Finally CRA Obeys the Law

  • National Newswatch

Since 2012, the Parliamentary Budget Officer (PBO) has been trying to fulfil my request to measure the tax gap, the difference between what is owed in taxes and what has actually been collected, but has been stonewalled by the Canada Revenue Agency (CRA) and its refusal to release the required statistical data. Therefore, the announcement that the CRA has finally provided that information is welcome, if belated, news. It is disappointing, however, that it took so long and only happened because the PBO threatened to take CRA to court.

The PBO now has what he needs to conduct his study, however for years, the CRA ignored that obligation. The Parliament of Canada Act, the legislation establishing the Parliamentary Budget Office, clearly states that the PBO is entitled to “free and timely access to any financial or economic data in the possession of the department that are required for the performance of his or her mandate”.

That said, why should the PBO produce an estimate of the tax gap at all, when the CRA has committed to conducting its own study, and has released three reports on the subject since 2016? The reason an independent analysis is required, separate and apart from any report prepared by the CRA, is quite simple: the Agency has been repeatedly caught trying to mislead Canadians. The result is the lack of credibility facing any sort of CRA-produced tax gap report. Regrettably, Canadians can no longer trust their revenue agency.

Below are just a few examples over the last years, from a very long list, of the CRA misleading Canadians:


The Claim: The Auditor General's recent report on the CRA's call centres cited the Agency's claim that 90 per cent of calls were successfully connected (to an agent or the automated help line).

The Reality: According to that same Auditor General Report, however, it was revealed that the CRA achieved this high success rate by blocking 28.9 million of the 53.5 million calls received and excluding these blocked calls from their calculations. When blocked calls and other factors were considered, “the Agency's overall success rate was 36 percent.”


The Claim: Historically, 80% of applications for the benefit by Canadians with diabetes were approved by the CRA. However in recent months, almost all previously approved claims have been rejected. Meanwhile, the revenue agency publicly claimed that there has been no change to the eligibility criteria.

The Reality: Documents obtained by Diabetes Canada show a CRA email dated May 2nd 2017 modifying the “variable for (Life Sustaining Therapy) clarification verses with a new variable.” In effect, diabetics who previously qualified for the disability tax credit were disallowed.

When confronted with the evidence of their misleading statement, CRA backed down.


The Claim: A CRA statement dated November 3rd 2017 claimed that “The Agency has a full-time dedicated unit focused on offshore non-compliance”, leaving the impression that this unit was new and represented an additional resource to combat overseas tax evasion.

The Reality: In response to a Written Question in the Senate, it was revealed that the “International, Large Business and Investigations Branch” was merely formed by reorganizing existing CRA assets, and specifically “did not necessitate an increase or transfer of resources”. In other words, people already working for the Agency were simply shuffled to a different part of the Agency.


The Claim: In February and March of 2017, articles appeared in newspapers and online across Canada extolling the work of the CRA. Bearing titles like “Federal programs in place to address offshore tax avoidance and evasion” and “How Canada is cracking down on offshore tax evasion and aggressive tax avoidance”, it was likely the best press the Agency had ever received.

The Reality: It was subsequently revealed that CRA—operating under the premise that if you can't earn good press, buy it—paid almost $300,000 for this positive “sponsored content” in six print and digital newspapers across Canada.


The Claim: A number of individuals, from CRA spokespersons to the Revenue Minister herself, have spoken of the “billion dollars” that has been invested in the fight against tax evasion, implying that this money was already at work.

The Reality: The billion dollars is the amount the government has promised to spend over six years finishing in 2022. As of the end of the 2016-2017 fiscal year, less than $40 million of that $1 billion had actually been spent.

To this litany of exaggeration, misinformation and outright falsehood, can be added the fake tough talk that comes from the Agency every time there is a public leak of information from some Bank or law firm operating in a tax haven. Nevertheless, the fact remains that for two leaks we know the most about—Liechtenstein, where 106 Canadian-held accounts contained more than $100 million, and Switzerland, where 1,785 Canadian accounts held a minimum of $500,000 each, with millions of dollars in taxes owing—not one person has been charged with overseas tax evasion, much less convicted, fined or sentenced. The recent report of raids related to the Panama Papers is as much reflective of a need to be seen to be doing something, at long last, as a new emphasis on fighting overseas tax evasion.

Clearly, the Canada Revenue Agency cannot be trusted to produce an accurate and unbiased estimate of the tax gap, and Canadians are owed an independent analysis of the scale of uncollected taxes in our country. When the CRA fails to do its job and collect those taxes, the rest of us have to make up the shortfall. Canadians deserve an honest assessment of the extent of that problem. The only way to get one is through the work of the Parliamentary Budget Officer, and the fact that the CRA has finally agreed to cooperate with him means that, after six long years of delays and a threat of court action, that work can finally begin.

Charlottetown Senator Percy Downe has also tabled a Bill in the Senate requiring CRA to cooperate with the PBO in its independent study of the tax gap, and to report on all convictions for tax evasion, including a separate report listing all convictions for overseas tax evasion.