Finance Committee on Feb. 5th, 2013

[Scott Brison, Liberal, Kings—Hants, NS]

Would you believe this is a case where that research has effectively given you a pretty thorough understanding of the schemes that are out there, or is it the tip of the iceberg? If you had more resources to pursue more research specific to this, might you find, on an ongoing basis, new and creative approaches and schemes that the audit function could then identify and close?

[Terrance McAuley]

We're finding that the approach we have is an excellent way of moving forward. In other words, having a component piece dedicated to research to feed the audit community and feed that current knowledge is having the impact it is designed for. I'm very comfortable with the approach we've put together.

[Scott Brison, Liberal, Kings—Hants, NS]

The CRA's October 2010 internal audit noted that due to resource constraints some tax service offices chose to focus on straightforward cases as opposed to the more complex cases of non-compliance. We're seeing more cutbacks across all program activities this year.

How does a reduction in resources affect your capacity to go after what are increasingly complex cases?

[Terrance McAuley]

In terms of looking at our programs for criminal law, aggressive international tax planning, transfer pricing, and other serious audit, there have been no reductions that have taken place, so those reductions in budget within the agency did not impact those areas.

[Scott Brison, Liberal, Kings—Hants, NS]

On those areas.

If you had—

[The Chair, Conservative, James Rajotte]

You have 45 seconds.

[Scott Brison, Liberal, Kings—Hants, NS]

—more resources, would you invest them with the same ratio, 80% audit, 20% research? Do you think that's an effective model?

[Terrance McAuley]

One of the keys we use is to completely review our programs on an ongoing basis to determine what level of resource is necessary. At the moment, we're comfortable with the resources we have. We have to keep looking at the environment shift to determine whether that's appropriate in the future.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison.

Mr. Hoback, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Thank you, witnesses, for being here this morning.

My question is on how you interact among yourselves and with the international partners you work with.

I'm curious. What kind of case would be involved where CRA would actually say this is now an RCMP file? Have you any example of what that would look like, and then vice versa, when you have a situation where the RCMP stumble across something and say this should maybe go to Revenue Canada?

Give me an idea of how that information flows back and forth or what it is.

[Terrance McAuley]

Certainly.

In the course of our review, we do an analysis. Once a file is referred to our criminal investigations division, we start to review that file. If we see there are circumstances that impact the RCMP, using the provisions of section 241 and the exception, we can contact the RCMP to enter into a joint forces approach to review a criminal law problem. That's one of the classic examples of what we do in terms of our interaction with the RCMP.

When the RCMP is aware of a certain issue that may involve tax evasion or tax fraud, they will contact us and provide us with that information so we can commence our own investigation. We have to be a bit careful. The provisions of section 241 are very clean in how we can pass information back and forth, and we need to live within the confines of that.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

When we're dealing with our international partners in these treaties, how do they know which association or agency to contact if they come across something that would be of interest to us in Canada?

[Terrance McAuley]

The treaties are specifically with us, so the treaty partners would contact us.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay. So if I'm assuming right, it goes to Revenue, and then you would do your initial analysis and say this has a criminal content. Then you'd bring in the RCMP and you'd form a joint task team to look at it.

Is that correct?

[Terrance McAuley]

At times that would be the approach we would take. It would depend on the facts of the case.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

With the RCMP, in your scenario, if you came across some criminal activity that looked like tax evasion, as a possibility to help get prosecution, how is the process to flow back to Revenue?

[Insp Jean Cormier]

Sorry, how is the process...?

[Randy Hoback, Conservative, Prince Albert, SK]

How do you contact Revenue, and how do you—

[Insp Jean Cormier]

The Canada Revenue Agency, yes. We've had a long-standing working relationship, as I stated in my opening remarks. CRA is an integral partner to our RCMP integrated proceeds of crime unit, obviously, and communication with CRA is pretty well ongoing.

Certainly the numbers I provided, as well as the number of cases we have referred to CRA.... That referred to cases that had to go to CRA for civil assessment. But for the criminal investigation, we would certainly communicate with them, and we would engage together in the criminal investigation to make sure the tax component was well addressed with their expertise.

[Randy Hoback, Conservative, Prince Albert, SK]

Is there anything as far as the interaction between the two associations, CRA and RCMP, that would make that collaboration better and more efficient?

[Insp Jean Cormier]

No, I can't point to anything in particular.

As I stated as well in my opening remarks, we are currently working together to try to enhance our relationship. But that's more specific to being able to maximize the use of the new legislation that was issued in 2010—it's relatively new—and to leverage each other's strengths to make sure we can pursue these investigations fully.

[Randy Hoback, Conservative, Prince Albert, SK]

So it's fair to say that you need the legislation in order to proceed. You could spend all the money in the world, but if you don't have the proper legislation in place, it doesn't help much, does it?

[Insp Jean Cormier]

Exactly. As we all know, obviously, tax law is very secret. The way tax information can be shared with law enforcement is limited, but there is legislation that does allow it.

Certainly if there were legislation that I would suggest could be improved, it would be the sharing of tax information for other than the limited offences that are currently listed, where tax information could be obtained so it could be useful in other investigations. But relative to tax evasion, I think the tools are in place that allow us to work together.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.