Facts about tax debt

The Guardian (Charlottetown) - - EDITORIAL -

I am re­spond­ing to the ar­ti­cle by Jim Bronskill from the Cana­dian Press, con­cern­ing the amount of tax debt de­ter­mined by the Canada Rev­enue Agency (CRA) to be un­col­lectable.

Here are the facts: When a tax debt is writ­ten off, it is not be­cause the CRA does not have the re­sources to col­lect the debt. Rather it is be­cause there is no rea­son­able prospect of re­cov­ery, or the amount is un­col­lectable due to the ex­pi­ra­tion of the le­gal lim­i­ta­tion pe­riod to col­lect, or the debtor is in­sol­vent.

For per­spec­tive: in fis­cal year 2013-2014, the agency col­lected a to­tal of $330.9 bil­lion in taxes and other rev­enues such as Em­ploy­ment In­sur­ance premi­ums, Canada Pen­sion Plan con­tri­bu­tions, in­ter­est and penal­ties. The amount writ­ten off — $3.4 bil­lion – rep­re­sents only one per cent of the to­tal tax col­lected.

Even when an ac­count is writ­ten off, it may re­main col­lectable and the tax­payer’s obli­ga­tion to pay may not be elim­i­nated. The CRA has the right to col­lect the debt in the fu­ture if the tax­payer is lo­cated or their fi­nan­cial sit­u­a­tion im­proves.

Fur­ther, the CRA’s ac­tions to ad­dress off­shore tax eva­sion have never been more sub­stan­tial. Most re­cently, Eco­nomic Ac­tion Plan (EAP) 2015 in­vested an ad­di­tional $58.2 mil­lion for tax avoid­ance by large and com­plex en­ti­ties, and an ad­di­tional $25.3 mil­lion to ad­dress off­shore non­com­pli­ance.

Be­cause of these ef­forts we are see­ing re­sults. The dra­matic in­crease in tax­payer sub­mis­sions to the CRA’s Vol­un­tary Dis­clo­sures Pro­gram (VDP) in­di­cates that Cana­di­ans are aware of the CRA’s fo­cus on de­tect­ing and de­ter­ring off­shore non-com­pli­ance. More than 5000 dis­clo­sures re­lated to off­shore ac­tiv­i­ties were re­ceived by the CRA from April 1, 2013 to March 31, 2014, lead­ing to the iden­ti­fi­ca­tion of $303 mil­lion in un­re­ported in­come. Com­pare that to fis­cal year 2014-15, where that num­ber rose to 10,188 dis­clo­sures and $708M in iden­ti­fied un­re­ported in­come.

This is mil­lions of dol­lars that, as a re­sult of con­certed gov­ern­ment ac­tion, is now be­ing col­lected and re­turned to Canada’s rev­enue base. Mireille Laroche, Deputy As­sis­tant Com­mis­sioner Col­lec­tions and Ver­i­fi­ca­tion Branch Canada Rev­enue Agency

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