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Results: 201 - 300 of 302
View Diane Lebouthillier Profile
Lib. (QC)
Thank you, Mr. Chair.
I appreciate the opportunity to participate in the committee's study of the supplementary estimates (B).
I am joined by two senior officials from the Canada Revenue Agency: Mr. Ted Gallivan, the assistant commissioner of international, large business and investigations branch; and Mr. Roch Huppé, the assistant commissioner of the finance and administration branch and the agency's chief financial officer.
Mr. Huppé will speak briefly about the supplementary estimates in just a moment, but I would like to say a few words by way of introduction.
In May when I last to spoke to this committee, I was six months into my mandate as Minister of National Revenue. At the time, I gave an overview of some of the measures outlined in budget 2016 to help the Canada Revenue Agency combat tax evasion and tax avoidance.
Now, having served as minister for more than a year I have an even deeper appreciation of the challenges involved in these activities and the CRA's other business lines. As you know, the CRA is a client-focused agency that exists to serve Canadians. I am pleased to inform the committee that the agency is becoming fairer, more helpful, and easier to use.
The CRA is delivering on the government's commitments by effectively administering the middle class tax cut and the Canada Child Benefit. And it is taking definitive steps to combat aggressive tax planning and tax avoidance, improve services for taxpayers, and enhance the role of charities in our society.
The agency has accomplished a number of objectives on the compliance front—both at home and abroad—since my last appearance. They are taking concrete steps here in Canada to crack down on tax cheats. The CRA is currently conducting audits on over 750 taxpayers and criminally investigating 20 cases of tax evasion specifically linked to offshore tax havens.
Recently, the CRA launched the hiring process to add 100 new tax professionals to its already robust audit team. These individuals will assist in auditing high-risk multinational corporations and unravelling complex offshore schemes to crack down on tax cheats. It is a strategy that will collect an estimated additional $500 million in revenue over five years.
As for service to Canadians, the CRA makes sure taxpayers have access to the information they need about taxes or benefits—on its website, through its call centres, or through mobile applications. To respond to the public's needs the agency has added resources to its telephone service and is improving upon the clarity of correspondence with Canadians.
In addition, the CRA is streamlining its processing activities and creating three new national verification and collection centres. Canadians will experience faster, more efficient processing of their tax and benefit returns and better handling of calls to the call centre.
The Canada Revenue Agency has also made a significant commitment to the charitable sector by engaging with key stakeholders. The government has pledged to further clarify the rules governing a registered charity's involvement in political activities.
To this end, the agency recently launched online consultations with the public, and starting next week, will begin in-person consultations with registered charities. This consultation will result in a better understanding of the needs of charities and help identify ways to better communicate the rules governing political activities.
It is clear, Mr. Chair, that the Canada Revenue Agency is improving its service to Canadians and acting on its commitment to crack down on tax cheats. I am proud of the accomplishments of the agency's dedicated employees. But there remains much more to be done. Supplementary funding will help the agency enrich its programs in a number of ways.
It will enhance the agency's efforts to crack down on tax cheats. It will fund measures to improve communications with taxpayers and outreach to Canadians, and it will implement and administer the new home accessibility tax credit for seniors and people with disabilities.
I could go on, but instead I will yield the floor to Mr. Huppé, who will speak to the details of the supplementary estimates.
Thank you for your attention.
View Diane Lebouthillier Profile
Lib. (QC)
In the mandate letter I received from the Prime Minister, I was asked to focus my efforts on all of the client services provided by the Canada Revenue Agency. The work to renew the services was done all through the year. To me it was important that we maintain the regional offices.
We kept the Gatineau office. We also added 500 administrative positions to the Winnipeg office. In Rimouski, we consolidated part-time positions and other positions in regional offices. To me and to everyone who works at the agency, it was also important to make an announcement in this regard. We have two years to work on the reorganization. This makes the employees feel more secure, and everyone knows where we are going. We will also work in cooperation with the unions on this.
View Diane Lebouthillier Profile
Lib. (QC)
Yes.
The Canada Revenue Agency is in fact working in co-operation with Revenue Quebec. In fact, we are consulting businesses about improving our services. We are consulting Revenue Quebec in order to provide more effective help to those who do business with the agency.
I am going to give the floor to Mr. Gallivan, who can provide additional information on this.
View Diane Lebouthillier Profile
Lib. (QC)
One factor is that we computerized our services, and we are continuing work on that. Last year, the number of people who used our electronic services increased by 2%. 84% of taxpayers now use it. This certainly is more conducive to taxpayers receiving returns as quickly as possible. As for improving electronic services, Mr. Gallivan could give you more information on the administrative aspect.
View Diane Lebouthillier Profile
Lib. (QC)
With regard to jobs, it is important to stop the decline in the number of workers in regional tax centres. As I mentioned a few moments ago, there is an across-the-board increase in electronic services. We have consolidated some positions. We had some part-time employees who are now full-time. We are working to provide better service to Canadians. We are working on reducing wait times, and in future, the agency will be offering more specialized positions.
Mr. Huppé could tell you more about this.
View Diane Lebouthillier Profile
Lib. (QC)
A committee has been set up to look at this. I want to thank this committee that worked on tax evasion and tax avoidance. It gave us a report that contained 14 recommendations. It is important to us to continue to work with our international partners on tax evasion and avoidance.
View Diane Lebouthillier Profile
Lib. (QC)
I really do not agree with you on that.
The agency is working on abusive tax evasion and tax avoidance. We are going after the big players.
We are talking about the G20, and I fail to see what a small business could do at the G20 level. We have multilateral agreements. The considerable funds we have received must be used to hire specialists who will work on aggressive tax evasion and avoidance. So we are talking about large enterprises and people who have offshore accounts.
View Diane Lebouthillier Profile
Lib. (QC)
The report will eventually be made public. We are going to implement the committee's 14 recommendations.
View Diane Lebouthillier Profile
Lib. (QC)
It was an excellent report. The committee's analysis was done in cooperation with the Canada Revenue Agency. I can assure you that the 14 recommendations are going to be implemented.
View Diane Lebouthillier Profile
Lib. (QC)
Last January we decided not to open any more investigations. The 12 investigations on organizations that are ongoing currently had already begun. It's also simply a matter of fairness toward the other organizations that were investigated. We want to finish the work we started.
View Diane Lebouthillier Profile
Lib. (QC)
I would say it depends on the individuals, on their income and on what they own. We are trying to simplify the return forms. We are working on Auto-fill my Return, which is a form for people on fixed incomes. By this I mean people who receive a Canada pension or social assistance, for example. The objective of Auto-fill my Return is to make things simpler for those people.
View Diane Lebouthillier Profile
Lib. (QC)
As we said earlier, amendments to the act are really up to the Department of Finance. The Canada Revenue Agency is entrusted with its application.
View Diane Lebouthillier Profile
Lib. (QC)
I agree with you completely.
The Canada Revenue Agency is working very closely with the Department of Finance on the matter. A number of factors indeed need to be considered. The wealthy are able to look after their needs. In my view, and I would say the government's as well, what really matters is making things better for the middle class. We want to make it accessible to people and offer tax credits and benefits to those who need them most.
View Diane Lebouthillier Profile
Lib. (QC)
It's important to understand that the majority of Canadians pay their fair share of taxes. As we mentioned in our presentation, we have to work on identifying those who set up schemes and encourage taxpayers to use them to avoid paying their fair share of taxes.
Mr. Gallivan can speak at greater length about what the agency and our government are doing to deal with the issue.
View Diane Lebouthillier Profile
Lib. (QC)
As I said earlier, we want to improve client service and are focusing our efforts on specific areas. Our goal is always to become more effective and efficient.
View Diane Lebouthillier Profile
Lib. (QC)
Right now, in fact, we are working with the Minister of Indigenous and Northern Affairs. We have set up pilot projects to reach out to all indigenous communities. We are also working with Service Canada to get the poorest Canadians, those who were not receiving their benefits or who were not aware of what was available to them, the money they are owed.
I am particularly concerned about indigenous communities, people who live in the regions, Inuit, seniors, those with little education, and homeless people struggling with mental health issues. They are groups I was asked to pay particular attention to. They are all clients of the agency and need to receive the benefits they are entitled to. A number of departments have been mobilized in an effort to reach these groups.
Mr. Ouellette, you were there when we met with people who were working on pilot projects targeting indigenous communities. Through those efforts, mothers were able to get up to $20,000 in family allowance benefits. These are measures people didn't even know were accessible to them. Getting the right people the money they are owed is important.
View Diane Lebouthillier Profile
Lib. (QC)
In Canada, 51% of the population is functionally illiterate. These are people who have trouble understanding our forms, and that's why it is so important to simplify forms with the auto-fill service. The people who really need the tax benefits have to be able to complete the necessary forms and receive the money they are due.
At the agency, we keep track of everything and we are results-oriented. We want to make sure we have comparative data for each year, so we can measure the real impact of the pilot projects and their success rates in indigenous and other communities where people need access to their benefits.
View Diane Lebouthillier Profile
Lib. (QC)
I would just like to add that, as part of my mandate, at the beginning of the year, I started visiting all of the CRA's offices, precisely to reach out to employees, see what's happening, and find out what they think. I can tell you that staff are very proud of the work they're doing, and everyone is glad to do their part to achieve improvements.
In fact, when I visited the Winnipeg office, you had an opportunity to see just how much people cared about their work, wanted to do a good job, and make a contribution, whether they were involved in the small business support program or other programs.
View Diane Lebouthillier Profile
Lib. (QC)
I can talk campgrounds with you. It's an area of activity where everything is calculated on a service basis. The businesses that are entitled to deductions provide water and sewer services, Wi-Fi access, and so on. Measures are really based on the services provided. We assess situations on a case-by-case basis.
It only makes sense that an owner of a wilderness campground in the middle of nowhere who does not offer customers any services can't necessarily take advantage of the same deductions as a campground owner who provides services, engages in business development, and hires staff.
View Diane Lebouthillier Profile
Lib. (QC)
I encourage you to check the agency's website because we have received requests about that. We've posted all the information pertaining to campgrounds on the agency's website.
I've also spoken with chambers of commerce about the matter. On the Canada Revenue Agency's website, you can access detailed information about camping-related services.
View Diane Lebouthillier Profile
Lib. (QC)
In terms of the amounts being sought, we really want to focus on improving client services and response times to lessen that feeling of insecurity people have.
View Diane Lebouthillier Profile
Lib. (QC)
Thank you, Mr. Chair.
I am pleased to accept the committee’s invitation to discuss the Canada Revenue Agency’s actions to address aggressive tax avoidance and offshore tax evasion, and to provide the current status of the Isle of Man file.
I am joined today by Mr. Ted Gallivan, the assistant commissioner of the International, Large Business and Investigations Branch at the CRA.
Let me begin by asserting that the Government of Canada’s position on tax evasion and tax avoidance schemes is unequivocal: all participants must be identified and brought into full compliance with all their tax obligations.
The CRA systematically pursues cases of non-compliance. CRA auditors conduct over 120,000 audits every year that result in more than $11 billion in additional taxes assessed as well as penalties and interest. At least two-thirds of that amount involves international and large business aggressive tax planning, including high-net-worth individuals and multinationals.
The CRA also takes action against tax professionals who offer, assist, or create opportunities for clients to participate in offshore tax evasion and tax avoidance schemes. The CRA is very active in combatting this problem and is already achieving significant results, but we know that we need to do more. Wealthy taxpayers must pay the taxes that they owe. It’s a question of fairness.
As you know, for budget 2016, the Minister of Finance announced a historic investment of $444 million to improve the agency’s ability to detect, audit, and prosecute tax evaders in Canada and abroad.
The CRA will use some of those new funds to hire additional auditors and specialists to conduct investigations. For example, we will increase the number of auditors who focus on those who create tax schemes. We will also hire another 100 senior auditors to pursue investigations on high-risk multinationals. This federal investment will increase the number of examinations focused on high-risk taxpayers from 600 per year to 3,000 per year. That will allow the agency to better target promoters of illegal schemes, increase its audit activities, and improve the quality of investigative work focusing on criminal tax avoiders.
The CRA is also developing business intelligence infrastructure for gathering and analyzing information that will help detect tax evasion and avoidance activities. For example, on May 13, I announced that Canada and 30 of its international treaty partners signed the Multilateral Competent Authority Agreement.
Large multinational enterprises will be required to make their global operations more transparent by providing “country-by-country reports” that contain their income, taxes paid, and economic activities. This will help ensure they pay appropriate taxes in the countries where they do business and where their profits are generated.
It also takes effective international cooperation to address offshore tax evasion. To that end, Canada has one of the world’s largest treaty networks, having entered into 92 tax treaties and 22 tax information exchange agreements. Moreover, we recently ratified the multilateral Convention on Mutual Administrative Assistance in Tax Matters, which further expands this international tax information-sharing network.
Canada is also a member of the Organisation for Economic Co-operation and Development—the OECD—and its Joint International Tax Shelter Information Centre network. The CRA recently participated in a JITSIC network meeting to coordinate measures concerning information related to the Panama affair. The CRA is also accelerating its offshore compliance measures related to the activities of some Canadians.
We are talking about measures taken based on information gathered concerning electronic funds transfers of more than $10,000. We have also received over 17 million records of such transfers into and out of Canada. Using that information, the CRA will target up to four jurisdictions a year, without any warning.
The net is tightening. Those who hide income and assets offshore, or who evade or avoid the taxes they owe, will be identified and will face the consequences.
The first targeted jurisdiction is the Isle of Man. The CRA is in the process of contacting 350 individuals and 400 businesses that have conducted transactions there. Over 60 audits are underway, with more to come.
Mr. Chair, there has been some recent speculation in the media about the CRA’s handling of this investigation, particularly regarding its relationship with KPMG and its treatment of some of its clients.
I cannot speak about a particular taxpayer or case, beyond what is on the public record. I can say that the KPMG offshore tax avoidance scheme was discovered through the efforts of the CRA, and that legal action is underway to obtain the identities of participating KPMG clients who have not yet been exposed or come forward voluntarily.
I can also point out that very specific legislation governs what the CRA may or may not do. Its decisions within that legislation are guided by the facts available to them.
In terms of overall stakeholder relations, the CRA has a responsibility to listen to those affected by its policies and programs. That includes individual taxpayers, businesses, and those who represent them, including KPMG and similar organizations.
In meeting with these stakeholders, CRA employees help them to better understand the requirements of Canada’s tax system and improve compliance. They do not discuss specific taxpayer files.
The agency avoids circumstances that could lead to real or perceived conflict of interest or preferential treatment. At the same time, it works hard to ensure that its operations are open and transparent to the public it serves.
In a show of commitment to openness and transparency, and in following the rules that govern its actions, the CRA commissioned an independent review of its investigation of the KPMG-Isle of Man case. The review concluded that the CRA's compliance actions were in accordance with its established policies and procedures and that no inappropriate interaction took place between KPMG and agency officials involved in the case.
I remain confident that taxpayer fairness is paramount at the CRA, as it is for all Canadian taxpayers and the public in general. The substantial investment of close to half a million dollars, announced in the last budget, will help the CRA ensure that the Canadian tax system works to its full potential, and contributes to an economy that is fair and that benefits all of us.
Thank you for your attention.
View Diane Lebouthillier Profile
Lib. (QC)
I would like to thank my colleague for his question.
Mr. Chair, I would like to reassure all of the members here today that the CRA's main objective is to make sure that it recovers the amounts owed to the government. The government has made that a priority. It was also part of the Liberal Party's election platform. My mandate letter clearly states that we need to work toward a tax system that is open, transparent, and fair for all Canadians.
The massive investment of $444 million will improve our ability to detect, audit, and investigate, as well as impose penalties and prosecute. Since we took office, we have improved the transmission of information to taxpayers. A total of 75% of the documentation that taxpayers receive is more accessible and easier to understand.
View Diane Lebouthillier Profile
Lib. (QC)
You are absolutely right. This is an international problem. We are working with our international partners. Given the meeting and the agreement signed in Beijing, I would ask Mr. Gallivan, who was there, to provide more information in that regard.
View Diane Lebouthillier Profile
Lib. (QC)
With regard to audits and investigations, the historic investment announced by the Government of Canada will be used to establish programs to stop organizations that promote tax schemes. Our goal is to examine 12 times more tax schemes. We are going to focus on high-risk taxpayers. We are going to increase the number of examinations from 600 to 3,000 per year. We are going to hire another 100 senior auditors through an independent process.
As a result of the unprecedented announcement that we made, we expect to recover $2.6 billion over the next five years.
View Diane Lebouthillier Profile
Lib. (QC)
I would like to thank my colleague for his question.
I want to say that, under my direction, Kimberley Brooks conducted an independent review of the CRA last spring. This independent review, which was conducted by an external tax expert, concluded that the CRA acted in accordance with its established policies and procedures and that officials acted in accordance with the agency's code of integrity and professional conduct.
Mr. Gallivan can give you more information in that regard.
View Diane Lebouthillier Profile
Lib. (QC)
I would like to make it clear to everyone around this table that the word “amnesty” is not part of the Canada Revenue Agency's practices or vocabulary. No one was given amnesty in the case in question and no one will ever be given amnesty in the future. Every taxpayer and every situation is assessed on a case-by-case basis. As we said at the beginning, the CRA's main objective is to make sure that it recovers the amounts owed to the government.
View Diane Lebouthillier Profile
Lib. (QC)
The CRA was able to recover $11.5 billion last year. Two-thirds of that amount, or $7 billion, involved aggressive tax planning.
Maintaining the confidentiality of information is also an important rule at the agency. It is one of the CRA's fundamental principles.
Mr. Gallivan can answer your question in more detail.
View Diane Lebouthillier Profile
Lib. (QC)
As I mentioned earlier, the investment of $444 million over five years will be used to detect tax evaders and improve our technology and tools so that we can deal with international cases. With regard to audits and investigations, we will be hiring another 100 auditors to work on international cases. With regard to penalties and prosecution, legal advisors will be added to the CRA's investigative teams.
View Diane Lebouthillier Profile
Lib. (QC)
I should repeat that the term "amnesty" is not in use at the Canada Revenue Agency. There has been no amnesty, and there will be no amnesty.
View Diane Lebouthillier Profile
Lib. (QC)
Mr. Caron, I'm a French Canadian as well, and I am telling you that the term “amnesty” is not in use, and will not be used—
View Diane Lebouthillier Profile
Lib. (QC)
First of all, I am unable to confirm the authenticity of the document. I will say it again: there is no amnesty, there was no amnesty, and there will never be amnesty at the Canada Revenue Agency. Each file is dealt with on a case-by-case basis. The objective of the CRA is to—
View Diane Lebouthillier Profile
Lib. (QC)
View Diane Lebouthillier Profile
Lib. (QC)
I would ask Mr. Gallivan to answer this question. And I must point out that I was not in the House as a minister in 1999.
View Diane Lebouthillier Profile
Lib. (QC)
This government has made historic investments. Our election platform made reference to such investments.
View Diane Lebouthillier Profile
Lib. (QC)
We have stated that the fight against tax evasion and aggressive tax avoidance are priorities of this government.
View Diane Lebouthillier Profile
Lib. (QC)
Mr. Chair, as I mentioned from the outset, the Canada Revenue Agency is the one who detected the scheme put in place by KPMG.
I will ask Mr. Gallivan to answer my colleague, provide additional technical information, and complete the response.
View Diane Lebouthillier Profile
Lib. (QC)
Thank you for your question.
I do, indeed, consider client service a priority. The fact that the Prime Minister chose a social worker as Minister of National Revenue was no mere happenstance. Since we're speaking to the issue of services to the public, I should mention that, for me, people who face greater challenges, and might not have their tax returns prepared by accounting firms, are important.
In the historic budgets we announced, we stressed the importance of improving telephone service as well. Many regions of Canada still don't have cellphone service or computer access.
And we want the public to be able to receive accessible, easy-to-understand documents by mail. This is particularly important given that 51% of Canada's population is functionally illiterate. This means that, when those people receive documents, they're unable to understand the contents.
With respect to volunteers, we need to see an increase in number, and they should be given much more support. The challenge is to help people who don't have the means to pay someone to fill out their tax returns. We're working on that.
View Diane Lebouthillier Profile
Lib. (QC)
Since your question is much more technical, Mr. Gallivan will answer it.
View Diane Lebouthillier Profile
Lib. (QC)
The 2013 program set a process in motion, in which the government determined that even more massive investments would be needed so that all amounts lost due to tax evasion and aggressive tax avoidance could be recovered.
View Diane Lebouthillier Profile
Lib. (QC)
I want to emphasize that the major investments that our government is making at this time show the importance we accord to the entire tax evasion and tax avoidance issue. These investments will enable the Government of Canada to hire many more people and modernize the tools needed to address a problem that's international in scope. Mr. Gallivan will be able to complement my answer in this regard.
View Diane Lebouthillier Profile
Lib. (QC)
Indeed, international agreements have been drafted because countries noticed the problem is international in scope. And the agreements signed in Beijing last week evince a clear interest in dealing with the issue at an international level. This is why it's important that the government put all the necessary resources in place so that all Canadians can get back their fair share.
View Diane Lebouthillier Profile
Lib. (QC)
I will ask Mr. Gallivan to respond to the technical aspects of your question more precisely.
View Diane Lebouthillier Profile
Lib. (QC)
We must work internationally, to ensure our partners can exchange information under the agreements.
Mr. Gallivan should be able to answer this by providing an update.
View Diane Lebouthillier Profile
Lib. (QC)
It's important to specify that 17 million electronic funds transfers of $10,000 are something major in Canada. And, as I was saying, our new tools are bringing the non-compliance abroad to light.
We are on the right track toward uncovering $1 billion through voluntary disclosure programs. That's an increase of more than 400% in the course of the last six years.
View Diane Lebouthillier Profile
Lib. (QC)
Given the technical aspect of this question, I will ask Mr. Gallivan to respond.
View Diane Lebouthillier Profile
Lib. (QC)
In the matter we're discussing—the KPMG matter—I can tell you that I wasn't present when agreements were signed on the subject. Mr. Gallivan will be able to respond to the various points in your question.
View Diane Lebouthillier Profile
Lib. (QC)
I am unable to confirm the authenticity of the document posted online by the CBC.
View Diane Lebouthillier Profile
Lib. (QC)
View Diane Lebouthillier Profile
Lib. (QC)
View Diane Lebouthillier Profile
Lib. (QC)
We have specified that the KPMG matter is not closed. Investigations concerning the identified taxpayers are ongoing. Given the major investments our government has made, we are confident that we can continue to work on all matters related to tax evasion and aggressive tax avoidance schemes.
View Diane Lebouthillier Profile
Lib. (QC)
As part of the announcement we made in April about the Canada Revenue Agency, we stated that the CRA was, indeed, going to undertake a detailed study of measures related to the tax gap. This will be done during the coming year.
View Diane Lebouthillier Profile
Lib. (QC)
Yes. You're correct. Resources have once again been allocated. In a summary of the situation that was given to me, I was told that, last year, people who were trying to contact the agency had to make up to 10 telephone calls before they could speak with someone and obtain information.
I was very happy to learn last week, during a meeting with my senior officials, that the number of staff had been increased and that the number of calls each person was making had decreased to two. Naturally, my objective is to ensure people can be answered as quickly as possible when they call. People have concerns, even though 95% of Canadians fill out their income tax forms and do things properly. So we need to be able to give them answers. CRA clients are Canadians. It's the CRA that works for Canadians, not the other way around.
View Diane Lebouthillier Profile
Lib. (QC)
Yes. I believe the agency will achieve those better results. I have every confidence in the professionals in place. Since my arrival at the department, I've established a short-term, medium-term, and long-term action plan involving CRA staff, professionals, and senior officials.
The action plan submitted to the Minister of Finance and the Prime Minister's Office has enabled us to obtain, as part of an overall envelope, close to $1 billion to combat tax evasion and address all aspects of client access and client service.
View Diane Lebouthillier Profile
Lib. (QC)
Thank you, Mr. Chair.
I thank you for the opportunity to participate in the committee's study of the main estimates 2016-17.
I am joined by several Canada Revenue Agency officials: Mr. Geoff Trueman, the assistant commissioner of the legislative policy and regulatory affairs branch; Mr. Ted Gallivan, the assistant commissioner of international, large business and investigations branch; and Mr. Roch Huppé, the assistant commissioner of the finance and administration branch. Mr. Huppé will speak briefly about the main estimates and answer your questions, but I would like to say a few words by way of introduction.
I spoke earlier today to your committee about some of the proposed measures in Budget 2016 that will help the CRA combat tax evasion and tax avoidance. A secure tax base is the foundation for a healthy economy, a sustainable social infrastructure, and a strong democracy. I would like to add that the Government of Canada proposes two additional areas of investment that will also support the work of the CRA and my priorities as Minister of National Revenue. Those priorities are in my mandate letter.
Budget 2016 proposes to invest $351 million in the CRA's ability to collect outstanding tax debt, and $186 million to improve service to Canadians through better telephone access, easy-to-understand correspondence, and increased outreach for vulnerable and low-income Canadians. That is a total investment exceeding $1 billion over the next five years, a testament to the importance of the work the CRA does.
As you are aware, Mr. Chair, Canada's tax system is based on voluntary self-assessment and compliance. Within this system, the CRA plays a special role. It administers tax laws for the Government of Canada and for most Canadian provinces and territories, and it administers various social and economic benefit and incentive programs that are delivered through the tax system. The taxes collected by the CRA are critical to families, businesses, and communities. When Canadians meet their tax obligations, they are helping to fund health care, post-secondary education, social programs, infrastructure, and many other programs. This is why it is crucial that everyone pays their fair share of taxes, so that all Canadians can benefit.
In 2014-15, the CRA processed $469 billion in revenues and engaged with 31 million individual and corporate taxpayers. More than 92% of taxpayers file their taxes and pay the amount they owe on time. The CRA also delivers important benefits to many eligible Canadians. Last year, the CRA delivered $22 billion in benefit payments to 12 million recipients.
With new funding of $186 million, the CRA will be able to reach out to Canadians who may be entitled to benefits but not be receiving them. By offering services that are proactive, more helpful, and easier to use, the CRA will ensure that people who interact with the agency feel like valued clients, not just taxpayers.
We are confident that our proposed investment in the CRA's ability to protect the revenue base while improving service to Canadians will yield significant returns. It will also help ensure that our tax system operates as fairly and effectively as possible.
I would now like to turn you over to Roch Huppé, who will walk you through the CRA's main estimates.
Thank you.
View Diane Lebouthillier Profile
Lib. (QC)
Since taking office as Minister of Revenue, I have visited offices throughout Canada. I can tell you that telephone service is not offered between 8 a.m. and 4 p.m.
Mr. Gallivan, who is more familiar with the improvements we are making, will be able to answer you on that point.
View Diane Lebouthillier Profile
Lib. (QC)
Yes, as we were saying, we have budgeted for $1 billion over the next five years.
View Diane Lebouthillier Profile
Lib. (QC)
Yes, this really is customer service, where we have to respond to a request quickly and be able to provide information in a form that can be understood. Access to clients means doing outreach to people with disabilities, people who live in remote areas and may not have access to electronic services, and also seniors. So it is a service that is really based on the specific characteristics of certain client groups. There are also the aboriginal communities. We have to be in contact with them in order to give them access to various programs. In the case of the aboriginal communities, we have to make sure they are able to receive the Canada child benefit. To do that, people have to fill out their tax return. All in all, it is important for us to reach the entire population so everyone has access to the programs they are entitled to.
View Diane Lebouthillier Profile
Lib. (QC)
I sincerely thank my colleague for his question.
In fact, client service is part of my mandate letter and one of the priorities of the Canadian government. We have already begun to put measures in place so that the correspondence we send people is easy to understand. We talked about telephone services earlier. We want to ensure that people are able to get responses much faster.
We have put a whole system in place for processing requests. When people have trouble paying what they owe the government, it is important to treat them well and make sure that everyone fulfills their obligations.
View Diane Lebouthillier Profile
Lib. (QC)
Yes, that is also part of client services. We are well aware that, in the case of the neediest or most disadvantaged clients, things having to do with the tax system are complicated. A lot of people did not have access to additional credits. The government is therefore truly committed to this. One of the CRA's priorities is to provide information when people call.
The CRA does not let people guess and search in this very complex system for the credits they are entitled to. When people call, we provide them with guidance in this regard.
The volunteer program is also designed this way. We want to enable people to get the money they are entitled to, to improve their quality of life.
View Diane Lebouthillier Profile
Lib. (QC)
According to my information, and from my experience working with my representatives, the important thing for us is that people receive the services they are entitled to and the benefits they are entitled to. I am very happy about what has been announced by our government. At the CRA, everything is in place so that starting in July, people will be able to receive the Canada child benefit. These measures have been put in place by our government to enable people to have a better quality of life and to receive the money they are entitled to.
As I said a little earlier, I am a social worker. I come from a remote region. I am very familiar with disadvantaged populations, seniors, and people with little formal education. I know very well that these people do not all receive the services they are entitled to.
We have to reach out to those people. We have to offer services to people in remote regions, like Nunavut. Canadians do not all live in cities.
View Diane Lebouthillier Profile
Lib. (QC)
Thank you very much, Mr. Chair.
I welcome this chance to address the committee.
I am joined today by senior officials from the Canada Revenue Agency: Ted Gallivan, the Assistant Commissioner of the International, Large Business and Investigations Branch, and Marie-Claude Juneau, the Director of the Access to Information and Privacy Directorate in the Public Affairs Branch.
Mr. Chair, as the world becomes increasingly globalized and cross-border activities become the norm, tax administrations need to work together to ensure that taxpayers pay the right amount of tax to the right jurisdiction. Cooperation with other tax administrations is critical to protecting the integrity of Canada's tax system and revenue base. In fact, Canada is part of one of the world's largest treaty networks, with no less than 92 tax treaties and 22 tax information exchange agreements in force.
In 2010, the U.S. Congress passed the Foreign Account Tax Compliance Act, or FATCA. FATCA requires non-U.S. financial institutions to enter into agreement with the Internal Revenue Service, the U.S. tax department better known as the IRS. This act, therefore, requires the reporting of information on accounts held by U.S. residents and U.S. citizens, including U.S. citizens who are residents or citizens of Canada.
If a financial institution, Canadian as far as we are concerned, is not compliant with FATCA, FATCA requires U.S. payers, that is, corporations and other entities that pay amounts such as interest or dividends, making certain payments of U.S.-source income to this financial institution, to withhold tax equal to 30% of the payment.
This 30% FATCA withholding tax can also be levied in respect of a compliant financial institution, on individual account holders that do not provide documents showing that they are U.S. residents or U.S. citizens. In some circumstances, FATCA could even require financial institutions to close the accounts of certain clients.
In February 2014, Canada and the U.S. signed an international intergovernmental agreement, an IGA, under the longstanding Canada-U.S. tax treaty. We should mention that the first fiscal agreement between Canada and the United States dates back to 1942. While our countries have been exchanging tax information without any problems for decades, this 2014 agreement provides for an enhanced exchange of financial information to improve compliance with our respective tax laws.
Less known is that the agreement is reciprocal. So, the IRS is required to provide the CRA with enhanced information on certain accounts of Canadian residents held at U.S. financial institutions. The intergovernmental agreement was signed in February 2014 and legislation to amend the Income Tax Act to reflect the agreement was passed by the Canadian Parliament in 2014.
Canadian financial institutions that comply with the IGA and related Canadian legislation are now exempt from the 30% withholding tax. Further, Canadian financial institutions report to the CRA the financial accounts they maintain for U.S. citizens. We, in turn, securely transmit that information to the IRS.
Concerning privacy, the CRA is committed to administering this agreement, and all of Canada's tax agreements, in good faith. During the drafting process of the agreement with the Americans, the CRA, together with the Department of Finance, took great care to consult with the Office of the Privacy Commissioner (OPC). We received valuable input and adopted our approach accordingly as the negotiations progressed.
The CRA completed a privacy impact assessment in August 2015. The goal of this assessment was to identify, assess, and mitigate privacy risks. We then submitted this assessment to the Office of the Privacy Commissioner for review. These communications with the OPC and the resulting actions were undertaken with the specific intent of protecting taxpayer privacy.
Information can be disclosed only to persons or authorities who assess, collect, administer, or enforce the taxes and tax laws to which the convention applies. This information can be used for income tax purposes only.
The IGA further stipulates that the information exchanged is subject to strict confidentiality and other protections provided for in the convention, including the provisions limiting the use of the information exchanged.
The CRA exchanged information with the IRS on September 30, 2015. This exchange was done while the CRA followed all of the confidentiality protocols of the treaty and the IGA. Just over three months ago, on January 4, 2016, the CRA received the OPC's recommendations pertaining to the agreement.
My officials have provided to the committee both the OPC recommendations and a copy of our response to them for your information. It is important to mention that, following our submission to the OPC, none of their recommendations suggested that we were not to share this information last September. The next annual transfer of records with the IRS is scheduled for September 30, 2016.
I want to reassure Canadians that all tax treaties and exchanges of information are subject to strict confidentiality requirements. Mr. Chair, this is a priority for our government.
These information-sharing agreements are very important because they allow us to better combat tax evasion and tax avoidance. Canadians are telling us that they want us to crack down on tax evasion and tax avoidance, and the government is committed to do so, as I mentioned earlier this week. This sharing of information is critical to allow us to follow through on that commitment to Canadians.
In conclusion, I emphasize that Canada and the international community continue to move ahead towards greater tax transparency. But rest assured that confidentiality of taxpayer information remains a fundamental cornerstone of Canada's tax system.
Thank you for your attention.
View Diane Lebouthillier Profile
Lib. (QC)
I am going to ask Ms. Juneau to answer your questions and give some comments on that.
View Diane Lebouthillier Profile
Lib. (QC)
Currently, that information cannot be publicly released because it was obtained under a treaty. It is the prerogative of the country sending the information to authorize public release of the information.
View Diane Lebouthillier Profile
Lib. (QC)
Mr. Long, our government takes the matter of privacy protection very seriously. All the information exchanged with the United States is subject to very strict confidentiality rules. The Canada Revenue Agency makes sure that tax cooperation with its partners is fully consistent with the privacy rights in effect in Canada. Information exchange is done electronically, through a dedicated, secure and effective transmission system.
All information that the IRS receives must be kept secret in the same way as information obtained under its own tax laws. All information can only be released to individuals and authorities in the American tax administration and can only be used for tax purposes.
Protecting the confidentiality of all transmissions is a major requirement for the agency. Protecting privacy really is a priority for the agency and for our government.
View Diane Lebouthillier Profile
Lib. (QC)
I will let Mr. Gallivan answer that question.
View Diane Lebouthillier Profile
Lib. (QC)
The financial institutions are aware of this kind of information exchange. I must emphasize that, if the agency had not signed an agreement with FATCA, the information exchange would be done by the banks. The fact that the agency is involved and that agreements have been reached with FATCA, allows us to protect the information even more and to respect confidentiality and privacy.
View Diane Lebouthillier Profile
Lib. (QC)
I must tell you that, clearly, we would have done things differently from the previous government when the time came to get the approval of Parliament. We would not have rushed the agreement into effect by hiding it in an omnibus bill more than 400 pages long. We would have taken the time to explain clearly to Canadians and to Parliament why the agreement was being adopted. We would have taken the time to discuss it in a much more open and transparent manner in order to provide parliamentarians and Canadians with all the information, as is right and proper.
View Diane Lebouthillier Profile
Lib. (QC)
After we had obtained all the information about FATCA, we clearly would still have entered into agreements with the United States. FATCA is an American act. The position that was taken at the time really allowed the Canadian banking system, and Canadians with dual citizenship, to be protected.
View Diane Lebouthillier Profile
Lib. (QC)
The current agreement adequately protects the rights of Canadians. As I mentioned, the action needed would have been more about the process of implementing the agreement with the United States. We would have worked differently by involving all parliamentarians in open and transparent discussions and by providing information that was fair and equitable for all Canadians.
View Diane Lebouthillier Profile
Lib. (QC)
That is true, but I must repeat that the difficulty was much more related to the process. If the process had involved all parliamentarians, we would probably not be here today discussing FATCA.
View Diane Lebouthillier Profile
Lib. (QC)
I think that Ted Gallivan will be able to answer that question.
View Diane Lebouthillier Profile
Lib. (QC)
As I mentioned a little earlier, we clearly would have done things differently in terms of what the previous government did when the time came to have the agreement approved. There would have been discussions in Parliament in which everyone would have been involved.
View Diane Lebouthillier Profile
Lib. (QC)
The NDP is loudly clamouring for measures to fight tax evasion and tax avoidance. However, the automatic exchange of information such as we have with the United States allows us to cross-reference information.
View Diane Lebouthillier Profile
Lib. (QC)
We can also identify inconsistencies in tax avoidance and tax evasion internationally.
Are you telling me that you are against measures that allow us to fight more effectively against tax evasion?
View Diane Lebouthillier Profile
Lib. (QC)
On Monday, we made a historic announcement about an investment of $444.4 million. We certainly responded to Senator Percy Downe, who has also taken a public position saying that he was in agreement with our direction. So we are now going to work in collaboration with the senator on the tax gap.
View Diane Lebouthillier Profile
Lib. (QC)
I will ask Mr. Gallivan to answer your question.
View Diane Lebouthillier Profile
Lib. (QC)
I would like to emphasize that FATCA is an American act and more than 100 countries have to comply with it in terms of Americans with dual citizenship, wherever they are in the world. As far as constitutionality is concerned, all agreements have been and are vetted by the Department of Justice.
View Diane Lebouthillier Profile
Lib. (QC)
As I mentioned a little earlier, Canada had to come to an agreement on FATCA. We had to sign an agreement with the United States. The problem was the process in the House. There should have been open and transparent discussions with all parliamentarians.
View Diane Lebouthillier Profile
Lib. (QC)
I will ask Mr. Gallivan to answer your question.
View Diane Lebouthillier Profile
Lib. (QC)
Do you want to know whether it would be a good idea to send all the information?
Under our current agreement, people who want to receive information about what has been transferred can get in touch with the agency or with their financial institution and the information will be provided to them.
View Diane Lebouthillier Profile
Lib. (QC)
As well, on the Canada Revenue Agency website, there is a special section on FATCA and everything that is involved.
View Diane Lebouthillier Profile
Lib. (QC)
If you want to amend the agreement, you would have to talk to the Department of Finance. That is the department that negotiated the agreement.
View Diane Lebouthillier Profile
Lib. (QC)
The Department of Finance negotiated the agreement. So you would have to check with that department to see if it is possible to change it.
View Diane Lebouthillier Profile
Lib. (QC)
Let me repeat the answer I gave. The Department of Finance negotiated the agreement. The Canada Revenue Agency implements the agreements negotiated by the Department of Finance.
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