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Paradise Papers audits show CRA cracking down on offshore tax evasion

Reports that the Canada Revenue Agency (CRA) is auditing a number of taxpayers named in the Paradise Papers tax leak confirm just how serious the taxman is about cracking down on offshore tax evasion, Canadian tax lawyer David J. Rotfleisch tells AdvocateDaily.com.

As the Toronto Star reports, documents tabled in Parliament confirm that the CRA is currently auditing approximately 100 taxpayers named in the Paradise Papers offshore tax leak, out of 3,000 people or corporations it identified that have “links” to the database. A 2017 media investigation revealed that 3,300 Canadians were named in the database, the article notes.

As yet, the CRA says no taxpayers named in the database have been referred for criminal prosecution for tax evasion and the agency has not collected any penalties or taxes owing, noting in the documents that: “Audits and criminal investigations such as those linked to the Paradise Papers are complex and, due to those complexities, can require months or years to complete.”

The CRA told Parliament that it has assigned 25 employees to work on Paradise Papers issues, the Star says.

Rotfleisch, founding tax lawyer with Rotfleisch & Samulovitch Professional Corporation, says 100 ongoing audits based on a release of 3,000 names “shows that the CRA is aggressively pursuing the taxpayers revealed in the Paradise Papers leak.” 

The CRA, he adds, has also launched 1,000 audits related to offshore financial structures in general.

Audits are necessarily a detailed and involved process and would take time. Taxpayers are certainly going to be fully represented by Canadian tax lawyers,” says Rotfleisch.

“This shows that the CRA and the government are serious about cracking down on offshore tax evasion," he adds. 

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