Fairness for All Canadian Taxpayers Act (measuring the tax gap to fight international tax evasion)

Summary#

Bill S-217, An Act to amend the Canada Revenue Agency Act (reporting on unpaid income tax), would amend the Canada Revenue Agency Act. Its alternate title states a goal of measuring the tax gap to fight international tax evasion. The supplied material describes proposed changes; it does not establish whether or when they would take effect.

• The Canada Revenue Agency would have to include a detailed list of all tax-evasion convictions in its annual report, with a separate list for international tax-evasion convictions.
• The Minister of National Revenue would have to collect, compile, analyze and summarize tax-gap statistics for individuals, corporations (by size) and trusts resident in Canada.
• Every three years, the annual report would have to include those statistics. The first report would be due in the year three years after the requirement takes effect, and cover a fiscal year ending three years before that report is submitted.
• The bill defines the tax gap as taxes that should have been assessed on undeclared income, plus the difference between taxes assessed and taxes collected. The calculation must use estimates of audit reassessments, possible collection of added revenue, undetected incorrect returns and uncollected tax linked to failures to report specified foreign property.
• The Minister would have to give the Parliamentary Budget Officer (PBO) the tax-gap data and any additional data the PBO considers relevant to further analysis.

What it means for you#

• Taxpayers: The bill would not change tax rates, tax liability, filing duties or penalties in the supplied text.
• People convicted of tax evasion: Their convictions would be included in the annual report’s list. The bill does not specify what details the list must contain.
• The Minister of National Revenue: Would have to produce tax-gap statistics for the named taxpayer categories and provide data to the PBO.
• The PBO: Could request additional relevant data for further analysis. The bill applies specified provisions of the Parliament of Canada Act to that data, with necessary modifications.
• The Canada Revenue Agency: Would have to add the conviction lists to its annual report.

Money#

No cost estimate or funding amount is provided in the supplied material.

• The proposed duties would require work to prepare the conviction lists and tax-gap statistics, and to provide data to the PBO; the material does not estimate the staffing or cost.
• The bill does not propose a tax, fee, fine, benefit or appropriation.

What is unclear#

• The Canada Revenue Agency Act is not supplied, so the current reporting rules and how these changes compare with them could not be verified.
• The bill does not define what makes a conviction “international” tax evasion or specify what information a “detailed” list must contain.
• It does not set out the methods, assumptions or level of detail for estimating the tax gap beyond the listed factors.
• The start date depends on when the relevant provision comes into force; the supplied text gives no commencement date.
• The bill refers to safeguards in the Parliament of Canada Act, but that Act’s text is not supplied, so the safeguards for data shared with the PBO could not be checked.

Case for#

• More regular statistics could give Parliament and the public information about unpaid taxes, including both undeclared income and assessed taxes that were not collected.
• Reporting convictions could make the Agency’s annual report more informative about tax-evasion cases.
• Breaking statistics down by taxpayer category, including corporation size, could help show where the measured tax gap occurs.
• Giving the PBO tax-gap data and relevant additional data could support further independent analysis.

Case against#

• The bill does not set out a detailed method for calculating the tax gap, so the meaning and comparability of the figures may be unclear.
• The reporting schedule builds in a delay: the annual report would cover a fiscal year ending three years before the report is submitted.
• The PBO could seek additional data it considers relevant, but the bill does not specify the scope of such requests in the supplied text.
• The bill requires added reporting and analysis but provides no cost estimate or detail on staffing.