I was on an airplane last week in order to escape from the interminable Vancouver rain. As I contemplated the warmer and drier climate that would receive me, I also used the flight as a chance to catch up on daily news. As the plane turned to head out over the Pacific and as I began to put work behind me, my attention was captured by an article discussing possible new measures that Canada might adopt to fight against tax evasion.
According to the article, it is potentially tens of billions of tax dollars of government revenue that are lost due to tax evasion. The article also reported that the current federal government has been criticized for being “soft on off-shore tax cheats”, the government has been subject to international pressure “to do more” and the “Harper government is taking notice”.
Recently, one senator has suggested that CRA receive more funding so that it can more effectively investigate tax evasion. However, the House of Commons finance committee has also suggested that the government should “better equip” CRA to investigate and prosecute cases of tax evasion. According to the article, this latter suggestion has been well received by the government.
More funding would potentially increase the bench strength of CRA and this cannot be objectionable. The article did not specify what was meant by better equipping CRA. However, if this were to mean additional or enhanced tools of investigation, this is potentially of interest and concern from a legal perspective.
There can be no doubt it is fully within the prerogative of government to choose to place new focus upon the investigation of tax evasion. It is also within the prerogative of government to consider whether the tools of investigation that are currently available to CRA are adequate. However, should the government decide to grant new powers or tools to CRA, that decision is limited by and must conform with the principles and standards as defined by the Charter of Rights. The Charter places limits upon the techniques that are available to the government to investigate criminal activity. It is no different that the crime might be tax evasion.
For every tax evasion prosecution that is mounted, the investigation underlying the prosecution must be scrutinized to ensure that it was lawful and in conformity with Charter standards. We will continue to do this on behalf of our clients.
As we also do, we will continue to monitor the government’s tax related initiatives. And should the government announce “better equipment” for CRA we will be certain to study and analyze that initiative to ensure that the limits of CRA’s tools of investigation are understood and our client’s interests are fully protected.