CRA pays out first rewards in offshore tax informant program
The Canada Revenue Agency has handed out its first cash awards to informants who called out offshore tax cheaters.
The payments characterized only as “under $1 million” were made in the 2018-19 fiscal year, which ended March 31, the Financial Post has learned.
The funds were paid out under a program called the Offshore Tax Informant Program, which was created by the tax authority in 2014 to track down tax evaders and “aggressive” tax avoiders.
Since inception, the program has generated more than 1,400 calls, more than 600 written submissions, and 39 contracts with informants, which has allowed the CRA to identify $50 million in taxes and penalties owed, the CRA said in an emailed statement.
About $19 million has been collected so far, of which “under $1 million” has been paid to an eligible informant or informants, said Étienne Biram, a spokesperson for the CRA.
The terms of the program allow informants to collect between five and 15 per cent of the amount brought in by the tax authority, “depending on the quality of the information received,” he said.
Biram said informants are eligible for rewards based only on taxes collected, not penalties imposed, and added that some tips don’t qualify for rewards. An example of an ineligible tip would be an anonymous one, he said.
He declined to provide any further details about the recent payouts, including whether the amount is close to $1 million and how many informants were paid.
As with other informant programs, the OTIP pledges to protect the identity of informants.
“Confidentiality is essential to the success of the CRA’s reward program,” the tax authority says on its website, adding that informants will be protected “to the fullest extent possible as required by law.”
The CRA was the first regulator in Canada to introduce a paid informant program.
“The Offshore Tax Informant Program (OTIP) is one of the many tools the Canada Revenue Agency (CRA) leverages to identify those who may be hiding assets offshore,” the tax authority said in the statement to the Financial Post.
In 2016, two years after the CRA created the OTIP program, the Ontario Securities Commission became the first Canadian securities regulator to launch a paid whistleblower program.
In February of this year, the OSC paid its first rewards for information, doling out $7.5 million to three recipients.
Under the OSC program, which is modelled in part on a similar program run by the U.S. Securities and Exchange Commission (SEC), a whistleblower can receive compensation of up to $5 million for a tip that leads to a successful enforcement action. Eligible whistleblowers can receive rewards equal to between five and 15 per cent of monetary sanctions imposed or voluntary payments made.
The SEC, which pays whistleblowers up to an amount of 30 per cent of money collected, paid its first reward in 2012, and has already rewarded dozens of tipsters with payouts totalling more than $300 million.