Mr. Speaker, with regard to parts (a), (b), (c) and (e), the CRA does not track Canada emergency wage subsidy, CEWS, applications in this manner, by companies practising aggressive tax avoidance and tax evasion, broken down by aggressive tax avoidance case and tax evasion case. Part 1 of the COVID-19 Emergency Response Act, No. 2, S.C. 2020, c. 6, notes that CEWS is available to qualifying entities, sets out definitions for the terms that apply to the emergency wage subsidy, and provides definitions of both eligible employees and qualifying entities. The CRA’s role is to administer legislation as it has been approved by Parliament and assented to by the Crown.
With regard to part (d), when the CRA processes CEWS applications, it uses an automated validation process and manually verifies certain elements of the claims when necessary. Manual verification can include contacting applicants directly. The CRA has also put procedures in place to identify fraudulent wage subsidy claims before it issues a payment. These procedures include intercepting claims from taxpayers associated with tax evasion or fraud. After payment, through the CEWS post-payment audit program, the CRA further verifies the legitimacy of wage subsidy claims and payment amounts. Taxpayers are selected for a post-payment audit through CRA’s risk assessment systems and processes. Selected taxpayers are sent an initial contact letter requesting information focused on the payroll and revenue tests. For many small and medium taxpayers that provide the required documentation, these tests can be performed swiftly, and if fully compliant, the audit can be closed quickly. The audit team conducts the payroll tests like any other payroll audit and confidentiality of the eligible employee information is maintained. In regard to the revenue test, where the taxpayer has used a consolidated accounting method or made an election in computing the revenue drop, then more audit work is required. The CRA examines whether the taxpayer took additional steps to artificially reduce or defer revenue to meet the requirements of the wage subsidy, and application of the specific anti-avoidance rule and the related 25% penalty is considered if the reporting of revenues have been manipulated.