Thanks to hundreds of calls to the Canada Revenue Agency’s new “snitch line,” officials now have as many as eighty leads on “taxpayers who may be hiding money offshore,” according to The Canadian Press.
The hotline was first established in mid-January 2015 to encourage tipsters to come forward in pursuit of billions of dollars hidden away in overseas accounts. It was first promised in the agency’s March 2013 budget as the OTIP (Offshore Tax Informant Program) line, but its development alone took about ten months.
The hotline offers an interesting cash reward system: when a tip leads to a tax collection for the agency, the caller may be rewarded up to fifteen-percent of the amount collected. Over 800 people called in a 4 ½-month span; of these, however, only 251 were from legitimate informants and only about 100 callers proceeded to the next step of the tipping process, which involves identifying oneself and explaining the alleged tax invasion involving hidden overseas finances. Identification is required for this new line, unlike the CRA’s “domestic” snitch line, which offers no rewards and focuses primarily on domestic tax affairs.
Additionally, twenty calls were dismissed as “dead-ends,” and the agency intends to pursue the rest.
Jonathan Garbutt, a Toronto-based tax lawyer, was at first critical of how the hotline was established, but has changed his outlook in the time since. “I’ve been surprised, pleasantly surprised,” he said. “I’m not … as pessimistic as I was.” He added that he is still being consulted by more potential tipsters, and two confirmed tipsters have even become his clients.
Sen. Percy Downe welcomed the program, despite long being critical of the CRA’s pursuits of offshore money, but with two important assertions: that the reward levels should be higher to match those in the U.S. – which can go as high as thirty-percent, double the CRA’s supposed upper limit – and whether large-scale job cuts within the agency, over 2,500 in recent years, will hinder its efforts to pursue leads. “The department fails to put the resources into fighting overseas tax evasion,” he said, “and this is another example of it – rather than doing thirty-percent (leads) they’re doing fifteen-percent.”
The snitch program’s annual budget totals around $700,000, though no rewards have yet been paid. “It may take several years from the date of entering into a contract with the CRA until the additional federal tax is assessed,” according to Philippe Brideau, an agency spokesman. Despite this, the agency remains optimistic that the program holds great potential.
“The CRA believes this is a good start to the program,” he said. “The early call and submission statistics indicate that there is interest on the part of informants to participate in this program.”
is a Canadian and US CPA working with clients throughout Canada and the US. Phil advises on cross border tax and financial planning matters. Phil can be reached at email@example.com
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