The 2013 CRA budget announces the CRA’s initiative to encourage Canadians to provide relevant information identifying tax evasion especially for international tax evasion. The latest changes in the `Stop International Tax Evasion Canada Program will enable the CRA to reward those individuals who have knowledge of major cases in tax non-compliance on an international level. The incentive will be as much as fifteen per cent of the income tax amount collected on account of the information that has been provided. As per the Statistics Canada Bureau, the Canadian funds in the biggest tax havens in the world have gone up to a record one hundred and seventy billion dollars.
The fifteen per cent rewards in the tax evasion Canada Program are going to apply only to those tax assessments or the reassessments on the international transactions which are over one hundred thousand dollars. So far, the federal government has been able to convict only around forty people with offshore tax cheating through the tax evasion Canada Program since the past eight years and the total amount of fines that have been levied are about seven million dollars in taxes that had been evaded.
The new changes in the tax evasion Canada program system are going to bring Canada in line with other important countries like the United States of America, Germany and the United Kingdom. The new kind of reporting criteria is going to require the banks, the co-operative societies and the credit unions along with the loan and trust companies to report to the CRA. The reporting will include all incoming or outgoing electronic fund transfers of ten thousand dollars and above. These standards will be the same as set by FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada.
Presently, individuals, corporations and trusts who are owning foreign investment properties costing more than one hundred thousand dollars have to file a Form T1135. The CRA does not have the power to reassess these people for additional tax after the normal assessment period. The relevance of the voluntary disclosure program has been increased. It will allow the taxpayers to come forward proactively to disclose any non-compliance in the past, resulting in penalties getting waived. The interest which is assessed on the tax will get reduced. The potential criminal prosecution for tax evasion Canada also gets waived.
It has to be remembered that the tax evasion Canada prosecution is a criminal one. This kind of case is prosecuted under Section 239 of the Income Tax Act. There are a couple of ways that this kind of prosecution can proceed. One is by means of a summary conviction that carries a potential penalty of a fine which is not less than fifty per cent and not more than two hundred per cent of the tax amount that was evaded. Imprisonment can also be charged for a term not exceeding two years. The second kind of prosecution is by indictment that carries a penalty of not less than one hundred per cent and not more than two hundred per cent of the tax amount which was evaded with imprisonment not exceeding a period of five years.