National Post (National Edition)
CRA claiming $4.4B from alleged Canadian tax cheats
Actual amount recovered likely to be less
OTTAWA
is claiming $4.4 billion from Canadians and corporations suspected of cheating the taxman by hiding their money in offshore tax havens.
“The gross number is $4.4 billion at this moment. It’s many years ahead of schedule, but it remains the gross number,” said Ted Gallivan, assistant commissioner of international, large business and investigations branch at the Canada Revenue Agency.
Gallivan was responding to a question from Bloc Québécois MP Julie Vignola during a virtual meeting of the House of Commons Committee on Government Operations and Estimates Monday.
Vignola asked both CRA and the Minister of National Revenue Diane Lebouthillier to detail the results of over $1 billion in investments by the
Liberal government to fight tax fraud and offshore tax evasion since 2015.
How many Canadian companies and individuals does that $4.4 billion involve? And how far back do those claims go? And what were the CRA’s claims targets that the agency is now “many years ahead of schedule” on?
Gallivan wasn’t asked to answer any of those questions by MPs, and the assistant commissioner was not available for an interview following the meeting.
But that $4.4 billion is far from won for Canada’s tax agency. Tax evasion cases, particularly when they involve wealthy individuals and corporations, often lead to notoriously long and difficult court fights for the CRA.
And that’s no different today, said Gallivan, who emphasized many times that $4.4 billion remains the gross amount, not the amount ultimately recouped by the agency.
“We still have a lot of cases that are in front of the courts, over 3,000 of them in fact. A lot of these inquiries will be resolved by the courts, but as of now, the gross amount is $4.4 billion,” Gallivan explained to MPs.
In many court cases, judges will end up awarding the government less than it asked for — when it wins.
“I think it might be reasonable to expect the CRA might get half of that based on past experience,” said Toby Sanger, executive director of Canadians for Tax Fairness.
“Obviously you need that tougher legislation. We do need stricter enforcement, but as the CRA keeps on losing, or has lost some significant cases, we definitely need stronger legislation on this and reform of international corporate rules,” he said.
A recent example of such a loss by CRA is a ruling by the Federal Court of Appeal three weeks ago overturning a 2018 ruling that found that Loblaw Companies Ltd. used a Barbados bank as a tax shelter.
The CRA claimed $368 million in taxes from the Canadian company, arguing a bank it owned in the Barbados from the 1990s until 2013 (Glenhuron Bank Ltd.) was really a subsidiary because it got most of its money from the parent company.
Thus, CRA argued, it had to pay taxes.
But the Court of Appeal finally sided with Loblaw, who argued that Glenhuron was a regulated foreign bank under the laws of Barbados.
“It’s the larger corporations that are most easily able to avoid (paying taxes), and it certainly gives them an advantage over smaller and medium-sized businesses,” Sanger commented, adding he was disappointed by the Loblaw ruling.
During committee, Lebouthillier confirmed despite the pandemic, CRA is still actively conducting roughly 50 criminal investigations involving offshore tax evasion.
The minister also promised that some cases will soon be brought before the courts, making them public for the first time.
She added that the $1 billion invested by the Trudeau government to fight that sort of tax fraud was used to “rebuild” the CRA’s investigative and auditing capacity.
“Those amounts were used to organize, set up and consolidate the tools used by our bureaucrats, to hire auditors and rebuild an expertise that disappeared during the previous government,” the minister told MPs.
According to the CRA’s 2018-19 annual performance report, the department claimed a “record” $14.4 billion in gross taxes from companies and individuals over the year.