Canadians have taxes on the brain — and not just because the April 30 income tax deadline is quickly approaching.
On April 3, the first news reports on the “Panama Papers” were published. The set of more than 11 million confidential documents, leaked in 2015 to a German newspaper, detail information about offshore companies reportedly used by wealthy individuals to avoid paying taxes on their assets. The articles generated international media attention.
“Many governments have announced plans to address the strategies that high-income individuals and multinationals employ to reduce their tax bills,” says Kim Brooks, associate professor and former dean of the Schulich School of Law who studies tax law and policy. “Most urgently, steps are being taken in response to the Panama Papers leaks, but the issues are well-known to tax policy-makers. The G20 and Organisation for Economic Co-operation and Development (OECD) have also urged governments to adopt significant international tax reforms over the last couple of years aimed at ensuring that everyone pays their fair share of tax.”
The Government of Canada is responding to these international developments, reaffirming in the latest federal budget its commitment to strengthen tax compliance and combat tax avoidance and evasion —including offshore tax schemes — by investing $444.4 million over five years into the Canada Revenue Agency (CRA). It’s also raising the number of audits of wealthy people and hiring more auditors to investigate high-risk multinational corporations.
Providing expertise
Additionally, last week the CRA announced the creation of an Offshore Compliance Advisory Committee (OCAC). The independent advisory committee on offshore tax evasion and aggressive tax planning will include seven experts with significant legal, judicial and tax administration experience. Prof. Brooks has been appointed as its vice-chair.
Prof. Brooks, a member of both the Canadian Tax Foundation Board of Governors and the International Fiscal Association, believes her appointment is a nod toward Dal’s strength in this area.
“I’m part of a larger team at pilipiliÂţ» who have expertise in tax law, specifically at the law school,” says Prof. Brooks, pointing to such colleagues as Geoffrey Loomer, who, like her, teaches international tax law.
The OCAC’s first meeting is slated to be held in late May. Its initial areas of focus will include:
- Strategies to help alleviate and discourage offshore non-compliance
- Administrative policies being used by other tax administrators to address the global issue
- Advice to the CRA in moving forward with its measurement of the tax gap
- Additional strategies and practices related to promoters of tax schemes
- Potential ways to improve the CRA’s criminal investigation functions
Prof. Brooks says the panel sends a strong message to Canadians trying to avoid paying their fair share of taxes.
“The Canadian government is exploring additional ways that they can ensure robust enforcement of the tax legal framework,” says Brooks. “The OCAC plans to look at the laws we already have in place and advise the CRA in its efforts to enforce them.”