Finance Committee on May 19th, 2016

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

I would like to thank my colleague for his question.

I want to say that, under my direction, Kimberley Brooks conducted an independent review of the CRA last spring. This independent review, which was conducted by an external tax expert, concluded that the CRA acted in accordance with its established policies and procedures and that officials acted in accordance with the agency's code of integrity and professional conduct.

Mr. Gallivan can give you more information in that regard.

[Ted Gallivan]

Just quickly on that point, first, I think both the minister and the agency wouldn't characterize this as an amnesty. I think we've already pointed out that we can't confirm any specific agreement, but the document posted to the CBC website contains no immunity from criminal prosecution. It indicates that the agency would have gone back 16 tax years. Financial analysis would show you that the compound interest would add 25% to the bill. Any taxpayer signing such an agreement would have to waive their right to appeal or object. Commonly in these situations, the agency insists on payment within 60 days.

Secondly, in terms of the go-forward and the remarks the minister had, the agency, when it is litigating, remains open to settlement, based on the facts of the case. In future, if the agency is litigating with a taxpayer, based on the facts of the case, based on the criteria we've established, we may consider resolving the matter without waiting for the judgment from the judge.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

The question, then, is this. If any other cases similar to KPMG come forward in the future, will you consider them?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

I would like to make it clear to everyone around this table that the word “amnesty” is not part of the Canada Revenue Agency's practices or vocabulary. No one was given amnesty in the case in question and no one will ever be given amnesty in the future. Every taxpayer and every situation is assessed on a case-by-case basis. As we said at the beginning, the CRA's main objective is to make sure that it recovers the amounts owed to the government.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I have a question, too, on something you mentioned, that there's $11 billion and two-thirds of this is from international cases. Also, you've hired, or you have been hiring, extra auditors and extra staff to do the investigations and to do the follow-ups. I'm not asking you to release any information, but is there a preferred list of tax professionals who CRA trusts to deal with, after what happened with the KPMG case?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

The CRA was able to recover $11.5 billion last year. Two-thirds of that amount, or $7 billion, involved aggressive tax planning.

Maintaining the confidentiality of information is also an important rule at the agency. It is one of the CRA's fundamental principles.

Mr. Gallivan can answer your question in more detail.

[Ted Gallivan]

Just to complement the minister's response quickly, we have a two-tiered risk assessment system, broadly speaking. The first is automated, numbers, stats, comparisons, algorithms, what doesn't make sense. The second is human. At that human level, absolutely, the reputation of the tax practitioner and their current behaviour will definitely influence our decision on whether to audit of not.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Quickly, the $440 million to be spent is quite a bit of money. Are you restructuring the CRA? Where is the money going to go? Are you hiring a few extra people? This is too much money for the number of people you'll be hiring. Is there any restructuring of the CRA?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

As I mentioned earlier, the investment of $444 million over five years will be used to detect tax evaders and improve our technology and tools so that we can deal with international cases. With regard to audits and investigations, we will be hiring another 100 auditors to work on international cases. With regard to penalties and prosecution, legal advisors will be added to the CRA's investigative teams.

[The Chair, Liberal, Wayne Easter]

Thank you both very much.

Mr. Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much, Mr. Chair.

Thank you for being here with us, Madam Minister.

I would like to come back to the letter and to the statement that you made in the House three times.

On March 10, you said that there is no amnesty. We have the letter signed by Stephanie Henderson from the Canada Revenue Agency, which not only proposes to “reach a final and complete settlement with regard to the consequences...under the Income Tax Act”, but also indicates that, “The Minister shall waive interest and penalties as indicated in Appendix A...”. Appendix A shows all of the taxation years for which there will be no penalty regarding the returns, contrary to the CRA's usual practices.

How can you say that there will be no amnesty when penalties are being waived for the people who choose to voluntarily admit that they used this mechanism but not for all taxpayers?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

I should repeat that the term "amnesty" is not in use at the Canada Revenue Agency. There has been no amnesty, and there will be no amnesty.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Madam Minister, at an earlier meeting, my colleague gave the following definition of the word “amnesty”:

An undertaking by the government to retroactively erase the punishable nature of the offence to which it applies. Depending on the case, amnesty may prevent or quash public prosecution, set aside a conviction, or terminate a sentence being served….

Whether the agency acknowledges the term or not, French-speaking Canadians recognize the concept in this case, as do I. Once again, we are dealing with a letter that specifies that the people who say they used this scheme will face no penalty, when, in fact, they should face one. At least in French, that is what we call an amnesty.

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Mr. Caron, I'm a French Canadian as well, and I am telling you that the term “amnesty” is not in use, and will not be used—

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

If it's not an amnesty, what is it?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

I invite Mr. Gallivan to answer your question.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I am not seeking an answer from Mr. Gallivan. I am seeking your answer.

[The Chair, Liberal, Wayne Easter]

We'll have Mr. Caron, and then the minister.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I'm sorry, but we heard Mr. Gallivan at a previous meeting. If it's not an amnesty, I'd like to know what it is.

Is the letter genuine? And what is involved in the letter, if not an amnesty?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

First of all, I am unable to confirm the authenticity of the document. I will say it again: there is no amnesty, there was no amnesty, and there will never be amnesty at the Canada Revenue Agency. Each file is dealt with on a case-by-case basis. The objective of the CRA is to—

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I feel I must interrupt. The time I have is limited.

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

—to recover money owed to the government, Mr. Caron.

[The Chair, Liberal, Wayne Easter]

Mr. Caron, the minister has the floor.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

She's repeating what she said before. My time is limited; you know that.

[Steven MacKinnon, Liberal, Gatineau, QC]

Mr. Chair, on a point of order.

Especially today, I must say that I've never seen a witness badgered like my colleague across the way is doing with this witness. The minister is answering his questions forthrightly.