Mr. Speaker, I appreciate this chance to set the record straight and to assure members of our government's determination to protect the integrity of the Canadian tax system.
While I am sure that the member for Rivière-du-Nord is well intentioned in bringing his motion forward, I can assure him that it is both misinformed and misguided. Not surprisingly, the opposition is unaware of the tremendous amount of work under way to address international tax evasion and aggressive tax avoidance as part of our effort to aggressively combat offshore tax non-compliance.
Our government is very active on this file, both here at home and internationally. My colleagues have already highlighted the work being undertaken by the Canada Revenue Agency on the domestic front. They have underscored the many important measures this government has taken to address international tax evasion and aggressive tax avoidance.
Tonight I would like to focus my remarks on the success of our government's efforts to work with our international partners when it comes to responding to similar challenges. Before I do, however, I need to offer this primer to the opposition about the mechanics of measuring the tax gap and to explain why deriving such an estimate would be overly complex, inefficient, and a total waste of time.
It is naive to think that any jurisdiction can simply institute some new rules and that there would be instant compliance by those who purposely attempt to skirt a country's tax laws. Unfortunately, that is not how it works.
On that note, the Organisation for Economic Co-operation and Development, OECD, has concluded that attempting to measure the international tax gap would be impractical at best. To state the obvious, how can we accurately measure what we cannot see? How can we reliably estimate elements subject to taxation that have deliberately and, in some cases, through complex arrangements, been concealed outside our domestic borders? That is what this motion entails. It is nonsensical.
By their very nature, international tax evasion and aggressive tax avoidance are virtually impossible to quantify. At the risk of repeating myself, they involve undeclared income and assets that are deliberately and aggressively hidden from the view of tax authorities. So it is entirely understandable that Canada, like most OECD countries, does not waste time, effort, or taxpayers' money attempting to estimate the revenues lost to international tax evasion and aggressive tax avoidance.
That said, this does not prevent us from pursuing those who try to hide their money from the CRA in offshore jurisdictions of concern. On the contrary, working with our global colleagues, we are making measurable progress in identifying and addressing those who think they can get away without paying their fair share.
Lest there be any confusion, Canadians are required to pay tax on their worldwide income. Not reporting income from foreign sources is illegal. Individuals who attempt to avoid taxes by participating in schemes using offshore jurisdictions will find themselves liable for taxes, interest, and stiff penalties, and they could even be prosecuted for tax evasion.
To leave no doubt about it, Canada participates in international initiatives that tackle tax evasion around the globe. These include the elimination of banking secrecy and setting global standards for information exchange for tax compliance purposes. For instance, we are part of a worldwide force addressing international tax evasion through our participation in the OECD. We constantly exchange information with other nations through the OECD's task force on tax crime and other crimes. Apart from this important work, we have an extensive network of bilateral income tax treaties with many of our international partners, as well as bilateral tax information exchange agreements. The latter are referred to as TIEAs.
Canada has one of the most extensive tax treaty networks in the world. At the moment, there are 92 treaties and 18 tax information exchange agreements in force that provide for exchange of information. These 110 agreements give Canada a very broad exchange of information network.
As well, in late November of last year Canada ratified the Convention on Mutual Administrative Assistance in Tax Matters. The convention is the most comprehensive multilateral instrument available for all forms of tax co-operation to tackle tax evasion and avoidance, a top priority for all countries. The G20 has consistently encouraged countries to sign the convention, and most recently did so at the G20 leaders summit in September 2013. Currently over 60 countries have signed the convention, and it has been extended to over 10 jurisdictions, including all G20 countries, all BRICs, almost all OECD countries, major financial centres, and a growing number of developing countries.
I also want to point out that in 2013, G8 and G20 countries committed to the automatic exchange of information as the new global standard. The technical work to develop this multilateral standard is currently being led by the OECD. This commitment was reinforced in the 2013 G20 Leaders' Declaration. The G20 members pledged to begin exchanging information on tax matters automatically among themselves by the end of 2015.
Therefore, for the opposition to erroneously suggest we are somehow failing to respond to these issues does a disservice to the collective efforts of not only our government but also to this country's important partners. There can be no debate about our joint commitment to resolve this matter.
Each year the CRA's understanding of international tax evasion and aggressive tax avoidance grows, and we have ensured that the CRA has the tools it needs to put this knowledge to work. The CRA's resources to audit aggressive international tax planning have increased steadily since 2006. This infusion of funding has enabled CRA auditors to gather intelligence and identify new ways to detect offshore tax avoidance arrangements.
These efforts are producing significant results. Since 2006, the CRA has audited over 7,700 cases of aggressive international tax planning. This has allowed it to identify nearly $4.6 billion in additional taxes.
Equally impressive, over the same time period it has completed compliance actions on some 340 audit cases of high-net-worth groups that were using sophisticated business structures and offshore arrangements to avoid taxes. This led to the identification of more than $195 million in unpaid federal taxes.
As one example, the agency identified 106 taxpayers with links to accounts in Liechtenstein with potential unreported income. All of them have since been subject to compliance action, and the CRA has reassessed over $24 million in unpaid federal taxes, interest, and penalties.
The intelligence gathered from the compliance actions on these cases was especially beneficial, as it enabled the CRA to utilize tools such as unnamed persons' requirements on domestic financial institutions. This tool helped it to identify other participants in similar offshore activities. Intelligence gathered from the Liechtenstein files also permitted the CRA to learn the value of offshore holdings and the methods used to set up them up, along with the identity of promoters and representatives facilitating these arrangements.
Our government is active now in bringing these cases to conclusion and in finding more cases every day. The number of disclosures received involving offshore accounts or assets has increased from a little over 1,200 in 2006-07 to more than 4,000 in 2011-12.
This track record makes it clear that Motion No. 485 is not the best way to respond to the concerns it raises. While I salute the opposition for recognizing the importance of protecting Canada's tax system, I encourage all parties to defeat this unnecessary motion.
