Finance Committee on Oct. 29th, 2025

[The Chair, Liberal, Karina Gould]

I call this meeting to order.

Welcome to meeting number 10 of the House of Commons Standing Committee on Finance.

Today's meeting is taking place in a hybrid format. I would like to remind participants of the following points.

Please wait until I recognize you by name before speaking. If you are on the video conference, please click on the microphone icon to unmute yourself. When you are not speaking, your mike should be on mute.

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Members who wish to speak are asked to raise their hand, whether they are in the room or participating virtually. The clerk and I will do our best to maintain a consolidated speaking order.

Pursuant to Standing Order 108(2) and the motion adopted on Monday, September 22, 2025, the committee will commence its study of the use of offshore tax havens.

I would like to welcome our witnesses.

From the Canada Revenue Agency, we have Marc Lemieux, assistant commissioner; Eric Ferron, director general, criminal investigations directorate; Alexandra MacLean, acting director general, international and large business directorate; and Adrianna McGillivray, director general, compliance programs branch.

From the Department of Finance, we have Trevor McGowan, associate assistant deputy minister, tax legislation, and Robert Demeter, director general, tax legislation.

From the Financial Transactions and Reports Analysis Centre of Canada, otherwise known as FINTRAC, we have Annette Ryan, deputy director, partnership, policy and analysis, as well as Michael-John Almon, assistant deputy director.

I understand that only CRA will be presenting opening remarks.

You have five minutes for your opening remarks. Please proceed.

[Marc Lemieux, Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency]

Thank you.

I would like to say that we've tabled a more fulsome set of remarks. In the interest of time, I'll keep it to the main points.

Good afternoon.

My name is Marc Lemieux, and I am the assistant commissioner of the compliance programs branch at the Canada Revenue Agency, or CRA.

The experts with me today are Eric Ferron, director general of the criminal investigations directorate; Adrianna McGillivray, director general of the compliance programs branch; and Alexandra MacLean, special adviser and acting director general of the international large business directorate.

Thank you for the invitation to appear before this committee today in order to discuss the CRA’s efforts to combat tax evasion and tax avoidance. Combatting tax evasion and tax avoidance is a priority for the CRA, and I will be sharing the progress we’re making, as well as the work that lies ahead.

Let me begin by stressing that the CRA is making significant progress in identifying and addressing aggressive tax planning, tax avoidance and tax evasion. Over the past several years, we have taken significant strides forward by investing in audits and creating new compliance programs. In 2024-25, there was a fiscal impact of about $18 billion.

We are carrying out more compliance activities and focusing on high-risk areas, particularly those involving sophisticated schemes. We are using and exploring new technologies to improve our audit and compliance programs by making them more efficient and effective.

On the international front, our collaboration with global partners continues to strengthen. Through the OECD's Forum on Tax Administration, we engage with over 50 tax administrations. We work together to share best practices and emerging trends, deal with international risks and improve compliance. This collaboration has supported the implementation of initiatives such as the OECD's common reporting standard, which gives us access to financial account information from close to 100 jurisdictions. It provides us with the data we need to uncover offshore accounts and ensure that taxpayers are paying their fair share.

However, it is important to note that holding an offshore bank account or offshore assets does not necessarily mean a taxpayer has committed any tax wrongdoing. We must take the time to carefully review the complex arrangements and ensure that there is a justified economic transaction that is aligned with the object and spirit of the Income Tax Act.

In addition, Canada is part of one of the most extensive tax treaty networks in the world. These exchanges and networks allow for better tax transparency and international co-operation.

Domestically, the government has provided us with critical legislative tools to enhance our effectiveness. For example, new mandatory disclosure rules require taxpayers and advisers to report certain transactions that could be used for aggressive tax planning. So far, we have received over 4,200 disclosures under these rules. We are examining each of them and starting audits where the disclosures reveal concerns about tax avoidance.

It is crucial for our legislative and administrative frameworks to be responsive. We are actively exploring new technologies like artificial intelligence and ensuring that our auditors and investigators have the tools they need, so that we can respond to emerging compliance risks and maintain the integrity of Canada's tax system.

Our goal is simple: to ensure a fair tax system, where everyone pays their share and Canadians can have confidence that the rules are being applied to all.

Thank you.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Lemieux.

I would also like to welcome Stéphane Sirard, deputy director of intelligence at FINTRAC.

We're going to start our rounds of questioning.

First, we have Mr. Kelly from the Conservatives for six minutes.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Thank you, Chair.

In 2018 the Auditor General identified offshore transactions as highly problematic. The Auditor General pointed out that with regular Canadians, small business owners and ordinary taxpayers, when the CRA would request a receipt or information to support a claim, the tax filer had 90 days to comply. The taxes would then be automatically assessed in the absence of the production of a document. However, for other taxpayers, such as those with offshore transactions, we found that the time frame to comply was extended for months or years.

It was the Auditor General's finding that offshore filers were given a break by the agency. After months or years of non-compliance with requests for information, taxes would simply be waived. I asked Commissioner Hamilton about this at a more recent meeting, when he was here in December. He didn't have any answer to my question about whether or not any real progress had been made.

Do we now have an even playing field between ordinary Canadian tax filers and offshore tax filers or those with offshore accounts?

[Marc Lemieux]

I will go first, and then I will pass the floor over to my colleagues who are the audit process experts.

Of course, we don't treat those files the same way, but we do make sure the approach is fair. Some taxpayers are better equipped than others to answer our questions, and we take that into account when setting the deadlines. That means some taxpayers can have more time, but we strive to be as fair as possible.

Ms. McGillivray can tell you more and explain how we carry out our audits.

[Adrianna McGillivray, Director General, Compliance Programs Branch, Canada Revenue Agency]

It's true that the OAG review did reveal that there appeared to be some inequities between the treatments of the taxpayers in certain categories.

There is an acknowledgement that offshore transaction audits involve complex arrangements that require extensive information-gathering activities. That does necessitate more time for the auditors to obtain that information.

That said, since—

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

If I may.... I'm sorry. There was quite a bit of time there for a response without an answer on whether we have shorter times, so I'd like to skip through and just get you to answer this question.

The recommendation was accepted by the agency—that the agency should set time limits around these audits. Are there limits? What are they, and how short are they? What's the gap between regular tax filers, who have 90 days, and offshore filers?

[Adrianna McGillivray]

Since that report, we did publish a communiqué to all of our auditors—and it is available online—that standardizes the timelines around audits. Time frames associated with information requests are detailed in that communiqué.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

They get more than 90 days, then.

[Adrianna McGillivray]

It's a 30-day time frame, and there are extenuating circumstances where the time frame may be lengthened if the situation warrants it.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Okay. Thank you.

Brookfield Asset Management, under the management of the current Prime Minister.... When he was there, he oversaw the creation of three funds: Brookfield global transition funds I and II and the catalytic transition fund. Two of these funds were domiciled in Bermuda and one was in the Cayman Islands. Are these locations tax havens?

[Marc Lemieux]

We cannot comment at all on specific cases. Unfortunately, we have to keep our answers general.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

My question was whether Bermuda and the Cayman Islands are tax havens.

[Marc Lemieux]

I'll let—

[Alexandra MacLean, Acting Director General, International and Large Business Directorate, Compliance Programs Branch, Canada Revenue Agency]

I think it's reasonable to call them low-tax or no-tax jurisdictions.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Okay. Thank you.

How much does the use of tax havens by large companies cost Canadians in lost revenue?

[Marc Lemieux]

That's hard to say. We've done studies, even internationally, in an effort to determine the gap between how much these taxpayers should pay and how much they do pay. The CRA has published reports on that, most recently in 2022. At the time, I believe the tax gap was between $1 billion and $3 billion. However, the estimate is based on a number of assumptions, so it's difficult to come up with an exact figure.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

I'm running out of time.

We're going to have the PBO later today. Does the Canada Revenue Agency now give the PBO access to the information that the PBO has long requested and that has been refused by the agency, so that the PBO can measure the tax gap?

I'm not talking about macroeconomic data. I'm talking about the actual tax information that successive PBOs have requested from the CRA. Do you now co-operate with that?

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Kelly. That's your time.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

I have 10 seconds, I think.

[The Chair, Liberal, Karina Gould]

No, that was it.

We'll move on to Mr. Lavoie for six minutes.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

Thank you, Madam Chair.

Thank you to the witnesses for joining us.

For those who don't know, I represent the riding of Beauport—Limoilou, in the Quebec City area, and I spent two decades working in the banking sector, so talking finance brings me back a few years.

Mr. Demeter and Mr. McGowan, how does Canada make sure its tax rules are consistent with its base erosion commitments through the OECD?

[Trevor McGowan, Associate Assistant Deputy Minister, Tax Legislation, Department of Finance]

Thank you for your question. I'm going to answer in English.

We are actively involved with the OECD and the inclusive framework project of 140-plus members, organized by the OECD and the G20, in the development of international tax policy and rules. We are heavily involved, both at the planning and group side of things, through the development and then through the implementation of the rules.

In terms of ensuring consistency between Canada's rules and the international standards that we worked on, of course, because we have a hand in the development of the rules, we can help ensure that they are appropriate for the Canadian context and that they work here domestically. Our representatives who work on developing the rules are also the same ones who implement them, which, of course, provides for a seamless application of knowledge.

However, there are a number of factors that are built into the processes that help ensure compliance. There is an ongoing peer review, for example, with the pillar two rules, whereby Canada or any country will put out its rules and be evaluated by a number of other members of the inclusive framework to ensure not just that our rules are consistent with the base rules and the consensus that is agreed upon at the inclusive framework, but also that we are engaged in reviewing our peer countries as well. That has been built into the system to ensure uniformity as much as is possible, given that every country will have its own unique legal system and landscape.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

Along the same lines, I'd like to know what mechanisms you have planned to prevent overlap or gaps between the federal and provincial beneficial ownership registries?

[Trevor McGowan]

Again, we work very closely with our provincial counterparts. We're actually just planning for an ADM-level meeting in a few weeks to help ensure consistency.

We have, for the large part, a uniform tax base with a number of provinces, and we work very closely with those who do not share that base. We have a very open, collegial and good working environment with our provincial counterparts where we exchange ideas, certainly at the policy development level and at the officials level, and help ensure that their rules work together—not just that they are integrated well, but also.... For example, recent amendments to, say, the general anti-avoidance rule were inspired, in part, based upon communications with Quebec and their rules. It's a two-way street.