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The Hon. Serge  Joyal, P.C., O.C., O.Q., B.A., LL.L., D.E.S., LL.M. Appointed to the Senate by the Rt. Honourable Jean Chrétien, Senator Serge Joyal represents the province of Quebec and the Senatorial Division of Kennebec. He has served in the Senate of Canada since November 26, 1997.

Letters to Gail: #2 in a series regarding her lack of action in dealing with overseas tax evasion

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Published by Senator Percy Downe on 20 April 2012

April 16, 2012


Honourable Gail Shea, P.C., M.P.
Minister of National Revenue
555 MacKenzie Avenue, 7th Floor
Ottawa ON  K1A 0L5

Dear Minister Shea:

I have a question regarding application of the Canada Revenue Agency's (CRA) Voluntary Disclosures Program (VDP).

Four years ago, the Government of Germany gave the Canadian Government a list containing the names of 106 Canadians with hidden bank accounts containing over $100 million in Liechtenstein. In 2009, the Government was asked in Parliament if any of the 106 had — or were eligible to — take advantage of the Voluntary Disclosures Program. The Government's response was:

The voluntary disclosures program, VDP, promotes compliance by encouraging taxpayers to voluntarily correct previous omissions in their dealings with the CRA. A requirement of the VDP is that taxpayers must make a full disclosure before the CRA commences any compliance action or investigation. If they do so, they may only have to pay the taxes owing, plus interest, but not face penalties or prosecution in the courts.

As compliance action has been commenced on all of the listed taxpayers, they are no longer eligible for consideration under the VDP.

The following year, however, the Government had changed its policy, with no explanation:

As of June 10, 2010, 20 residents of Canada who have accounts in Liechtenstein had availed themselves of the CRA's Voluntary Disclosures Program.

CRA's own definition of voluntary disclosures disqualifies circumstances where the taxpayer was aware of, or had knowledge of an audit, investigation, or other enforcement action set to be conducted by the CRA. The CRA has stated on the record that due to the fact that compliance action had been commenced on all of the 106 Canadians discovered to be hiding money in Liechtenstein, none of them were eligible for consideration under the VDP.

My questions are as follows:

1. How does the CRA reconcile these two contradictory statements, made to Parliament only a year apart?

2. Who lobbied the CRA, or you as minister, to change the policy, and would you please provide the list of those who lobbied?

3. Would the Government provide a copy of all documents and communications (including letters, e-mails, memoranda, etc.), related to this policy change?

4. How much of a financial benefit did the recipients of this policy change receive (i.e., reduced taxes and penalties)?

This is an issue that has caused Canadians to write to me expressing their concern and asking for an explanation, and I, in turn, am asking you.

Sincerely,
Original signed by
Percy E. Downe
Senator

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