Finance Committee on Oct. 29th, 2025

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Lefebvre.

We have Mr. MacDonald from the Liberals.

You have five minutes, please.

[Kent MacDonald, Liberal, Cardigan, PE]

Thank you, Madam Chair, and thank you to all the witnesses for coming today.

My first question is in regard to the global minimum tax that you discussed in your introductions. What steps are you taking so that it's fully implemented, and can you explain how it's going to work to discourage companies from relocating profits to lower-tax jurisdictions?

[Trevor McGowan]

Absolutely. I would be happy to go through its limitation.

Canada has been actively involved in the base erosion and profit shifting process since its inception. We have been actively engaged with our international counterparts on developing the rules and, as I said earlier, ensuring their work in a Canadian context.

Those draft legislative proposals in respect of the global minimum tax were released for consultation. We consulted on them. They have been enacted by Parliament for two of the three main components of the rules. Those are the IIR and the UTPR, the undertaxed profits rule, which allow Canada to essentially step in and tax its multinationals that have subsidiaries in low-tax jurisdictions, or to impose a top-up tax in Canada whereby foreign subsidiaries would be collecting their global minimum tax. Draft legislative proposals for the final component, the UTPR, the undertaxed profits rule, were released for consultation, and we have gathered feedback from stakeholders on that.

In addition, we are continuing to be actively engaged at the OECD and the inclusive framework on developing and refining the global minimum tax rules to ensure that they work appropriately for Canadians even after they have been enacted. We have draft legislative proposals that were put out to refine the rules to take into consideration particular issues that have arisen recently, and we will continue working together with our international counterparts to do that.

[Kent MacDonald, Liberal, Cardigan, PE]

Is it fair to say that it's early days for the global minimum tax 2024, so we really don't have a lot of data to see its effectiveness yet?

[Alexandra MacLean]

I think it's fair to say that it's early days. You're right about 2024. The first returns are due under the global minimum tax in June 2026, so CRA is actively engaged in building systems to accept those returns. We have a website dedicated to the Global Minimum Tax Act to keep payers informed of the steps we are taking, and we have a team in place to examine those returns.

[Kent MacDonald, Liberal, Cardigan, PE]

I was working in the private sector when the Panama and paradise papers came out. Of course, I was mortified by what I was reading in the media. Do we know the total amount that CRA has recovered since then through reassessments for penalties or voluntary disclosures of individuals or corporations?

[Adrianna McGillivray]

Absolutely. Relating to the Panama papers, we've had about 330 closed audits, and to date we've assessed approximately $119 million in federal taxes and penalties.

[Kent MacDonald, Liberal, Cardigan, PE]

Further along those lines of questioning, you talked about a more comprehensive regime now in going after these corporations that are using tax evasion. Currently, approximately how many active audits or investigations are under way into offshore tax evasion and profit shifting, and how would that compare to five years ago? Have we increased the numbers?

[Alexandra MacLean]

I don't have numbers this afternoon. The pandemic impacted our activities for a period. We're back, for sure. We never ceased audits, including audits of cross-border transactions, but they were affected for a period during the pandemic.

We have better tools and better data than we did in the past, and our recoveries are improving consistently, but we are quite excited about the global minimum tax. Its ordering role, which my colleague Trevor touched on.... Basically, a given jurisdiction can protect its own tax base by imposing the 15% minimum tax. If it fails to do so, other jurisdictions can impose tax.

[The Chair, Liberal, Karina Gould]

Thank you, Ms. MacLean. We're out of time for this round.

Thank you, Mr. MacDonald.

We're going to Mr. Hallan for five minutes.

Oh. Did you switch?

Go ahead, Mr. Kelly.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Last week, at the ethics committee, there was testimony in a report from the Centre for International Corporate Tax Accountability and Research, which stated that “Brookfield's tax gap in the last five years (2017-2021) was over $6.5 billion”. It was the testimony of an expert at the ethics committee that the tax gap for that one tax fighter alone was $6.5 billion. I'm going to ask for a little more information on the tax gap.

Does the CRA now comply with the request from the Parliamentary Budget Officer to give the PBO the audit information that has long been requested to measure the tax gap independently?

[Marc Lemieux]

We now produce a tax gap study at the agency, following international best practices.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

I asked if you supply the information to the PBO.

[Marc Lemieux]

I don't have a precise answer to this. I don't know if the team can.... We have some challenges sharing some of the information, because of section 241. We publish tax gap studies.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Yes, you do, with your own method. The problem Canadians have is....

For example, 10 months ago at this committee, we had testimony from the commissioner, I believe, who said they were at a 95% call answer and accuracy rate at the CRA's call centres. That has been completely debunked by the recent Auditor General report. We would like to have the PBO get the information, so that he can independently measure the tax gap.

If I may, I'll move to a different question. How many criminal convictions has the CRA seen through for offshore tax evasion, let's say, for the most recent year you have information for?

[Marc Lemieux]

I'll turn to Eric Ferron for an answer on this one.

[Eric Ferron]

Between 2020 and 2025, we had 14 convictions with sentencing related to offshore tax evasion. We currently have 25 cases that are either being investigated or currently before the courts.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

In a country with an economy in excess of $2 trillion and 41 million people, were there only 14 cases of criminal tax evasion and overseas avoiders in that five-year period?

[Eric Ferron]

If there are more tax evaders than the 14 that were found guilty in those five years, I assume that, yes, they might have been there. Those are the ones we received referrals for and investigated. We referred them to the PPSC, which accepted laying the charges. It was able to bring them to prosecution and get sentencing.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

You have successfully prosecuted fewer than three cases per year.

[Eric Ferron]

What we said is 14 in those five years.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

It's fewer than three per year on average.

[Eric Ferron]

We don't prosecute. That's the PPSC.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

That's right. You investigate and provide the information.

[Eric Ferron]

Exactly. We make the referral and they review—