Finance Committee on Feb. 5th, 2013

[The Chair, Conservative, James Rajotte]

Thank you for that, Ms. Nash.

I'll just clarify for our witnesses that Ms. Nash does have the floor. She does have the right to move her motion at any time. I'll just give a ruling as the chair.

The objective of Ms. Nash's motion is to have the Standing Committee on Finance recommend the extension of Mr. Page's term as Parliamentary Budget Officer until a successor has been appointed.

As section 79.2 of the Parliament of Canada Act stipulates that the Parliamentary Budget Officer must provide the finance committee with independent analysis on different matters, I can certainly understand that a member might be inclined to think that his administrative mandate falls within our jurisdiction as well. However, this is not the case, as section 79.1(1) of the Parliament of Canada Act states:

There is hereby established the position of Parliamentary Budget Officer, the holder of which is an officer of the Library of Parliament.

Section 108.4 of the Standing Orders states, and I quote:

(4) So far as this House is concerned, the mandates of the Standing Joint Committee on

(a) the Library of Parliament shall include the review of the effectiveness, management and operation of the Library of Parliament;

Therefore, I rule the motion out of order as House of Commons Procedure and Practice states on page 1054: “motions moved in committee must not go beyond the committee's mandate”.

So that motion is out of order.

I'll just remind members that rulings are not debatable. They can be challenged, but they're not debatable.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Chair, given that I cannot debate this ruling, I challenge the chair.

[The Chair, Conservative, James Rajotte]

Okay. The vote is on the phrase, “that the chair's ruling shall be sustained”.

(Ruling of the chair sustained: yeas 6, nays 5)

Thank you.

We'll now move on to my round of questioning.

Mr. McAuley, I want to start with you. In your statement you said that:

Since 2006, the CRA has audited nearly 8,000 cases suspected of having an aggressive international tax component. These audits led to the identification of over $4.5 billion dollars in unpaid tax.

Just for clarification, can you identify how much of the $4.5 billion was recovered?

[Terrance McAuley]

I will not be able to answer the question in the way you anticipate, Mr. Chair.

Our audit system and our collection system are independent of each other, and as a result, once an audit has been completed and the amount is identified as outstanding, it is attached to that taxpayer and it goes into the system, along with all other tax debt that may be there. So when a payment is made, it's not currently possible to identify that payment being associated with any particular debt that has arisen. It's a bit like one's credit card. You have a series of credits and a series of debits, so as a result, it's not easily translatable to go from a particular reassessment to having paid that reassessment.

[The Chair, Conservative, James Rajotte]

But is there any way for us, as a committee, to know how much of the $4.5 billion has been recovered or is expected to be recovered?

[Terrance McAuley]

If you look at the agency as a whole, Mr. Chair, well over 90% of tax debt identified by the Canada Revenue Agency is paid within one year of being identified. By analogy, you can assume that once our debt is identified, the vast majority of that will be paid within the year, subject to situations such as appeals, whereby once a taxpayer goes on appeal, that debt is suspended.

[The Chair, Conservative, James Rajotte]

For the committee's information, can you briefly take us through an investigation or a typical audit you would conduct?

[Terrance McAuley]

Certainly, Mr. Chair.

Once we identify, from an international aggressive tax standpoint, that certain schemes could affect Canadian taxpayers, we look at those schemes and identify particular points that we think are relevant for our audit community to look at when they're doing audits. For example, that could be a taxpayer who is using a country that has a very bad track record with exchange of information or has a very low tax rate or is using offshore trusts. There are a whole series of issues.

When our auditors begin looking at a particular file, they will look at it to see if any of those issues are in play, at which point they will scrutinize the aggressive international tax that exists.

[The Chair, Conservative, James Rajotte]

Okay.

I'll bring in the RCMP on this. In the last set of hearings we had, we understood as a committee that there are some restrictions with respect to the sharing of certain information from certain investigations that the RCMP is conducting, which may lead to investigations that have some impact on tax evasion.

Could you educate the committee in terms of what those restrictions are, or how you proceed with respect to sharing of information between the RCMP and the CRA on certain investigations?

[Insp Jean Cormier]

Mr. Chairman, may I first go back to the question that was asked by Ms. Glover, to clarify the last sentence in part of my speech? When I reread the sentence, Ms. Glover is correct. That was my interpretation, that a statistic was possibly represented. For instance, if the figure goes up, it means crime goes down. But I would like an opportunity to verify that and come back to the committee with clarification on that, please.

[The Chair, Conservative, James Rajotte]

Absolutely.

[Insp Jean Cormier]

Thank you.

As far as the sharing or the restriction as to where we can share information, I can't think of too many cases where we cannot openly share information with the CRA if we are engaged in a joint investigation with them. Typically that is the requirement. If we are engaged in a joint investigation, we are certainly able to share information, which we come into possession of, with the Canada Revenue Agency.

Where the information would be limited or restricted is where there would be no joint investigation. But if there is an indication that there is an avenue for tax evasion or tax fraud involved in the investigation, it's one of those matters we would still refer to the Canada Revenue Agency. So I'm not quite sure what the previous witnesses may have been referring to.

[The Chair, Conservative, James Rajotte]

Then you're telling us there's very little restriction with respect to the sharing of information between the RCMP and the CRA on these matters.

[Insp Jean Cormier]

From the RCMP to the CRA.

[The Chair, Conservative, James Rajotte]

There's very little restriction.

[Insp Jean Cormier]

That's correct.

[The Chair, Conservative, James Rajotte]

Okay. I appreciate that.

Mr. Brison, please.

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

Thank you, Mr. Chair.

Since 2004, when the Joint International Tax Shelter Information Centre, JITSIC, was established...it now includes China, South Korea, France, and Germany. There have been 500 exchanges of information between other JITSIC countries and Canada as of 2009. How would you describe the relationship with JITSIC? Is it growing on an ongoing basis? Are you seeing more communication and engagement of our partners in JITSIC?

[Terrance McAuley]

The whole JITSIC arena is growing, Mr. Chair. You've mentioned China, Japan, and Korea coming on board. France was the last full member to come on board, and now Germany is about to come on board.

The JITSIC operation exists in Washington and it exists in London, in the U.K. Canada supplies full-time membership in the United States, and we participate heavily through our treaties to exchange information. A growing number of matters are brought to the attention of the JITSIC members sitting in these two offices that are then ultimately shared with Canada. When information comes back to Canada, every piece of that information is reviewed by our centre of expertise to determine whether we have that problem in Canada. Then we determine a course of action, and then, through our risk assessment system, we identify taxpayers who may be involved in that.

It's a very active process and one that does provide us with information.

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

Do you think there's been a significant impact fiscally in terms of the program?

[Terrance McAuley]

Without going into detail, obviously for the protection of the treaty interests among the countries, there have been assessments issued from the work that's come out of JITSIC, yes.

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

Have you considered or thought of countries whose inclusion in JITSIC would be beneficial to your work if they were to join?

[Terrance McAuley]

Certainly as a member of the deputy commissioner's committee that sits on JITSIC, we do have that discussion periodically, and it's balancing the benefit that comes from a small group of like countries to expanding it to a larger group that would start to look like some of the work of the OECD, for example.

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

When you expand to a larger group, would some be full partners and others...I don't want to say.... Well, in a sense it's associate partners who may not be full partners but they participate at some level.

[Terrance McAuley]

Since I became a member of the deputy commissioner's committee, we have not had that discussion about second-tier membership.