tax to be assessed and collected.

Revenue Minister Kerry-Lyne Findlay said of the initiative: "Our Government is committed to combating international tax evasion and aggressive tax avoidance as part of its work to protect the important resources that Canadians can count on. Hiding income and assets in foreign jurisdictions to avoid taxes is a serious issue that undermines the integrity and fairness of Canada's tax system."

TAGS: individuals | compliance | Offshore | tax | tax avoidance | tax incentives | interest | revenue guidance | tax authority | tax planning | Canada | revenue statistics | penalties | Tax | Tax Evasion

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