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19 April 2019
In Budget 2019 the federal government continues to bolster its tools and resources to detect and prosecute tax evasion. These proposals are relevant both to:
The budget states that the government is "cracking down on tax evasion and aggressive tax avoidance". It will do this through significant investments, which will:
strengthen the Canada Revenue Agency's (CRA's) ability to unravel complex tax schemes, increase collaboration with international partners, and ultimately bring offenders to justice.
As such, several measures have been proposed:
across intelligence and law enforcement agencies to strengthen inter-agency coordination and cooperation and identify and address significant money laundering and financial crime threats.
Some of these proposals engage significant privacy concerns. For example, opening the tap on the flow of information between Canadian and international agencies will certainly make it easier for tax evasion to be audited, investigated and prosecuted. However, this is not the test for constitutionally justifying a loss of privacy.
Some budget proposals never come to be. However, there can be no doubt that the government's focus on tax compliance continues to intensify and that standards have changed when it comes to what files might be audited, investigated or prosecuted. For some taxpayers, this might mean that careful consideration must be given to whether a voluntary disclosure should be made to the CRA for past misstatements or omissions in tax filings. With increased resources, information sharing and cooperation between tax and law enforcement agencies within Canada and internationally, the risk of detection will increase.
For tax professionals representing clients in high-risk audits, it is imperative to understand how:
Finally, for tax professionals themselves, increased vigilance is needed to ensure that a client's wishes do not result in the professional becoming:
More so than ever, tax professionals should be well acquainted with the definitions of 'tax evasion', 'proceeds of crime', 'money laundering', 'aiding', 'abetting', 'conspiring', 'wilful blindness' and now 'recklessness' to ensure that the services and advice that they offer to their clients cannot be construed as the commission or facilitation of a criminal offence.
For further information please contact Greg DelBigio or Jennifer Flood at Thorsteinssons LLP by telephone (+1 604 689 1261) or email (firstname.lastname@example.org or email@example.com). The Thorsteinssons LLP website can be accessed at www.thor.ca.
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