The Canada Revenue Agency (CRA) announced today the prescribed annual interest rates that will apply to any amounts owed to the CRA and to any amounts owed by the CRA to individuals and corporations. These rates will be in effect from July 1, 2017, to September 30, 2017.

There have been no changes to the prescribed interest rates since last quarter, except for the interest rate for corporate taxpayers’ pertinent loans or indebtedness.

Income tax

• The interest rate charged on overdue taxes, Canada Pension Plan contributions, and employment insurance premiums will be 5%.
• The interest rate to be paid on corporate taxpayer overpayments will be 1%.
• The interest rate to be paid on non-corporate taxpayer overpayments will be 3%.
• The interest rate used to calculate taxable benefits for employees and shareholders from interest‑free and low-interest loans will be 1%.
• Change: The interest rate for corporate taxpayers’ pertinent loans or indebtedness will be 4.55%.

The Government of Canada is working to improve the tax system for all Canadians by ensuring that everyone pays their fair share. Taking action against tax loopholes is a way to instill confidence in Canada’s tax system and drive economic growth for the middle class.

The Parliamentary Secretary to the Minister of Finance, Ginette Petitpas Taylor, joined representatives from a large number of other jurisdictions today in signing the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.

The Multilateral Convention will modify many of Canada’s current tax treaties in order to implement the tax treaty-related measures developed by the joint Organisation for Economic Co-operation and Development (OECD) and G20 project to counter base erosion and profit shifting (BEPS).

This is the culmination of several years of collaborative work by OECD and G20 countries to combat international tax avoidance.

BEPS refers to aggressive tax planning arrangements undertaken by multinational enterprises which, though legal, exploit the interaction between domestic and international tax rules to inappropriately reduce their taxes. For example, some enterprises will shift their taxable profits away from the jurisdiction where the underlying economic activity has taken place in order to avoid paying their fair share.

The signature of the Multilateral Convention supports the Government of Canada’s commitment in Budgets 2016 and 2017 to enhance tax fairness and combat international tax avoidance. It is also consistent with commitments made by Canada and other OECD and G20 members to implement tax treaty-related BEPS measures, recognizing that widespread and consistent implementation of these measures is critical to the effectiveness of the BEPS project.

The Parliamentary Secretary will conclude her trip tomorrow by attending the OECD Ministerial Council Meeting.

The Canada Revenue Agency (CRA) confirmed Monday that it will not seek leave to appeal to the Supreme Court of Canada the decision of the Federal Court of Appeal that granted BP Canada Energy Company’s (BP Canada) appeal of an order to release certain records to the CRA.

The CRA believes the ability to obtain all information required to administer and apply Canadian tax laws is central to the integrity of the tax regime, transparency and voluntary compliance. The Government remains firmly engaged in its commitment to obtaining all the information required to administer and apply Canadian tax laws.

The CRA considers the facts and circumstances unique to this case. Rather than appealing the Federal Court of Appeal’s decision, the CRA is addressing the issue on a broader scale by undertaking to update its audit procedures to clarify when and why information is to be requested from taxpayers. This will give the CRA better, and more clear procedures to access information. The CRA has also struck an interdepartmental Access Working Group mandated to support CRA’s ability to request information and to coordinate related litigation.

The Access Working Group will focus its attention on CRA information requirements, including information required as part of a taxpayer’s routine tax filing, as well as information sought by the CRA in activities related to the administration and enforcement of the legislation such as risk assessment, compliance reviews and collections. These efforts will bring greater focus to how the CRA seeks information and national coordination of related litigation.

In recent years, the CRA has taken significant action to detect, correct and deter non-compliance, but more can be done to find those who aggressively avoid or evade tax. In its last two Budgets, the Government of Canada has invested close to $1 billion to enhance the CRA’s continued efforts to crack down on tax evasion and combat tax avoidance and the government is on pace to raise assessments of over $13 billion this year.

Audits are one of the key tools to identify and deter non-compliance, and to conduct effective audits, the CRA needs to assess information from taxpayers. Getting the right information is critical to a review or audit that is fair and effective. CRA auditors only ask for information when appropriate, given the facts and circumstances of individual cases.