Evidence of meeting #16 for Public Accounts in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was information.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Marian McMahon  Assistant Auditor General, Office of the Auditor General of Canada
Richard Montroy  Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency
Gina Jelmini  Director, Offshore Compliance Division, Canada Revenue Agency
Heather Miller  Director, Office of the Auditor General of Canada

4:25 p.m.

NDP

The Chair NDP David Christopherson

You're much better. I used to do that all the time. Just a little question, and I'd be going on and on. I really appreciate your respecting that, thank you.

Moving along, back over to Monsieur Giguère. You have the floor, sir.

4:25 p.m.

NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

Thank you, Mr. Chair.

The government has decided to offer compensation. In the first instance, that of Liechtenstein, you have, in a manner of speaking, obtained information that was not even needed. It was sent to you on a silver platter. You know that informers have privileged information and you are ready to pay them, but are you proactive? Do you communicate with representatives of foreign financial institutions to talk about these people who deal with them and who invest millions of dollars with them? Do you tell them that accountants and IT operators can also get a few million dollars? Are you proactive? Do you try to speak to people who have information to incite them to become informers?

4:25 p.m.

Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency

Richard Montroy

Thank you for the question.

At the current time we are not working proactively in this way because the program has just started. Several people have already called and submitted information. It is fairly difficult for the agency to do what I would call marketing to financial institutions, because that could be seen as being an incitement to possibly commit a criminal offence. For the moment, we are not working proactively in this way.

4:25 p.m.

NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

Mr. Chair, I appreciate the response, but it leads me to ask a question on the established procedure.

The Auditor General did a draft of this procedure. Does it seem to you to be relatively quick, and does it give good results? Given the importance of the information that was sent to them, in your opinion, is the result acceptable? We have identified a number of fraudsters, we have identified the amount of money defrauded, and we have recovered some of the money from these frauds. Does that seem acceptable to you? Should there be improvements made in this area?

4:25 p.m.

Assistant Auditor General, Office of the Auditor General of Canada

Marian McMahon

I do not fully understand the question on our chapter. We audited the Liechtenstein list only in the context of laws that were in force at that time.

4:25 p.m.

NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

You make a verification of the work of the agency.

4:30 p.m.

Assistant Auditor General, Office of the Auditor General of Canada

Marian McMahon

Yes, we started the activities with the help of the list. There has been an improvement since 2007. The work seems to be giving good results, but this is not an evaluation.

4:30 p.m.

NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

The Canada Revenue Agency indicated to the Standing Committee on Finance, which was holding hearings on tax fraud and the use of tax havens—

4:30 p.m.

Conservative

Bryan Hayes Conservative Sault Ste. Marie, ON

I have a point of order, Mr. Chair.

4:30 p.m.

NDP

The Chair NDP David Christopherson

Mr. Hayes, on a point of order....

4:30 p.m.

Conservative

Bryan Hayes Conservative Sault Ste. Marie, ON

I'm getting confused. This committee has nothing to do with the finance committee. We don't know what happened at the finance committee and what didn't. This seems to be straying outside of the purview of this particular audit.

4:30 p.m.

NDP

The Chair NDP David Christopherson

I hear your point and I share your thought, but I'm not convinced that Mr. Giguère is making the points that he's trying to make.

I've noted the issue, and unless and until Mr. Giguère is asking an unfair question of someone who doesn't have that report in front of them, I'm allowing Mr. Giguère some latitude to make his comments, as I do with all members. At the point at which it starts to be unfair—if he did make a reference in a question to a document that the witnesses don't have—then I would have to pull that back.

For now, I don't think he's gone beyond the latitude that is given to a member to make his statements. When it comes to the questions, though, they need to be fair, and not having information in front them is not fair. I would deal with that accordingly.

Mr. Albas.

4:30 p.m.

Conservative

Dan Albas Conservative Okanagan—Coquihalla, BC

I have a question on that, and I won't belabour the point.

The transcripts of this committee go toward our process of a report back to the House. If a member does seem to stray off the subject matter considerably, I would hope that the analyst would be looking at that and seeing what's pertinent to the actual reporting process. I'm hopeful that is the standard case.

4:30 p.m.

NDP

The Chair NDP David Christopherson

I would expect that the analysts will continue to use the excellent discretion that they've been using.

I think that your time on this committee has shown that the statement is not over the top. I would also point out, of course, that it takes a majority of the committee to approve something in the final committee report. There's a double safeguard, if you will, from concerns.

We will stop the clock here for a moment.

I think your concern is with somebody having the ability to say something and skew the report when the statement didn't have any factual basis, in your opinion, in where we are, or relevancy.

Your point is well taken. However, we do need to buttress that against the right of members, particularly at committee, to have that wide latitude. I know you support that because I've given you that latitude. I do think we have the checks and balances, but it's always worth underscoring these things.

Thank you for your point. Are there any further interventions?

Hearing none, please start the clock.

Mr. Giguère, you have the floor again.

4:30 p.m.

NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

I will share with you some public information that you are familiar with. Since 2006 and following the audit of 8,000 tax evasion files, the Canada Revenue Agency has identified and recovered 4.6 billion dollars. Can we expect to see growth in the amount of tax recovered? Is this a cruising speed that you intend to maintain? Do you feel that you still have a lot of work to do in this area? The recent budget from the Conservative government included a five-point plan to improve this performance. Will the five points in this plan be enough to improve your performance?

4:30 p.m.

Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency

Richard Montroy

That is an excellent question.

Indeed, I often discuss results with my boss. Results vary from year to year according to the economic situation and the context. The 2013 budget, which I referred to earlier, has closed several tax loopholes. As the person in charge of audits, I am very happy that the government has adopted these clauses which close these tax loopholes, but this will have an influence on our results. Certain audits that we did in the past gave results, but we no longer do them since the tax loopholes have been closed. However, because I am a fatalist by nature, I have no doubt that certain taxpayers will be able to find other ways to commit tax evasion.

When a government closes one door, professionals in the field find a way to open another. This is a game that is played in every country.

4:35 p.m.

NDP

The Chair NDP David Christopherson

Thank you. The time has expired.

Moving along, Mr. Chisu, you have the floor, sir.

4:35 p.m.

Conservative

Corneliu Chisu Conservative Pickering—Scarborough East, ON

Thank you very much, Mr. Chair.

Thank you very much to the witnesses for appearing before this committee.

Being an engineer, I am humbled by and am enjoying this wonderful experience of being between lawyers and accountants.

4:35 p.m.

Voices

Oh, oh!

4:35 p.m.

Conservative

Corneliu Chisu Conservative Pickering—Scarborough East, ON

I have a question for Ms. McMahon of the Auditor General's office.

International tax evasion is a very serious issue that was largely ignored in the past by successive Liberal governments. As a result, the Liechtenstein case was one of the first major compliance projects of its kind. Despite this, in general the opposition has been highly critical of the results of this investigation. In your report, you recognize that due diligence was done when deciding which files to pursue. Can you elaborate on this, please?

4:35 p.m.

Assistant Auditor General, Office of the Auditor General of Canada

Marian McMahon

Thank you, Mr. Chair.

In our chapter, we start out in paragraphs 9.8 through 9.11 to identify that we reviewed CRA's actions in taking the names on the list and determining which ones to audit and which taxpayers not to audit. They do have procedures to follow to ascertain which ones to follow through on, and we had no concerns. As we state, sufficient work was done to justify the decision on which taxpayers to continue auditing and which ones the agency decided not to audit.

4:35 p.m.

Conservative

Corneliu Chisu Conservative Pickering—Scarborough East, ON

Thank you very much. I will follow that up with the following question.

Based on your report, I think it's fair to say that the CRA handled the project quite well. You mentioned in your report that this project was relatively uncharted territory for the CRA when it began, yet it's no secret that offshore tax evasion has been around for a very long time. Can you comment on what the CRA's approach to offshore tax evasion was prior to 2006, and why something like this was never done prior to that time?

4:35 p.m.

Assistant Auditor General, Office of the Auditor General of Canada

Marian McMahon

I will start answering and will probably recommend that the agency continue with the answer.

In this audit, we looked at how the agency managed the Liechtenstein list only. We did note that it was the first time that they had received such extensive information in this manner, but we concentrated our efforts on only what they did with this list starting in 2007. For anything done prior to that, I would defer to the agency.

4:35 p.m.

Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency

Richard Montroy

Mr. Chair, thank you for the question.

Actually, that is a very good point about what happened in the past. I would have to say that it's easy today, in 2014, to say that this happened and that happened, but if you take a step back.... I was lucky enough to be one of Canada's representatives on the Forum on Harmful Tax Practices, where we looked at what so-called tax havens did and at countries involved in bank secrecy.

It's no secret that Switzerland was one of those countries. I would say that in the mid-2000s, when I was a member of the Forum on Harmful Tax Practices, I never thought for a million years that I would see Switzerland sign an amended treaty with Canada for article 26, which is the exchange of information. Also, a year or two years ago, whatever the case may be, Canada signed a new treaty with Switzerland that includes the OECD standard for article 26, and we now exchange banking information with Switzerland.

Things have changed dramatically in the last few years, and I think they will continue to change dramatically. The ex-head of the OECD, Mr. Owens, said that for a lot of the stuff that the OECD and the treaty partners were doing, their ultimate goal was to ensure that nobody has room to hide money anywhere in the world. I think the OECD and its member countries have done a very good job in a relatively short period of time.

4:40 p.m.

NDP

The Chair NDP David Christopherson

You have just a couple of seconds, sir.