Finance Committee on Feb. 5th, 2013

[Terrance McAuley]

Certainly, Mr. Chair, since the time that the IFRS standard came into play, nothing has been brought to my attention that it is an issue.

[The Chair, Conservative, James Rajotte]

Thank you.

We will go to Ms. Glover, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Chair.

I would like a confirmation from the CRA, and it can come after this meeting, of what Mr. Brian Jean was asking about the $174 million in 2005. Could you submit that, just for comparison purposes? Of course, our report would be much more fulsome if we had that comparison, so if you could do that, it would be much appreciated.

I would like to ask a question about international cooperation. You've mentioned the OECD several times and the efforts they put forward on tax evasion, but there are a number of other agencies or organizations that make the same effort. I was wondering if you would like to name a few of them right now, and describe how Canada has had a leadership role with those organizations.

[Terrance McAuley]

Mr. Chair, apart from the OECD, several organizations operate in the tax administration universe.

Canada is a very heavy player in several of the regional tax administrations, for example, CIAT, which is an organization for tax administration in the Americas and South America.

The APFF is an organization that operates within Canada. We also have CREDAF, which is an organization of French-speaking tax administrations, and we do participate quite heavily in CATA, the Commonwealth Association of Tax Administrators.

Again, all these administrations are designed to share and develop best practices. It's a learning tool, a sharing tool.

The OECD is by far the largest of the organizations that participate. It's probably the most in depth that we do. A lot of the countries in these smaller organizations are also participating in the OECD.

[Shelly Glover, Conservative, Saint Boniface, MB]

I appreciate that. Thank you. That's important work that's being done.

I do want to ask about the technical tax bill. A number of measures in the technical tax bill will provide some more tools to the CRA, so I would like someone to address what those measures are and how they might help.

[Brian Ernewein]

Perhaps I might take that.

The technical tax bill has a lot in it. I think it is roughly 1,000 pages, most of which are highly technical amendments effectively dating back through the last decade and implementing a lot of changes relieving taxpayers on a technical level. On a level of the questions being raised in terms of measures to help the government in relation to aggressive tax avoidance transactions, a few things that I mentioned before, I will explain in a little more detail.

There are new rules in relation to non-resident trusts and foreign investment entities. These rules build on rules that are already in place in the Income Tax Act but take them quite a bit further. On the foreign investment entity side, it raises the income that can be attributable to having an investment in a foreign investment entity. On the non-resident trust side, it tries to effectively put in a more robust regime for making sure that Canadians who invest in foreign trusts are taxable on that income currently, where the conditions for the rules that apply are met.

I've already talked at some length about the aggressive tax planning reporting regime, which requires taxpayers to effectively self-identify and tell CRA when they are engaged in an avoidance transaction that has certain hallmarks: where a contingency fee is involved, where there is a requirement by the tax adviser that the taxpayer be quiet, keep the transaction confidential, presumably so they can continue to market it to others. Where hallmarks like that are part of a tax avoidance transaction, the regime would require that the transaction nonetheless be reported to the Canada Revenue Agency.

The final one I'll mention, for the sake of this, is a rule dealing with foreign tax credit generators. This is a scheme or transaction, which we've seen in some contexts in very high volumes, quite frankly, whereby taxpayers were attempting to create foreign tax credits without really generating any additional underlying foreign income. The FTC, or foreign tax credits, could be applied to reduce taxes on other real foreign income. That was a concern, and again, it is part of Bill C-48, the Technical Tax Amendments Act, to address.

[Shelly Glover, Conservative, Saint Boniface, MB]

That's very good. I appreciate that.

I only have a short period of time, but how are we doing on prosecutions? We've talked about getting there, but how are we doing on them?

[Terrance McAuley]

Very quickly, Mr. Chair, in terms of prosecutions over the last several years, we have gone to 1,532 charges that have been laid both domestically and internationally.

In terms of the results from that, as of last year we had convicted 1,282 taxpayers, of which we've received 192 jail terms totalling 3,421 months in jail. In terms of the amounts of fines we've received, it's been $98.2 million. The tax upon which those convictions have taken place is $162 million.

We have a very, very aggressive domestic and international convictions process.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

On behalf of all members of the committee, I want to thank all of our witnesses here this morning.

If there's anything further with respect to any specific questions, or on this whole topic, please do submit that information to the clerk. I know some of the members did want to submit something. I will make sure all the members of the committee get it.

Thank you so much for your time this morning.

Colleagues, you have a budget in front of you for this study, for a total of $25,800. I believe everyone is in agreement.

Can I get someone to move this budget?

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I so move.

[The Chair, Conservative, James Rajotte]

It's moved by Mr. Jean.

(Motion agreed to [See Minutes of Proceedings])

Thank you.

The meeting is adjourned.