The changes proposed by the Canada Revenue Agency (CRA) to the Voluntary Disclosures Program (VDP) have been described as an improvement, but no where close to what is needed to reduce tax evasion, according to The National Union of Public and General Employees (NUPGE) – one of Canada’s largest labour organizations.
VDP, as we all know, gives Canadian taxpayers who made mistakes or hid income on their taxes the opportunity to voluntarily come forward to the CRA and declare or correct the mistakes without fear of prosecution, and gross negligence penalties.
Some, however, feel the VDP has been overly generous in cases such as the deal offered to clients of the KPMG Isle of Man tax scheme. The same people also believe that the CRA’s VDP has failed to differentiate between those who simply made errors in their tax return and “wealthy individuals” who wilfully evaded taxes using offshore tax havens.
While it can be very difficult to distinguish between someone who willfully evades taxes from someone who tried to but got caught, it is quite clear regarding the use of tax havens because either you report your offshore income (legal) or you don’t (illegal).
The union strongly believes that those caught “using a tax haven should be treated more severely than innocent mistakes.”
The Minister suggested that releasing the names of the participants and their advisors should be required although the CRA has always kept track of both scenarios once the disclosure has been approved. Where a taxpayer received assistance from an advisor in respect of a VDP application, the name of that advisor should generally be included in the application.
The union expressed concern that the proposed changes fail to restrict access to voluntary disclosure in cases where leaks about tax havens are likely to provide the government with lists of Canadian account holders. They feel that at that point, “it should be too late for wealthy individuals to take advantage of the VDP if they are already likely to be exposed.”
While I do agree the government should look at how they treat those who have not filed differently than those who store money offshore in hopes of evading the paying of taxes, I do not agree that in each and every case it is the “rich” or “wealthy” who are doing it.
In fact, I have encountered many Canadians of all races, religions and levels of income who have stuffed away money overseas and they range from being super-wealthy, to single parents on OAS or pension income who can barely make their rent. It’s not just a “wealthy” issue.
Sure, it doesn’t read as well if its not an attack on the “rich” and yes, there are some who have complained that nowadays it is the unionized worker who is the “rich” in Canada, which is why I prefer to not paint everyone with the same brush, and group by filers and non-filers.
Under the program, any use of a tax haven scheme should mean less relief than for other forms of non-compliance, which makes a lot of sense.
For the union, they believe that; “the majority of Canadians feel that there are two tax systems, one for the rich and one for the rest of us. It is very important for the government to get this right.”
NUPGE: Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good.
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