On April 11, 2016, the Honourable Diane Lebouthillier, Minister of National Revenue, outlined measures that the government will implement to combat what it perceives as “aggressive” tax avoidance – strategies that adhere to Canada’s tax laws but may contravene its intention – and tax evasion.
This announcement is consistent with the international trend for public authorities to blur the line when discussing tax evasion, which is a criminal offence, and international tax planning, which taxpayers are allowed to do and, in most cases, must do to carry on business or investment across international borders. As part of this trend, many transactions that tax authorities now label as “aggressive” used to be common transactions sanctioned by tax authorities.
In this climate, where some formerly prudent tax planning transactions are now labelled as aggressive, and grouped together with the criminal offense of tax evasion, taxpayers are encouraged to take a second look at their tax affairs and ensure they are aware of potential tax risks, ready for an audit and that any errors are disclosed proactively.
Read this Tax Insights for more information.