Downe’s bill passes Senate

New bill would require CRA to report on all convictions for overseas tax evasion

Charlottetown Senator Percy Downe’s bill, the Fairness for All Canadian Taxpayers Act, has passed the Senate.

Bill S-243 would require the Canada Revenue Agency (CRA) to report on all convictions for overseas tax evasion, to study and to report to parliament regularly on the tax gap (the difference between what is owed in taxes and what is actually collected), and to cooperate with the Parliamentary Budget Officer in his independent study of the tax gap.

If this bill passes the House of Commons, Canada would join a list of countries that publish estimates of their respective tax gaps, among them the United States, the United Kingdom, Denmark, Sweden and Finland.

Bill S-243 is particularly timely in light of the Nov. 20 report of Canada’s auditor general on the CRA.

The auditor general found that “the Canada Revenue Agency did not apply the Income Tax Act consistently during its compliance activities. It treated taxpayers in similar situations in different ways” — most notably when it comes to those with overseas assets compared to those whose money is kept in Canada.

Furthermore, it called into question the CRA’s reporting on the impact of its work, stating: “We found that the Canada Revenue Agency did not know the full results of its compliance activities. Its calculation of the additional revenues generated from compliance activities, beyond the initial taxes assessed, was incomplete. It did not know how much money it wrote off as uncollectible in its compliance reassessments. The amount it reported to parliament as additional revenues resulting from extra funding for compliance activities was only an estimate.”

In fact, in a passage that also neatly encapsulates the motivation for Downe’s bill, the report goes on to declare it is “important for parliamentarians and the public to have complete and transparent information. They need to assess whether the agency is meeting the government’s objective to crack down on non-compliant taxpayers, so that all taxpayers pay the right amount of taxes.”

Bill S-243 will now go to the House of Commons for study and debate.