As part of its recent efforts to step up the fight against international tax evasion, the federal government announced the launch of new reporting requirements for financial firms.
Under the new requirements, financial firms now have to report incoming and outgoing international electronic fund transfers of $10,000 or more to the Canada Revenue Agency (CRA). The government says that this reporting is designed to help the CRA identify taxpayers that may be engaging in aggressive international tax avoidance, and attempting to conceal income and assets offshore.
The new CRA reporting requirements are the same as the reports required to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), which targets money laundering. They apply to financial firms such as banks, credits unions, and other deposit-taking institutions; money service businesses; and, casinos.
“Through this initiative, financial intermediaries will play an important role in helping the CRA to detect offshore transactions that are potentially associated with tax evasion and aggressive tax avoidance,” it says.
“These new tools will combat offshore tax non-compliance and improve the integrity of the tax system,” said Kerry-Lynne Findlay, Minister of National Revenue.
The government says that in the wake of its recent efforts to increase tax compliance, the CRA “has seen a dramatic increase” in the use of its Voluntary Disclosure Program (VDP). And, it says that VDP disclosures involving offshore issues reached a record level in 2013-2014, up almost 42% from the previous year. As a result, it reports that the CRA has identified more than $300 million in unreported income.