I should indicate that I'm happy to stay for the duration of the meeting.
If I may, I will say at the outset, on behalf of all CRA employees, that all our prayers and thoughts are with the people of Fort McMurray and the first responders there.
With me today are Mr. Ted Gallivan, the assistant commissioner of the international, large business, and investigations branch; Ms. Stéphanie Henderson, the manager of the offshore compliance section; Ms. Lynn Lovett, the assistant deputy minister of the Department of Justice tax law services portfolio; and, Ms. Diane Lorenzato, the assistant commissioner of the human resources branch.
Canada's tax system features a level of voluntary compliance that's among the highest in the world, but offshore tax evasion and aggressive tax avoidance remain a challenge, requiring both concerted action here at home and global strategies.
Increases in international trade and globalized investment flows have resulted in complex multinational corporate structures, use of offshore jurisdictions of concern, and profit-shifting schemes that challenge all tax administrations.
The CRA is responding through a four-point action plan to effectively target this globalized tax environment and related non-compliance. Our plan includes: first, better access to information; second, a more focused organization targeting offshore non-compliance; third, increased resources to deepen our capacity; and fourth, more effective international collaboration.
More than two-thirds of the $11 billion that the CRA assesses through audits—over $7 billion—involves our international and large business programs and aggressive tax planning, including high net worth individuals and multinationals.
These results, and our ability to identify non-compliance by those using offshore schemes have never been better. In large measure, this is because we've significantly improved our information tools. Since January 1, 2015, financial institutions are required to report international electronic fund transfers of $10,000 or more. This information is invaluable in helping the agency target jurisdictions and financial institutions of concern.
Second, the process for using the unnamed persons requirement, which enables the CRA to pursue information through the courts on taxpayers using offshore jurisdictions, has been streamlined to give us authority to obtain information from third parties such as banks. Yesterday, we applied for authorization to issue an unnamed persons requirement to the Royal Bank of Canada for information about RBC clients linked to the Panamanian law firm Mossack Fonseca, subject of the Panama papers. RBC has informed CRA it will not oppose the court application. With court approval, the CRA will receive this information expeditiously.
Third, the foreign income verification statement, form T1135, was significantly strengthened in 2013 to established more detailed and rigorous reporting requirements for Canadian taxpayers holding foreign property and assets. The volume of these reports has subsequently increased by 50% as a result of our measures to strengthen our scrutiny of offshore activities.
Fourth, we are undertaking a comprehensive study of tax gap measurement over the next year to determine how this could be applied to Canada in estimating the tax gap. A better understanding in this regard may help us target our compliance activities more effectively.
Finally, Canada is very active in sharing information with our international treaty partners. We have one of the world's most extensive treaty networks, with 92 tax treaties and 22 tax information exchange agreements in place. These measures also help us identify and pursue non-compliance as never before.
Through our action plan, we have better focused the CRA to target offshore non-compliance. In 2013, we created several specialized teams across Canada and launched a dedicated offshore compliance division.
In 2014-15, we reviewed nearly 13,000 international large business files, reviewed nearly 10,000 aggressive tax planning files, and fielded almost 2,000 calls through the offshore tax informant program where we identified 110 cases for active review. In the last three years, we also reorganized our criminal investigations division to focus on the more severe cases of tax evasion, and those who promote schemes that enable them. These measures are paying dividends. As a result of these measures, $1.57 billion in additional revenues has been assessed. That's three times the initial estimate.
In April of this year, we created a new agency branch headed by Mr. Gallivan to focus exclusively on international tax, aggressive tax planning, large business, criminal investigations, and strategies to combat offshore tax avoidance. Our organizational changes are supported by a third element of the plan, namely, increased resources. Today, we have more than 6,400 auditors. That's a 20% increase from 2006 at a time of ongoing fiscal restraint.
Budget 2016 includes an unprecedented $444 million investment in measures that will increase the CRA's capacity to combat offshore tax avoidance and evasion. This includes a special program to pursue those who create and promote tax schemes for the wealthy. We anticipate this to result in a 12-fold increase in the number of tax schemes examined by the CRA.
As recently announced, the agency will also use the funds to hire more auditors and specialists, increasing the number of examinations focused on high-risk taxpayers from 600 to 3,000 per year. And we'll bring in 100 additional auditors to audit high-risk multinational corporations.
As a result, the federal government anticipates that its investment in the CRA will generate an additional $2.6 billion in revenues over 5 years.
Finally, our efforts on the domestic front must be complemented by collaboration with our international partners, the fourth element of the plan. Canada plays a central role in international fora to address non-compliance, such as the OECD forum on tax administration. We recently ratified a Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which further expands our international information-sharing network.
Through our partnerships in the OECD we are active in several global initiatives: the OECD's base erosion and profit shifting, or BEPS, project, which aims to address international tax plan strategies used by multinational enterprises to inappropriately minimize their tax; country-by-country reporting for multinational corporations; and implementation of a common reporting standard in 2018.
Canada participates in the joint international tax shelter information and collaboration, or JITSIC, network, working with the G8 and G20 on measures to tackle tax avoidance and aggressive tax planning. We recently participated in a JITSIC meeting in Paris to coordinate next steps related to the Panama papers. Based on our own sources of information, we've initiated 40 audits related to Mossack Fonseca prior to the Panama papers release. Through more recent efforts, the CRA now has tens of thousands of records from multiple sources. The agency will use this and any other data collected from various sources to ensure that all Canadian taxpayers identified from the Panama papers are pursued.
The Auditor General concluded in 2013 that CRA had done a good job of following up on information received about offshore accounts in the Liechtenstein case and improved its process for identifying taxpayers with unreported income.
In 2014, the Auditor General also found that the CRA had the tools to detect, correct, and deter the use of aggressive tax plans. Since then, our toolbox has expanded considerably.
Next week, I will also be joining tax commissioners from 46 countries at a meeting of the forum on tax administrators, in Beijing, China, where we will further strengthen international efforts.
We are making progress, but work remains to be done as we continue to refine and build upon our tools and the most recent investments. It is worth noting that the agency's record has been reviewed twice in recent years, and in both cases was good.
In conclusion, we've provided the committee information very relevant to your study and your opening remarks, Mr. Chair: the summary findings of a recently completed independent review into the CRA's management of the KPMG file. The agency undertook this review to ensure that due diligence was followed in our approach to this case. The CRA is in the difficult position of being unable to fully discuss details of the KPMG file due to ongoing litigation and our confidentiality provisions. Having said that, the review, conducted by Ms. Kim Brooks, former dean of Schulich School of Law at Dalhousie University, confirms that the CRA acted appropriately in its management of the KPMG file.
I conclude now, and we welcome your views and questions on how we can make better progress in identifying, addressing, and deterring offshore non-compliance.
Just briefly, at any given time like today, we have 230 high-end cases that are before the courts with large dollar values at stake. However, each year we give 400,000 Canadians taxpayer relief. We resolve over 90,000 tax appeals, where a distinct part of the agency reviews, for free, taxpayers' representations and makes adjustments where it sees fit, so the numbers of ordinary Canadians being served by the agency greatly exceeds the quantum.
In terms of access, I talked about executives needing to be accessible, not just to KPMG and high-end accountants but to all taxpayers. In that same interview I talked about how I, personally, as a senior executive, reviewed all minister mail. If a taxpayer writes to the national revenue minister or the commissioner, somebody at my level actually approves the response, and we don't do so blindly.
I think an important message is that it's not just the large firms that have access to CRA executives but it's the CFIB, boards of trade, accounting firms, bookkeeping firms, and through these other programs I mentioned, the CRA reaches out to help ordinary Canadians.
We started the argument at the last meeting regarding the importance of this motion.
This motion is important. Three meetings were scheduled, two of which have already taken place. At the first, we heard from a KPMG representative. At the second, today's, we heard from CRA and Department of Justice officials. At the third, scheduled for May 19, we will hear from the minister. In light of the two meetings we have had so far, however, it is clearly going to be extremely difficult to get to the bottom of this affair, especially as regards how exactly the scheme worked.
We need to be able to represent all taxpayers, to stand up for tax fairness under the system, and to make sure we can get to the bottom of this whole thing. In order to do that, we believe it's necessary to have the names of the people involved in creating this scheme and of those who benefited from it. That will give us crucial insight into their interpretation of the act and regulations. It will also tell us what the KPMG representatives said to those clients.
When we last talked about the motion, we were discussing the possibility of replacing the word “compel” with the word “request” in English, and the word “contraigne” with the word “demande” in French. As we see it, it's extremely important that we use the committee's authority to request these documents. If we use the word “request”, KPMG could refuse to co-operate because it is under absolutely no obligation to do so, and we would be no farther ahead than we are now. If KPMG refuses to hand over the documentation, without any discussion, we'll face an uphill battle trying to get to the bottom of things.
Our motion, then, stands. Our motion is a strong one that aims at ensuring that this issue will not slide, will not go down to oblivion, but will continue to do what we have to do as a committee, which is to ensure that it is well understood that this will not be repeated and that we will hold the people who are responsible, if that is the case, to account.
I see a major flaw in the Liberals' argument.
First of all, we aren't talking about people who are before the courts but, rather, about the minister's request to obtain people's names, the exact same request we are trying to make here in this committee. The Liberals are telling us that, because the minister has requested the names of those responsible for the scheme and those who benefited as a result, the committee cannot request the information. We have a serious problem with that.
As for the names of the five individuals currently before the courts, we have already made clear our willingness to exclude them from our motion. At the end of the day, we are talking about people who have been given amnesty. In order to be given amnesty, one must acknowledge one's guilt. In that sense, then, we shouldn't have any problem requesting those names or those of the individuals responsible for developing the scheme.
As I said, the main difference between compel and request lies in the outcome and will become very clear when we get nothing. The Liberals simply want to give up because the Government of Canada could be sued or wind up in litigation.
Do we really want to get to the bottom of things and make sure the Canadian government stands up for taxpayers and the tax system so that it is worthy of Canadians' confidence? If not, are the Liberals simply trying to water down the motion to make sure that KPMG will be under no obligation to hand over the documents because it might be too risky or dangerous?
The purpose of the motion before us is to make KPMG turn over the information in question. If KPMG refuses to co-operate and chooses to challenge the request, it will have to answer for its decision in the court of public opinion. It is our duty to protect the interests of taxpayers, of Canadians.
The choice is clear. Do the members of the government want to water down the motion, let the situation run its course, and have it fade from memory in the fullness of time? Or do they want to really use the authority of the committee, and ultimately of the House, to make KPMG turn over the documents for public scrutiny in order to represent and safeguard the interests of taxpayers and Canadians? That is the choice before the members of the government.
I guess we want to go to the question pretty quick.
One of my issues is the names of the clients. I think there has to be a certain level of fairness and privacy for individuals when they're dealing with the Canada Revenue Agency. In the political environment here, I'm not always certain that that's perhaps the most appropriate means to be dealing with something, especially concerning people for whom we don't know their situation in their lives. So I'm a little concerned about that, because I'm very concerned about the idea surrounding privacy.
On the other hand, when we first started this idea of going and looking into KPMG and the Panama papers—this was in the media—the idea, I believe, the original intent, was that we would discuss with the officials and then we would see where that would lead us over time. I'm very supportive of the idea of getting more names to have greater discussion and trying to understand how these tax havens work, Canada's implication in the international community, but I think this is really what we should be trying to get to, trying to get more people here so we can truly understand it, get them on the record, and really try to gain a greater understanding of that.
I'm not sure what everyone else thinks, but I would actually like to propose not a substantive amendment, but a slight change. I don't think my change will be major in any way, but the idea in this one is to remove, for instance, the word “compel” and just have “request”. That does not preclude in the future, if KPMG refuses to provide that information, coming back and trying to deal with this again, and also just removing the names of clients.
Essentially, the original motion is, “That the committee compel KPMG to provide documents indicating the names of clients who used the Isle of Man tax sheltering scheme and the names of KPMG employees responsible for the development and marketing of the tax scheme.”
And we would replace it with, “That the committee”, not compel but , “request KPMG to provide documents on the Isle of Man tax sheltering and the names of the KPMG employees responsible for the development and marketing of the tax scheme”.
I don't believe this is a substantive change to this motion. I believe it's still in the spirit of what you're trying to get at and it wouldn't preclude, later on, coming back if KPMG refuses to provide more documentation to this committee so that we could continue to do our work and really get to the bottom of what's going on. I applaud Monsieur Dusseault and Monsieur Caron for bringing this to the forefront.