Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
MINISTER/DM'S OFFICE 96-04410M ADM'S OFFICE RETURN TO RULINGS, 15TH FLOOR, 25 NICHOLAS ST. PENDING
September 12, 1996
XXXXXXXXXX
Dear XXXXXXXXXX:
Thank you for your letter of May 14, 1996, concerning the Auditor General's report and the income tax treatment of two family trusts. A copy of your letter was sent to this department by XXXXXXXXXX on May 27, 1996.
The suggestion in the article that large corporations have avoided as much as $60 billion in income taxes results from a misunderstanding of a study done by Revenue Canada on information received on a specific information return, called the corporate information return of non-arm's length transactions with non-resident persons, form T106. This form is not part of a corporation's T2 income tax return. The $60 billion is an estimate of international transactions that were underreported on form T106 in 1991. It is important to note that the $60 billion does not represent income which was not reported on corporate T2 income tax returns or an amount of lost income tax revenue.
The role of Revenue Canada is to administer and enforce the Income Tax Act as passed by Parliament, while the Department of Finance is responsible for tax policy and any proposed changes to the Act. I can assure you that Revenue Canada treats all taxpayers in accordance with the law and the specific cases referred to in the
Auditor General's report did not contravene any provisions of the Act. Nevertheless, the tax policy issues raised in that report have been referred to the House of Commons Standing Committee on Finance. Following this committee's review, the Government will take action as required.
I wish to thank you for expressing your concerns on these matters.
Yours sincerely,
Pierre Gravelle, Q.C.
Catherine Bowen
957-8585
July 3, 1996
962204