2015-0572181C6 2015 STEP - Q16 - Offshore Tax Informant Program

Principal Issues: Overview of the Offshore Tax Informant Program.

Position: Response provided by CPB - General comments provided

Reasons: See below.

Author: Bogdan, John
Section: -

STEP CRA Roundtable - June 18 2015
Question 16. Offshore Tax Informant Program

The Government of Canada introduced a number of measures in the 2013 Federal Budget to strengthen the CRA’s ability to address international tax evasion and aggressive tax avoidance, including a paid informant program.  Can the CRA give a brief overview of the Offshore Tax Informant Program, as well as provide other information that may be of interest to our members regarding the new program? 

CRA Response

Under the OTIP, the CRA is able to pay individuals who provide specific and credible details about major international tax non-compliance that leads to the assessment and collection of additional federal taxes. If this information helps the CRA to assess and collect more than $100,000 of additional federal taxes, the reward will be between 5% and 15% of the federal tax collected, excluding interest and penalties. Upon receiving a written submission from an informant, the program considers its eligibility for the program. If the informant and the submission appear to qualify for the program, the CRA will enter into a contract with the informant.

The payment process only begins once more than $100,000 of the associated additional federal tax (not including interest or penalties) is collected and after all the taxpayer’s recourse rights have expired. This may take several years. As you may be aware, the reward is taxable in the year it is received. The CRA will withhold the applicable taxes upon payment.

In terms of what we are seeing in the submissions we have received so far, they are generally received directly from individual informants, though some are from their legal representatives, and most submissions are about individual taxpayers. The types of alleged international non-compliance issues and related mechanisms, as well as the countries and financial institutions have been diverse. We are seeing submissions that reflect the type of international non-compliance that the program was designed to identify.

Since the program’s launch on January 15, 2014 through to March 31, 2015, the OTIP has received over 1,900 calls, 522 of which have been from potential informants, and 201 written submissions. Over 100 cases are being reviewed by the OTIP to determine program eligibility. Cases that do not qualify under the OTIP have been closed and where appropriate referred to other areas within the CRA for possible compliance action. The program is currently engaged in the contracting phase with several informants.

2015-057218
John Bogdan (for CPB)

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