The Canadian Revenue Agency (CRA) has made it clear that they plan to get much better at collecting outstanding tax debts over the next 5 years, which means Canadians who aren’t current or compliant with their tax payments need to be on notice. But with that said, what can we actually expect from the Liberal Government over the next 5 years as it relates to tax debt? Well, here’s what I can tell you:
According to Budget 2016, which can be viewed here, the Government “is committed to preventing underground economic activity, tax evasion and aggressive tax planning. Budget 2016 provides increased resources to ensure more effective administration and enforcement of tax laws, and proposes actions to improve the integrity of Canada’s tax system.” So, just how serious is the Government? Well, consider this: over the next five years Budget 2016 proposes to invest $444.4 million so the CRA can enhance its efforts and crack down on tax evasion, the result of which is expected to be revenue in the amount of $2.6 billion. That’s right, $444.4 million of investment to crack down on tax evasion and tax avoidance, which is expected to collect $2.6 billion.
Further, Budget 2016 proposed to invest $351.6 million over five years to improve tax collection procedures for outstanding debts, a proposal that will invest in more auditors, tax specialists, business intelligence infrastructure, and outreach programs so tax payers understand and can meet their obligations. This investment is expected to net and additional $7.4 billion over the length of the plan.
Finally, the integrity of Canada’s tax system represents another priority, both domestically and internationally. The system will see “ongoing changes and adjustments to ensure that it is functioning as intended and contributing to an economy that works for everyone.” In everyday terms, this means that the tax advantages available through fancy tax planning will be looked at very carefully with a much greater level of diligence than ever before.
The Canadian Government has laid out its plan: collect more taxes and make the system a fairer one for all Canadians. The investment in these initiatives is massive, and the return, as highlighted above, is expected to be in the tens of billions of dollars. So, when we ask ourselves how committed the government is to making this new tax reality come to life, we only need to look towards their anticipated return on investment to get our answer: there are billions of reasons why the CRA means business, so this effort is unlikely to go away any time soon.
This new reality means that a lot more Canadians are going to be getting unexpected audits and tax bills in the years to come, and it is with this in mind that I encourage you to reach out to your accountant, tax lawyer or our company for advice on how to handle these situations. In many cases, by the time people come to my office their debt is already too high and insolvency is often inevitable. However, with some guidance and advice I may be able to assist you or your clients, so click here to set up a call or meeting and let’s chat.