Canada tells tax collectors to get hold of Panama Papers info
Canada’s tax collectors want to get their hands on the so-called Panama papers, a vast collection of documents that lays bare details of offshore accounts and tax shelters.

Thestar.com
April 4, 2016
By Bruce Campion-Smith

Canada’s tax collectors want to get their hands on the so-called Panama Papers, a vast collection of documents that lays bare details of offshore accounts and tax shelters.

Hours after media outlets around the globe - including the Toronto Star - went public with the internal records of a Panamanian law firm that specializes in hiding money in tax havens, Revenue Minister Diane Lebouthillier instructed officials at the Canada Revenue Agency to get the information.

“The minister of National Revenue has instructed CRA officials to obtain the list of data leaked through Panama Papers in order to cross-reference this information with data already being obtained through the agency’s existing mechanisms,” said spokeswoman Chloe Luciani-Girouard.

Luciani-Girouard said Lebouthillier was following the story of the leaked documents “very closely.”

“The Canada Revenue Agency is committed to combating the abusive use of offshore jurisdictions and protecting the integrity of the tax system,” Luciani-Girouard said in an email.

The leaked documents are the confidential records of Mossack Fonseca, a law firm in Panama known for establishing shell companies. And the hidden identities of some 350 Canadians are contained in the private database.

It’s not illegal to have foreign investments. But Canadians with investments abroad are required to report all income earned outside Canada to the CRA.

Luciani-Girouard said that since 2015 the department has collected information on all international fund transfers worth more than $10,000, including Panama, and selects the “highest risk” taxpayers for review or audit.

“Canada has significant tools to detect offshore tax avoidance and past success working with leaked information to detect and correct non-compliance,” Luciani-Girouard said.

Yet Sen. Percy Downe, who has long been active on the issue, said Canada has a “massive” problem with overseas tax evasion and suggested it’s getting worse. “It used to be extremely wealthy Canadians. Now it’s moved into the upper middle class doing it,” he said.

But just how much is lost is unknown because the Canada Revenue Agency has refused to study the tax gap - a measure of the revenues it should be collecting and those it actually gets, Downe said in an interview Monday.

“Time has passed them by on transparency and openness. They could really get ahead of curb by...telling Canadians how much they’re losing, what resources they need,” Downe said.

Downe wrote Lebouthillier on Nov. 26, 2015 - soon after she took over the revenue portfolio - to make the case that such analysis was critical in light of the revelations that rich Canadians have sheltered wealth abroad, meaning the “loss of literally untold amounts of revenue” for the federal government.

On Monday, Downe revealed a Jan. 20 letter from Lebouthillier signalling that the department will finally try to measure how much revenue it might be losing to dodgers.

“There is strong interest in measures of tax evasion and avoidance, both domestically and internationally,” Lebouthillier wrote in her letter.

“I have instructed my officials to commence work on a plan aimed at enhancing public understanding of non-compliance with Canada’s tax laws and to identify the financial resources that would be required to move forward on the plan.

“As a first step, the CRA will undertake a comprehensive study of tax gap estimation,” Lebouthillier said.

Still, Downe said the department lacks the resources to go after tax cheats sheltering income abroad.

“If you have enough money overseas and you can lawyer up and accountant up, they’ll cut you a deal. So it’s a double standard,” he said.

Lebouthillier became revenue minister last November with a mandate from Prime Minister Justin Trudeau to invest resources to help the agency to go after tax cheats and work with “international partners to adopt strategies to combat tax avoidance.”

The most recent federal budget committed an extra $444.4 million over five years to “crack down” on tax evasion and tax avoidance. Ottawa expects to collect an extra $2.6 billion in revenue as a result of these efforts.

Luciani-Girouard said that work will include targeting “aggressive tax avoidance, including offshore.”

NDP MP Pierre-Luc Dusseault (Sherbrooke) said the federal agency needs more resources but said the secrecy of some foreign jurisdictions complicates efforts by federal officials.

He said there needs to be co-operation on the international front to make those countries “less opaque, more transparent.” That lack of information allows some taxpayers to cheat the system.

“Right now there is too much secrecy in those jurisdictions so people don’t feel they are obliged to tell the revenue agency,” he said in an interview.

Unless action is taken, there will be a two-tier tax system that favours those with the expertise and resources to shelter income abroad, Dusseault said.