PACP Committee News Release
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Standing Committee on Public Accounts |
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Comité permanent des comptes publics |
For immediate release
NEWS RELEASE
PROMISING RESULTS FROM FIRST AUDIT OF OFFSHORE BANK LIST, BUT FORMAL APPROACH IS NEEDED TO DEAL WITH FUTURE WORKLOAD
Ottawa, June 6, 2014 -
The Canada Revenue Agency’s (CRA’s) audit work on a list of account holders at a bank in Liechtenstein – “the Liechtenstein list” – showed promising results in the use of intelligence to combat offshore tax evasion, but the CRA needs to formalize its audit approach to enforce offshore tax compliance effectively in relation to names appearing on subsequent lists, according to the Standing Committee on Public Accounts’ report presented today in the House of Commons by Committee Chair David Christopherson.
Combating tax evasion can be challenging for tax authorities, especially if the unreported income is located in foreign jurisdictions that have bank secrecy laws or in “tax havens,” and in light of the complicated schemes used by tax evaders to avoid detection. Taxpayers have reasonable expectations that compliance with income tax laws should be enforced and applied to all Canadians, regardless of where their income is earned.
In its Fall 2013 Report, the Office of the Auditor General (OAG) released a performance audit that examined whether the CRA conducted compliance actions adequately for those named on the Liechtenstein list, and used the intelligence gained to confirm or update its detection and audit procedures for offshore banking. The OAG found that the CRA followed its standard procedures and conducted adequate compliance actions on the names in the Liechtenstein list, but that it needs to establish a formal framework for the conduct of offshore tax compliance audits.
In its report, the Committee acknowledges the challenges faced by the CRA’s staff who worked on the Liechtenstein list, as they audited taxpayers named on an offshore bank list for the first time and with limited information. The Committee also indicates its expectation that the CRA will continue to improve its ability to combat offshore tax evasion effectively as its workload in this area is expected to increase.
In order to ensure that the federal government makes progress in the area of offshore tax compliance, the Committee recommends that the CRA provide it with progress reports on actions taken to formalize audit timelines, the use of audit agreements with taxpayers to obtain information, the integration of lessons learned into audit objectives and procedures, and the communication of audit policies, procedures and guidelines to staff.
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