Mr. Speaker, I am pleased to have this opportunity to discuss Bill S-217, an act to amend the Canada Revenue Agency Act with regard to reporting on unpaid income tax.
This bill would amend the Canada Revenue Agency Act to require the CRA to list all convictions for tax evasion, including international tax evasion, in its annual report. The bill also requires the CRA to include statistics on the tax gap in its annual report once every three years. Additionally, Bill S-217 specifies that the Minister of National Revenue is to provide the Parliamentary Budget Officer with data on the tax gap.
Broadly defined, the tax gap is the difference between the taxes that would be paid if all obligations were fully met in all instances, and taxes that are actually paid and collected. It is not difficult to imagine that a lot of circumstances could produce a tax gap. That said, I should point out that the CRA is firmly committed to protecting the integrity and fairness of Canada's tax system. This includes cracking down on tax avoidance and tax evasion both domestically and internationally. I should also mention that CRA takes a firm stand on non-compliance.
First, I would like to point out that the CRA has a robust criminal investigations program. This program investigates major cases of tax evasion, tax fraud and other serious criminal violations of tax laws. Where appropriate, the CRA's criminal investigations program refers cases to the Public Prosecution Service of Canada for potential criminal prosecution, which is extremely serious.
The consequences for taxpayers who commit tax fraud or hide assets or money abroad are very serious. If convicted of tax evasion, these taxpayers must still pay the full amount of tax owed, plus interest and administrative penalties imposed by the CRA. Under the Income Tax Act, offenders could face a fine of up to 200% of the taxes evaded. In addition, they could also be sentenced to up to five years in prison.
It should also be noted that a person convicted of fraud under the Criminal Code is liable in Canada to a sentence of up to 14 years in prison. Fingerprinting and restrictions on international travel are also possible consequences. However, it should be noted that all convictions related to tax evasion, including those involving tax evasion abroad, are already published via enforcement notices on the Canada.ca website.
The CRA has also set up a free subscription service to raise Canadian taxpayers' awareness of CRA enforcement actions and warn them about potential fraud schemes. During the period from April 1, 2020, to March 31, 2025, the courts sentenced 49 people to prison for a total of more than 98 years. Investigations are under way, prosecutions are under way, action is being taken and people are being sentenced. That represents more than $39 million in evaded federal taxes, with a total of $24.5 million in court-imposed fines.
As of March 31, 2025, the criminal investigations program, or CIP, had 200 ongoing investigations. That is a huge number of investigations. Between April 1, 2024, and March 31, 2025, the CIP also executed 86 search warrants, a 46% increase from the previous fiscal year. The CIP's computer forensics analysts seized at least 258 devices totalling more than 119 terabytes of data.
I would now like to bring up a second point, namely the CRA's work on estimating Canada's tax gap. Since 2016, the CRA has had a dedicated team studying the tax gap, which supports the Government of Canada's commitment to encouraging an open and transparent discussion on tax non-compliance.
Estimates of Canada's tax gap, combined with other indicators relating to compliance and non-compliance, can provide valuable insights into the overall health of our tax system.
At the end of March, the CRA published Canada's second overall tax gap report for the 2014 to 2022 tax years. This edition presents the overall federal tax gap and is supported by updated estimates based on the most recent data available for the 2014 to 2022 tax years. The report provides tax gap estimates for all key components. These include personal income tax, corporate income tax, GST, HST and excise revenue. The report also includes two new subcomponents: the payment payroll gap and the excise gap on cannabis. Furthermore, it examines the impact of the COVID-19 pandemic on the federal tax gap, providing an overall picture. Importantly, this report also highlights how the CRA's compliance and collection activities are impacting the tax gap.
The money recovered by the CRA puts downward pressure on the federal tax gap each year. We have the numbers in front of us, and we can compare the gross and net amounts. In tax year 2022, the gross tax gap was 16% of the federal tax revenue or $59.5 billion. However, the net tax gap would have been 9.3% of the federal tax revenue or $34.7 billion, so the CRA's compliance and collection activities resulted in a potential reduction of the overall gross tax gap by 42%, or $24.8 billion.
That said, I would like to mention that the data on Canada's tax gap is also published on the Government of Canada's open data portal and is widely available. That means that this information can be accessed by the Canadian public and interested parties, such as the Parliamentary Budget Officer. Canadians can rest assured that the Government of Canada and the CRA remain committed to supporting the Parliamentary Budget Officer in carrying out her mandate. This commitment is being fulfilled with the assurance that Canadians' confidential tax information is protected in accordance with the law. I would like to take this opportunity to recognize the recent appointment of Annette Ryan as the Parliamentary Budget Officer.
In conclusion, the work on the tax gap provides us with a clearer picture of the health of Canada's tax system. This work encourages an open and transparent discussion on tax non-compliance. That said, it is important to note that many factors remain beyond the control of any tax administration when estimating the tax gap. Moreover, there is an international consensus that a country's tax gap will likely never reach zero.
Furthermore, it is important to note that the tax gap is not a performance indicator for either the CRA or the government. It is a theoretical estimate of non-compliance with tax obligations over a given period, and this non-compliance can vary over time. As a result, the tax gap is primarily an important source of information to monitor what is happening in our tax system.
One thing is certain: These efforts to address the tax gap are aimed at ensuring that everyone, individuals and corporations alike, meets their tax obligations, because taxes not only fund government services and programs, but also promote economic development in Canada through investments in the many sectors of our economy.
