Facts about tax debt
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