In the wake of the release of the Panama Papers, the Canadian government has pledged to crack down on tax evasion. It plans to begin with an investigation of accounts on the Isle of Man.

Panama Papers

The Panama Papers revealed that thousands of people, including a number of politicians and public officials, from all over the world have been hiding their money offshore. On April 11, Minister of National Revenue Diane Lebouthillier announced that the government plans to spend $444 million to improve the Canada Revenue Agency’s (CRA) ability to detect, audit, and prosecute tax evasion.

International funds transfers

The CRA has been collecting information on all international funds transfers over $10,000 since the beginning of last year. A message posted to the CRA web site points out that the most recent budget gave the agency powers to "more fully examine potential tax evasion across an entire jurisdiction" and indicated that the Isle of Man will be the first area it examines.

Why begin with the Isle of Man? Lebouthillier says that electronic funds transfers to the island came to $860 million over a twelve-month-period, and that the CRA has identified 3000 transfers involving approximately 800 Canadian taxpayers. Examinations of other jurisdictions will follow, she warned.

Tax schemes for the wealthy

What's more, the CRA is launching a special program to stop the organizations that create and promote tax schemes for the wealthy. The agency expects this to result in a twelve-fold increase in the number of tax schemes it examines, and says that the new team will refer cases for criminal investigation where appropriate.