CRA keeping tax cheat data secret, breaking minister’s commitment

Canada’s tax authority refuses to say how often it has used international treaties and agreements to obtain information on tax cheats, despite a commitment by the national revenue minister to publish these statistics.

Canada has a world-leading 115 tax treaties and Tax Information Exchange Agreements (TIEAs). Since 2010, tax cheats and criminals have used these treaties to move money in and out of Canada to avoid paying taxes anywhere. But these agreements have language that should, in principle, allow the CRA to compel foreign nations — including some of the world’s most notorious tax havens — to provide information on Canadian tax cheats’ activities.

But the Canada Revenue Agency (CRA) has never said how often it has actually received information under these agreements and refused to release figures to the Star under access to information laws.

This data would be crucial to determine whether Canada’s international tax agreements have helped catch offshore tax evaders, as intended — or whether they have only made it easier for Canadians to spirit money offshore, out of the reach of the CRA.

National Revenue Minister Diane Lebouthillier committed to releasing the data after Parliament’s Standing Committee on Finance highlighted the issue last year.

“Recognizing that all exchanges with treaty partners are protected under treaty, Canada will seek opportunities to publish statistical information on the number of taxpayer exchanges with other jurisdictions involving risk assessment, simultaneous or joint audits, and criminal investigations,” Lebouthillier wrote in a response tabled in the House of Commons in February.

Despite this, the CRA last month refused the Star’s request to release how many times Canada had made or received requests for information under the agreements, and how many times those inquiries had met no response.

“We have enclosed a copy of the requested information,” read the CRA’s response. “When you review the documents, you will note that all of the information has been removed.”

The tax agency cited parts of the Access to Information Act that exempt disclosure of information obtained in confidence from a foreign government and information that “could reasonably be expected to be injurious to the conduct of international affairs.”

When the Star contacted Lebouthillier’s office to point out that she had committed to releasing the statistics, her spokesperson said she was unable to intervene.

“The minister’s office cannot interfere in the (access to information) process and give instruction to the agency on how to respond to a request,” ministerial spokesperson Cédrick Beauregard wrote in an email.

The Star’s reporting from the Panama Papers leak has exposed tax evasion schemes that exploit Canada’s network of treaties and TIEAs to make it appear as if taxes are being paid overseas — a technique called “treaty shopping.”

Earlier this month, Canada joined an international effort to end treaty shopping, which allows “corporate profits to ‘disappear’ or be artificially shifted to low or no tax environments,” said the OECD, which sponsored the initiative.

Treaty shopping “defeats the purpose of bilateral tax treaties and poses risks to the Canadian and international tax bases,” wrote the finance ministry in a briefing.

The OECD initiative doesn’t apply to Canada’s TIEAs, 22 agreements signed exclusively with tax havens that have had the unintended consequence of facilitating tax evasion.

Without the CRA statistics on their use, it’s impossible to determine whether TIEAs have helped catch any tax evaders.

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