Canada makes progress in identifying Canadians trying to hide their assets overseas

On 13 November 2018, the Canada Revenue Agency (“CRA”) released a statement on Canada’s commitment on combating offshore tax evasion and aggressive tax avoidance (Link).

The CRA states that strong international partnerships are a key to success. Thanks to historic investments in the last three federal Budgets, better tools and approaches in their compliance activities are helping to get more data and allowing better identification of tax evasion and aggressive tax avoidance.

The Common Reporting Standard (“CRS”) was implemented in Canada in 2017 and includes the participation of more than 100 jurisdictions. It provides the CRA with information on Canadians’ overseas financial accounts. Under the CRS, Canadian financial institutions are required to identify non-residents’ financial accounts and to provide account details annually to the CRA. The CRA then shares this information with foreign jurisdictions and in turn, the CRA receives the same type of information from other jurisdictions.

Under this initiative, the CRA expects to receive information from more than 80 international partners and has committed to sending information to more than 60. The number of exchange partners is expected to increase in the coming years. Information received will help the CRA identify financial accounts held in other jurisdictions to ensure that tax residents of Canada are meeting their Canadian tax obligations.

Participating in the CRS honours Canada’s commitment to its Organisation for Economic Co-operation and Development (“OECD”) and Global Forum on Transparency and Exchange of Information for Tax Purposes (“Global Forum”) partners to share more data in the fight against offshore tax evasion and aggressive tax avoidance.

Canada continues to be a leader in international collaboration as a member of the expanded Joint International Taskforce on Shared Intelligence and Collaboration (“JITSIC”). This network of 38 countries works closely and actively with other tax administrations to coordinate tax compliance activities across the spectrum of international tax risks. This expertise has allowed the CRA to participate and lead JITSIC expert working groups, including the development of a strategy to identify and stop promoters of abusive tax schemes.

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