The Auditor General’s Fall 2018 report on compliance activities by the Canada Revenue Agency (CRA) confirms what we’ve heard from Canadians and from CRA professionals as well: Canada’s Revenue Agency is more lenient in many ways with international and large businesses and taxpayers with offshore transactions than they are with individual Canadians.
The Auditor General’s report found that “the Agency requested information from these (individual) taxpayers more quickly, and gave less time to respond, than it did with other taxpayers, such as international and large businesses, and taxpayers with offshore transactions.”
It also found that, for individual Canadians, “the Agency did not proactively offer relief from interest and penalties—even when the Agency had caused the delays. … However, for small and medium-sized enterprises, international and large businesses, and taxpayers with offshore transactions, … the Agency required its auditors to consider offering relief without taxpayer requests.” The CRA has also been inconsistent in waiving of penalties and interest, often waiving these when audits (which were generally of businesses) were already underway.
These findings confirm what we’ve heard from many Canadians, including small businesses, who feel that the CRA has been overly heavy-handed with them, while not being aggressive enough to recover taxes owed by international and large businesses, and those with their money in tax havens.
Three years ago we published a report What is Wrong at the CRA and how to fix it that revealed through interviews with CRA staff that their ability to go after larger tax avoiders had been compromised by budget cuts, misplaced priorities, along with allegations of political interference. There’s also been little done to go after the facilitators of aggressive tax avoidance and tax evasion schemes, including large accounting firms.
Canadians for Tax Fairness has continually advocated for the CRA to crack down on large tax avoidance operations, larger corporations and the wealthy and to stop being so heavy handed with individuals, charities, and small businesses.
The Trudeau government has restored some of the funding that Harper cut, but CRA hasn’t shifted its focus nearly enough. A recent Environics survey of the entire professional staff at the CRA, sponsored by PIPSC found that 90% of respondents agreed that “It is easier for corporations and wealthy individuals to evade and/or avoid tax responsibilities than it is for average Canadians” – even more than the 80% of Canadians who agreed with this. Disturbingly, nearly half of CRA professional staff agreed that the “The ability of the CRA to carry out its mandate has been compromised by political interference.”
While the CRA is spending money on ads highlighting how it is addressing international tax evasion and aggressive tax avoidance, in reality this report from the Auditor General confirms that it continues to be overly lenient with the larger tax cheats and too heavy-handed with individuals. There urgently needs to be a significant shift of priorities and culture at the CRA.