Tax cheats whistleblower hotline up and running
OTTAWA — Ten months after it was first trumpeted in the budget, the Conservative government announced Wednesday its whistleblower hotline to crack down on tax cheats is finally operational.
A week after Postmedia News reported the Canada Revenue Agency’s international tax evasion snitch line was several months overdue, Revenue Minister Kerry-Lynne Findlay announced Wednesday the government has opened the tipster line for people with information on offshore tax evaders.
The whistleblower program — now dubbed the Offshore Tax Informant Program (OTIP) — will pay cash rewards to snitches with tips on international tax evasion.
The CRA will enter into a contract with tipsters and pay them between five and 15 per cent of the federal tax collected for quality information leading to tax assessments and collection of more than $100,000 in additional federal taxes.
The minister and CRA officials acknowledged, though, it could take “several years” for tipsters to receive their rewards, which will only be paid out after the debt is collected and “all recourse rights” have expired or been waived by the taxpayer.
“There’s always a difference between identifying money and actually collecting it,” Findlay told reporters Wednesday at a news conference in Vancouver. “None of this is quick.”
A toll-free secure number has been set up for tipsters to use anywhere in North America, while an Ottawa-based number can be accessed anywhere in the world.
Findlay said the program will be a “critical tool” for recovering taxpayer dollars that would otherwise be lost to tax cheats.
“Unpaid taxes, of course, mean less money for programs that all Canadians depend on, including health care, education and defence, just to name a few,” she added.
It’s not illegal to hold an offshore account as long as all the income is reported.
The Harper government initially announced the program in last March’s federal budget.
It was a key promise by the federal Conservatives to help crack down on the growing problem of international tax evasion, and came in the lead up to G8 and G20 summits last year that saw world leaders make new commitments to fight tax cheats.
However, the program has faced delays and opposition parties have labelled the government’s efforts on tax evasion as little more than window dressing.
“The fact that the minister is holding a press event to launch a phone number that was announced 10 months ago shows just how little progress this government is making in the fight against overseas
tax evasion,” said Liberal Sen. Percy Downe, one of the leading voices in Parliament on fighting international tax evasion.
Internal briefing notes prepared for Findlay, and obtained by Postmedia News under access to information legislation, show the Canada Revenue Agency had planned to launch the program by last September.
The minister and CRA officials wouldn’t say Wednesday how many calls they expect to receive or how much unreported tax they expect to collect. The CRA will document the program’s results in its annual report.
The tipster hotline, 1-855-345-9042, was opened Wednesday and is ready for calls.
Findlay said she’s confident the agency has the resources necessary to support the tipster line and potentially a large volume of calls, despite the CRA cutting $313 million annually and more than 3,100 full-time positions by 2017-18.
She maintained the CRA is not cutting auditors who work on international tax evasion, but seemed to acknowledge that the overall number of auditors across the agency is being reduced.
The whistleblower reward payments will be subject to income tax, so tipsters will still have to pay the CRA at the same time the tax collection agency pays them for their information.
Questions remain, though, around whether tipsters can remain anonymous throughout the process, or if they might have to appear in tax court. Findlay said it “depends on the circumstances.”
The rewards will only be paid if the tipster can show “major international tax non-compliance” such as undeclared Canadian taxable income that has been transferred outside Canada or undeclared foreign taxable income or property.
Individuals convicted of tax evasion in connection with the non-compliance will not be eligible to collect rewards.
In the United States, the Internal Revenue Service runs a similar program that pays whistleblowers rewards between 15 and 30 per cent of the taxes collected if it exceeds $2 million. The IRS also offers another program that pays a maximum 15 per cent reward on taxes collected in cases that don’t meet the $2 million threshold.
International and domestic tax evasion is a growing problem for Canada and countries around the world, stealing potentially tens of billions of dollars every year from federal government coffers.
Canadians for Tax Fairness, a domestic advocacy group, calculates that international tax havens alone are costing Canada potentially $7.8 billion annually.
Statistics Canada data show Canadians have stashed a staggering $170 billion in the top 12 global tax havens around the world, the group says.