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Results: 1 - 15 of 999
Yves Giroux
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Yves Giroux
2019-06-20 11:01
Yes. Good morning, Mr. Chair, vice-chairs and members of the committee. I don't know if I should say “Good morning” or “Good afternoon”, but I'll stick with “Good morning”.
Thank you for the invitation to appear before you today to discuss our latest report, “Preliminary Findings on International Taxation”, which was published earlier today.
Today I'm joined by Mark Mahabir and Govindadeva Bernier, who will help in responding to your questions.
Our report presents PBO findings on international taxation. This report stems from the initial request of one of your colleagues in the other House, Senator Downe, in 2012. Following this request, PBO pursued its efforts to estimate the tax gap.
As you may know, the tax gap is the difference between the amount of tax that would be paid if all tax obligations were fully met in all instances and the amount of tax that's actually collected by the tax administration authority.
Part of the tax gap can be attributed to unintentional actions, such as errors, ignorance of relevant tax rules, or inability to comply. It can also arise from intentional actions, such as tax evasion or failure to pay taxes. One part of the tax gap that is not often measured, because of the difficulty of estimating it properly, is that attributed to tax avoidance, which is legal but contravenes the objective and spirit of the law.
Our report examines financial flows between corporations in other countries and those in Canada. These flows and transactions can reduce taxable income in Canada by shifting income and profits to certain jurisdictions, thus reducing the amount of taxes paid by corporations in Canada.
The report provides the magnitude of financial flows and transactions involving jurisdictions that are offshore financial centres, but does not quantify the amount of taxes that could be collected if such practices of profit-shifting were no longer permitted. For example, in 2016 there was a net outflow of funds from Canada of $200 billion to offshore financial centres. Similarly, the total value of all revenue from and expenses to those same jurisdictions by Canadian corporations was $996 billion. If just a small proportion of such transfers and transactions were used to reduce taxable income in Canada, the amount of tax revenue that could be collected would be in the billions of dollars.
Finally, we also examined financial metrics for large multinational corporations with operations in Canada. For example, when total earnings before taxes and revenues were attributed to Canada, based on Canada's GDP relative to the GDPs of the countries in which those multinational companies operate, the attributed revenues and earnings were higher than those reported on Canadian tax returns by those corporations. This suggests that earnings reported in Canada are not commensurate with the economic activity of those corporations in Canada.
Mark, Govindadeva and I would be pleased to respond to any questions you may have regarding our preliminary findings on the international taxation report or other PBO analyses. Thank you.
Bob Hamilton
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Bob Hamilton
2019-06-11 11:24
Thank you, Mr. Chair.
Good morning.
Thank you for the opportunity to present the Canada Revenue Agency's 2019-20 main estimates to the committee, and to answer any questions you may have on the associated funding.
My understanding is that you have a copy of my full remarks. In the interest of time, I will just hit some of the highlights as I go through.
As you are aware, the CRA is responsible for the administration of federal and certain provincial and territorial programs, as well as the delivery of a number of benefit payment programs. Last year the agency collected approximately $526 billion of tax revenue on behalf of federal, provincial and territorial governments, and distributed over $33 billion of benefit payments to millions of Canadians. The CRA also offers help and information to those who need it, and is working hard to reach Canadians who might not be receiving the tax credits or benefits to which they are entitled.
In order to fulfill its mandate in 2019-20, the CRA is seeking a total of $4.5 billion through these main estimates. Of this amount, $3.5 billion requires approval by Parliament, whereas the remaining $1 billion represents the forecast statutory authorities that are already approved under separate legislation. The statutory items include the children's special allowance payments, employee benefit costs and, pursuant to section 60 of the CRA Act, the spending of revenues received for activities administered on behalf of the provinces and other government departments.
These 2019-20 main estimates represent a net increase of $297.7 million when compared with 2018-19 main estimates. Of this change, $236.8 million is associated with previous funding announcements, with the balance of $60.9 million related to proposed budget 2019 measures. The largest component of this change is an increase of $110 million for measures to crack down and combat tax evasion and tax avoidance, at $61 million; enhance tax collections, at $22 million; and improve client services, at $27 million. This represents the amount of incremental funding received in 2019-20 as a result of measures announced in budgets 2016, 2017 and 2018.
To give you a sense of the kind of programs supported by this funding, allow me to touch on some specific initiatives.
Increased reporting requirements for trusts, which will seek information on beneficial ownership, will help authorities to effectively counter aggressive tax avoidance, tax evasion, money laundering and other criminal activities.
We are addressing commitments to service excellence in three key areas. The first is improving telephone services, including reducing wait times for callers and improving the accuracy of responses provided by call centre agents. The second is enhancing the community volunteer income tax program, where community organizations host tax preparation clinics and arrange for volunteers to prepare, free of charge, income tax and benefit returns for individuals with modest or low income. The third is strengthening digital services by updating and modernizing the agency's information technology infrastructure to deliver a more user-friendly experience, allowing Canadians to easily find the tax and benefit information they need.
Other items contributing to the year-over-year change include adjustments for collective bargaining increases of $64.8 million and the implementation of the federal fuel charge of $56.4 million.
The CRA's 2019-20 main estimates also reflect about $60 million in proposed incremental resources for the announcements made by the Minister of Finance in the March 2019 budget. The largest component, at nearly half, is a proposed increase of $29.3 million to improve general tax compliance. These funds will be used to hire auditors, build technical expertise and improve the agency's compliance IT infrastructure.
A further $9.5 million is proposed to take action to enhance tax compliance specifically in the real estate sector. The proposed funding will be used to create four new dedicated residential and commercial real estate audit teams in high-risk regions, notably in British Columbia and Ontario, to ensure that tax provisions regarding real estate are being followed.
Other examples of items relating to budget 2019 include about $9 million proposed to stabilize Phoenix-related activities by the CRA in our role as administrator of the tax system;
$8.5 million proposed to support the agency's ongoing service improvement efforts;
and $3.5 million proposed to improve access to the Canada workers benefit throughout the year.
In closing, the resources being requested through these estimates will allow the CRA to continue to deliver on its mandate to Canadians by making it easier for the vast majority of taxpayers who want to pay their taxes, and more difficult for the small minority who do not, and by ensuring that Canadians have ready access to the information they need about taxes or benefits.
Mr. Chair, at this time my colleagues and I would be pleased to respond to any questions you may have. Thank you.
View Pierre Poilievre Profile
CPC (ON)
I'm quoting from the Toronto Star of November 5, 2017:
Liberal fundraisers held family millions in offshore trusts, leaked documents reveal.
A massive new leak of offshore financial records contains more than 5,000 documents that reveal how two generations of Liberal fundraisers amassed $60 million...in a tax haven beyond the reach of tax collectors.
Internal email correspondence and financial records in the Kolber trusts appear to show evidence of bogus records to hide payments, false invoicing and six-figure gifts to avoid paying tax, raising red flags for experts consulted by the Star and CBC/Radio-Canada.
From the article, I now quote Denis Meunier, a former director general of compliance at CRA: “This definitely merits an audit by the Canada Revenue Agency.”
Has there been any such audit, yes or no?
Bob Hamilton
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Bob Hamilton
2019-06-11 11:37
Mr. Chair, thank you for the question.
I can't answer specifically whether or not there has been an audit of a particular taxpayer, but what I can say in response to that is an example where we try to use every source of information we have to uncover the risks—
Bob Hamilton
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Bob Hamilton
2019-06-11 11:37
—and uncover the areas that we have to look at. That can come through our own internal databases or from some of the information sharing that I've talked about.
View Pierre Poilievre Profile
CPC (ON)
Why can't you say whether there has been an audit of this particular case?
Mr. Bob Hamilton: [Technical difficulty—Editor]
Hon. Pierre Poilievre: Why not?
Bob Hamilton
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Bob Hamilton
2019-06-11 11:38
First off, we, as officials, are bound by section 241 of the Income Tax Act to not discuss taxpayer-specific information, and we abide by that. In a particular case, sometimes there are things in the public domain, but we certainly have to respect the information that we have on taxpayers and not disclose that unless it has been authorized by the taxpayer.
I don't know if Ted wants to add anything to that.
View Pierre Poilievre Profile
CPC (ON)
Okay. You can't discuss individual cases. I gather it is inappropriate for any governmental official to do the same. Of course, the head of government, the Prime Minister, has commented on this particular case, as follows:
“We have received assurances that all rules were followed, indeed, the same assurances made in the public statement released by the family, and we are satisfied with those assurances,” Trudeau told reporters during a news conference....
In other words, the Prime Minister has commented on this particular case. Were you aware that the Prime Minister made public comments about exonerating his friend and fundraiser in the matter of the Paradise Papers leaks?
Ted Gallivan
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Ted Gallivan
2019-06-11 11:39
Yes. If it's helpful, we risk-assess taxpayers, and one of the sources for a risk assessment is media coverage. Every time there is media coverage like that, I would like to presume that my team is already on it, but I don't presume. When there is media coverage like this or a leak like this, we do undertake a systematic risk assessment, which means that if we're not already auditing them, and if we should audit them, we will audit them.
Ted Gallivan
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Ted Gallivan
2019-06-11 11:39
I can tell you that when there's a public leak like that, that process takes place.
View Pierre Poilievre Profile
CPC (ON)
Thank you.
The question was, were you aware? You're doing this media monitoring. Yes or no, were you aware that the Prime Minister made these comments?
View Pierre-Luc Dusseault Profile
NDP (QC)
Thank you, Mr. Chair.
Thank you to the witnesses for being here today. I am very disappointed that the minister did not give us the opportunity to ask her questions. She came to testify about the main estimates for 2016-17, 2017-18 and 2018-19, but she did not want to appear before our committee to defend the 2019-20 main estimates.
That being said, I would now like to turn to the KPMG case. You probably expected that. I discussed this with you, Mr. Gallivan, as recently as last February. I don't know if you're the one who can answer my questions. You made the following comments at the time, which are public:
Then there's the fact that some participants [in the KPMG case] objected to the Tax Court of Canada. It will be up to the judges of that court to decide whether the behaviour of those participants was consistent with the law.
Last week, we learned that the Canada Revenue Agency had reached an agreement, an out-of-court settlement, to close the file. In the end, no judge will have pronounced on the behaviour of these participants. Yet the minister said that there was no amnesty in the KPMG case and that there would never be one. However, for me, this corresponds more or less exactly to the definition of an amnesty. We may not agree on that.
In any event, I would like to know who, in the KPMG case, made the decision to settle out of court with these participants.
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2019-06-11 11:43
I would like to begin by noting that this file was the responsibility of the appeals branch, but that several sectors of the agency were consulted to reach this conclusion.
We do not consider amicable settlements to be amnesties. This aspect of the dispute is not optional. A settlement process is followed. When a taxpayer makes an offer that eliminates the risk of the agency losing everything, we have an obligation to resolve the matter.
The minister has made it clear that lack of transparency is a concern for her. We want to adopt a more formal approach that emphasizes transparency. When you don't have all the details, you have to debate whether or not it's an amnesty. That is why the minister asked that the agency find a way to increase transparency.
With regard to the KPMG case, on the strategic side, taxpayers no longer resort to such a scheme. I can confirm that, to date, we have identified $24 million in contributions from these taxpayers. There are still a few taxpayers who are challenging this in court. Our employees analyze the facts and risks and then make the best possible decision.
I can assure you that decisions are made as a team, not by one or two employees, in secret. They are based on the law and the facts of the case, as well as our expectations of court decisions. The Tax Court of Canada is a specialized court in Canada. The judges of this court give us some good clues as to what we can expect.
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2019-06-11 11:46
I do not think the minister was informed. However, I cannot say that because that does not fall under my purview.
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