Budget 2016 plans to increase resources so that tax laws are administered and enforced more effectively and proposes measures to improve the integrity of Canada’s tax system. Budget 2016 also contains other tax measures that will affect businesses and individuals.
Make the tax system fairer
In the interest of fairness for all taxpayers, it is important to prevent underground economic activity, tax evasion and aggressive tax planning. To this end, it is important to provide the Canada Revenue Agency (CRA) with sufficient resources so that it can administer and enforce tax laws effectively. It also requires measures, including legislative measures, to improve the integrity of Canada’s tax system – both internationally and domestically – to ensure it functions as expected. Budget 2016 proposes several measures that improve the fairness and integrity of the tax system. These measures will serve to support the objective of putting the economy at the service of all.
Improve compliance with tax rules
To ensure that all tax payers pay their fair share of taxes, Budget 2016 proposes a number of measures aimed at preventing tax evasion and improving compliance with tax rules.
Punish tax evasion and fight against tax avoidance
Tax evasion and aggressive tax avoidance by individuals and businesses results in a fiscal cost to governments and taxpayers, in addition to undermining the fairness and integrity of the tax system. Budget 2016 proposes to invest $444.4 million over five years to enable the CRA to do even more to crack down on tax evasion and combat tax avoidance through the following measures: hiring auditors and additional specialists, develop a solid business intelligence infrastructure, intensify audit activities and improve the quality of investigative work that targets cases of criminal tax evasion.
As the CRA has demonstrated its ability to meet expectations by carrying out targeted interventions to verify compliance with tax rules, Budget 2016 takes into account the expected impact of these measures on revenues, namely 2, $6 billion over five years. This amount does not include the gain that the provinces and territories will receive as a result of these initiatives which will increase tax revenues.
The CRA’s success in combating aggressive tax planning, the underground economy and tax evasion is undermined when the Agency does not collect anticipated revenues. Budget 2016 proposes to provide $351.6 million over five years to the CRA to increase its ability to collect unpaid tax debts. This proposed measure is expected to recover an additional $7.4 billion in tax debt over five years. This strategy will complement current efforts to encourage faster payment of overdue tax debts and to come to terms with people who cannot pay the full amount due.
In the interest of fairness for all taxpayers, it is important to prevent underground economic activity, tax evasion and aggressive tax planning. To achieve this, it is above all important that the CRA has sufficient resources to enforce tax laws effectively.
In recent years, the CRA has taken significant steps to detect, correct and deter non-compliance. In particular, it focused on high-risk segments of the population, strengthened strategic partnerships with key countries and organizations, developed business intelligence tools to optimally use all available tax data and strengthened risk assessment capacity.
Further investments to crack down on tax evasion and combat tax avoidance will increase the CRA’s ability to identify people who aggressively evade or avoid paying taxes, which will improve
To achieve this, the CRA will hire additional auditors and tax specialists, develop a more robust business intelligence infrastructure, increase audit activities and improve the quality of investigative work targeting cases of criminal tax evasion.
The CRA will increase its outreach work to ensure that taxpayers understand and comply with their tax obligations. Tax compliance will be improved by adopting the “do it right from the start” approach to educate, inform and assist taxpayers by improving service and encouraging voluntary compliance.
Canada’s tax system must continually be adjusted so that it functions as intended and contributes to the goal of an economy that works for all.
On the international stage, Canada is actively participating in concerted multilateral efforts aimed at combating “base erosion and profit shifting” (“BEPS” project ) and to increase transparency through the automatic exchange of financial account information between tax administrations. At the national level, the biggest challenge is preventing businesses and wealthy individuals from reaping unanticipated tax benefits through sophisticated tax planning techniques that involve private corporations or other mechanisms.
Budget 2016 proposes measures to improve the integrity of Canada’s tax system, both internationally and domestically, to protect the tax base and increase Canadians’ confidence in a system that is fair for all. In addition, these measures protect provincial revenues from common tax bases.