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Results: 1 - 15 of 37
Janique Caron
View Janique Caron Profile
Janique Caron
2020-06-16 18:07
Thank you, Mr. Chair.
Good evening, and thank you for the opportunity to appear before the committee to present the Canada Revenue Agency's main estimates for 2020-21, and to answer any questions you may have on the associated funding.
My understanding is that a copy of my full remarks, in both official languages, has been provided to the clerk. To respect the members' time and to avoid technological issues, I will be providing my remarks in one official language and will be prepared to respond in either official language.
I am accompanied today by my colleagues: Frank Vermaeten, assistant commissioner, assessment, benefit and service branch; Geoff Trueman, assistant commissioner, legislative policy and regulatory affairs branch; and Ted Gallivan, assistant commissioner, compliance programs branch.
As you are aware, the CRA is responsible for the administration of federal and certain provincial and territorial tax programs, as well as the delivery of a number of benefit programs. Each year, the agency collects hundreds of billions of dollars of tax revenue for the Government of Canada and distributes timely and accurate benefits to millions of Canadians.
It should be noted that the CRA's 2020-21 main estimates do not reflect incremental resources required for the payments or the administrative costs in support of the Government of Canada's measures to support Canadians and businesses facing hardship as a result of the global COVID-19 pandemic. These measures include, as you know, the Canada emergency response benefit, the Canada emergency wage subsidy and the Canada emergency student benefit, to name a few. The cost of the emergency benefit payments will be funded through statutory authorities, including those under the Department of Employment and Social Development. The funding associated with the administrative costs will be sought separately by the CRA in the coming months. Our priority is to deliver on these measures as quickly as possible.
In the meantime, to fulfill its mandate in 2021, the CRA is seeking a total of $7.9 billion for these main estimates. Of this amount, $3.5 billion requires the approval of Parliament; whereas, the remaining $4.4 billion represents forecasts for statutory authorities that are already approved under separate legislation. These statutory items include the climate action incentive payments, children's special allowance payments, employee benefit plan costs and, according to section 60 of the CRA Act, the spending of revenues received or activities administered on behalf of the provinces and other government departments.
These 2020-21 main estimates represent a net increase of $3.4 billion when compared with the 2019-20 main estimates. Almost the entire amount of this increase is related to the forecasted statutory climate action incentive payments of $3.4 billion, which returns the bulk of direct proceeds from the federal fuel charge to eligible individuals and families living in provinces that have not met the Canada-wide federal standard for reducing carbon pollution. The CRA is responsible for administering the fuel-charge component of the Greenhouse Gas Pollution Pricing Act, which includes the climate action incentive payment.
Excluding the statutory climate action incentive payment, the agency's 2020-21 main estimates represent a net increase of approximately $33 million, or 0.7%, when compared with the 2019-20 main estimates. The largest component of this change is an increase of $69 million for collective bargaining adjustments for some 12,000 employees represented by the Professional Institute of the Public Service of Canada.
Other increases to the agency's budget include a $24-million adjustment to forecasted statutory payments under the Children's Special Allowances Act for eligible children in the care of agencies and foster parents. These payments are equivalent to the Canada child benefit paid to biological and adoptive parents. There is also $27 million in incremental funding for measures to improve tax compliance that were announced in prior budgets. Thanks to the significant investment made in recent years, the CRA has expanded its tools and capacity to target clients who attempt to conceal their assets to avoid paying their share of tax.
To give you a sense of the kind of programs that are being supported by this funding, allow me to touch on some specifics. To further combat tax evasion and aggressive tax avoidance, the CRA has hired additional auditors, conducted outreach and education, and built technical expertise to target non-compliance associated with cryptocurrency transactions and the digital economy. Offshore audit resources have been expanded, which directly supports the fairness and integrity of the tax system by ensuring that wealthy individuals and corporations do not circumvent their tax obligations.
Improved information technology tools and systems, combined with closer international co-operation, allow the CRA to focus on the higher-risk taxpayers. Although efforts in this domain have been affected by COVID-19, preparation for the eventual full resumption of this important work is under way.
These increases are partially offset by a $49-million adjustment associated with changes in the funding profile for various measures announced in previous federal budgets, a $25-million reduction in statutory contributions to employee benefit plans and in the forecast of cost recovery revenues for initiatives administered on behalf of the provinces and other government departments, and $13 million in transfers with other government departments, including an adjustment to accommodation and real property services provided by Public Services and Procurement Canada.
In closing, the CRA is listening to Canadians, changing how it works and improving services. The resources being requested through these estimates will allow the agency to continue to deliver on its mandate to Canadians by making it easier for the vast majority of taxpayers who 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 their taxes and benefits.
At this time, we will be pleased to respond to any questions you may have.
View Sébastien Lemire Profile
BQ (QC)
Thank you, Mr. Chair.
In the Library of Parliament's accompanying documents, one of the questions mentions that the 2016 budget provided $351.6 million over five years to the Canada Revenue Agency, or CRA, to improve its ability to collect outstanding tax debts, with the hope of recovering an additional $7.4 billion over that period. In the previous intervention, it was also mentioned that these budgets had been increased.
In the 2020-2021 main estimates, how much money does the CRA allocate annually to combat tax avoidance and tax evasion?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2020-06-16 18:30
Thank you for the question, Mr. Lemire.
Half of our overall budget of $900 million is aimed at abusive tax planning by multinationals or wealthy citizens. This represents 50% of our overall budget, or about $450 million.
I can follow up to give you the exact number, but it's usually 50% of our effort, which is aimed at 1,200 multinationals and 10,000 affluent Canadians.
The other budget is $2 million for small and medium enterprises.
View Sébastien Lemire Profile
BQ (QC)
Since 2016 and over a five-year period, you estimate that you can recover an additional $7.4 billion.
How did you come up with this evaluation? Is this amount still up to date?
Ted Gallivan
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Ted Gallivan
2020-06-16 18:31
I'll make a clarification.
You're talking about an amount related to collection, not assessment. In the current fight, we're assessing, and then there's the collection. For these analyses, we rely on the past. We look at what the marginal ratio of our results is. Because we have a risk-based approach, the marginal results go down. In planning, we assume that it will be the marginal result we see today, with a decline. That's the basis on which we produce the estimates. Just prior to COVID-19, our programs and estimates were generally meeting expectations. We were able to collect the expected amounts. We had the green light just before the COVID-19 pandemic started.
View Sébastien Lemire Profile
BQ (QC)
You are certainly in a position to point to companies that are at fault that you find difficult to catch or to hold to account for repaying that money. In many cases, these companies have taken advantage of the Emergency Wage Subsidy, the Canadian Business Emergency Account or the very large business support funds that were put in place in the context of the COVID-19 pandemic.
Is that the case? In your opinion, should these companies have been denied access to the assistance programs put in place to support businesses during the COVID-19 crisis?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2020-06-16 18:32
That's an excellent question.
When it came to these emergency programs, the rules were pretty clear. With regard to the emergency wage subsidy, for example, we had to base our decisions on existing legislation. For people with a history of aggressive tax planning, we spent a lot of time making sure they were eligible for the program. However, it should be remembered that this is a program that is designed to help employees and the funds are intended to subsidize salaries. We therefore limited ourselves to scrutinizing these companies before making payments. We are talking about a ten-year period. It's really about supporting the employees at the end of the day.
View Sébastien Lemire Profile
BQ (QC)
This is indeed part of the answer that the minister often gave us during question periods. Nevertheless, some countries, such as Denmark, have been bold in passing laws to better fight fraudsters.
Would you have liked to have benefited from additional legislation? Would it have had a concrete impact on your work?
Would you have been able to increase collections if the law had been tougher?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2020-06-16 18:34
I think there's work to be done on the legislation itself. There are a number of ways, outside of the assistance programs, to address this issue that we are all concerned about.
When we see cases, such as the Loblaws case, before the courts, or the Cameco case where, despite the audits and the efforts of the agency, the Tax Court of Canada or the Federal Court of Appeal say that tax planning is done in good faith under the current law, I think we have to invoke the need to close loopholes.
Outside of the crisis, we have other ways to achieve the goal we all aim for, such as closing the loopholes.
View Sébastien Lemire Profile
BQ (QC)
Are you able to identify these escape mechanisms or the ways in which companies are doing it today? We are all familiar with tax havens, like Barbados, for example, but what are the modern ways of doing things?
Is there anything in the digital economy that you're particularly concerned about that could be changed?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2020-06-16 18:35
There's a lot packed into that question.
Before turning to the digital issue, I will limit myself to the issues that concern us at the agency. In terms of our protocol regime, which includes protocols with Barbados and Luxembourg, those arrangements were made at a certain point in time, and I think we have a good track record in the courts that gives some food for thought.
As far as multinationals are concerned, when we started to have country reports under a program of the Organisation for Economic Co-operation and Development, or OECD, we found that Luxembourg, for example, appeared in a disturbing number of documents. We were aware of that, but when we saw the percentage of Canadian companies that had trusts in Luxembourg, it gave us pause for thought. This is an example of a debate we could have to determine whether it is time to review our protocols with Luxembourg.
View Peter Julian Profile
NDP (BC)
Thank you very much.
I just want to go to the issue of prosecution of fraud, tax fraud and tax avoidance. The Parliamentary Budget Officer last year told us it's $25 billion that the federal government loses every year. That was the conservative estimate they made at the time.
I am sitting here in New Westminster, B.C., and right next to me is the international consortium of investigative journalists and their offshore leaks database. I just want to ask about that, because it's very detailed. It has a whole list of Canadian corporations.
I want to start with the Panama papers. How many of the corporations named in the Panama papers on the offshore tax leaks database have been charged by CRA?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2020-06-16 18:41
We have confirmed publicly that we have a small number. I believe we have confirmed publicly that there are five criminal investigations under way. At this point, given people's legal rights and the aggressive criminal defence in these cases, we haven't brought any to charges laid.
View Peter Julian Profile
NDP (BC)
Okay, thank you. I just wanted a quick answer.
Now the Paradise papers are also listed here with hundreds of Canadian corporations. How many corporations in the Paradise papers have been charged?
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2020-06-16 18:41
Again, I think we haven't confirmed publicly the exact number that we have under criminal investigations. I think the point needs to be made, though, that many of these sophisticated taxpayers paper over their tax planning with multiple legal opinions and law firms. I think there's no lack of willingness on the part of CRA to pursue these cases criminally; I think it's the forethought of the perpetrators to really paper over what they are doing to make it very difficult and complex to bring criminal charges.
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