Canada’s Revenue Agency Says Canadians Implicated in Panama Papers Shouldn’t Expect a Tax Deal
Canadians who have been somehow implicated in the Panama Papers leaked earlier this year shouldn’t expect leniency, the Canada Revenue Agency (CRA) said. The announcement comes on the heels of Canada’s decision to allocate more resources to the CRA in hopes of cracking down on tax evasion and ensuring compliance. In April, the government added an extra $44 million to the CRA budget. It used some of those extra funds to hire an addition 100 auditors to dig into potential tax evaders — including those named in the Panama Papers.
The CRA is currently in the process of going through the leaked the documents to identify those who may have evaded their tax obligations.
“Over 2,000 files are being reviewed and 85 taxpayers are currently under audit,” said Chloé Luciani-Girouard, press secretary for Revenue Minister Diane Lebouthillier.
Beyond those 85 official audits, there are also a number of search warrants currently underway. However, the CRA can’t provide many details at this stage because it could jeopardize the investigation.
Canada’s Voluntary Disclosure Program (VDP) offers Canadians the opportunity to come clean about any assets they may be hiding offshore. While anyone who discloses assets as part of the program is obligated to fulfill all tax obligations related to them, they don’t receive any further punishment. However, those Canadians named in the Panama Papers won’t be eligible to participate in the VDP.
“The taxpayers under audit can’t qualify for the Voluntary Disclosure Program,” Luciani-Girouard said. “And it is highly unlikely that any others would. Given the significant information the CRA has in relation to the Panama Papers, any VDP request would be referred to Offshore Compliance agents who, barring any exceptional circumstances, would confirm that the taxpayer is not eligible because compliance interventions are planned for all identified participants.”
The CRA has also indicated that these individuals will also not be offered any kind of negotiated settlement.
Expert say that the Canadian government has opted to pursue tax evaders with renewed vigor in part because the cost of apprehending those who have evaded taxes pales in comparison to the amount that can be recouped. In other words, it’s a smart business move. By playing hardball with those who have evaded taxes, the government may also be more successful in deterring others from making the same mistake.
However, it should be noted that it is still possible for anyone who hasn’t been notified that they are under investigation by the CRA to still apply under the VDP. Those who do have unreported offshore income should ensure they are up to date on their tax obligations as soon as possible.
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