Principal Issues: General comments regarding the audit of high net worth individuals
Position: CPB provided general comments
STEP CRA Roundtable – June 2012
QUESTION 12
Could the CRA comment on its progress to date with respect to its audit focus on high net worth individuals?
CRA Response
The background to our program to examine compliance by high net worth individuals (HNWI) was introduced in question #13 of the 2011 STEP Conference CRA Roundtable. We refer to this program as the Related Party Initiative (RPI) and as indicated last year the population under review includes:
- Individuals who together with related economic entities have a net worth of about $50 million or more.
- The number of entities in the group is approximately 30 or more.
- The entities in the group are not already included in the CRA’s Large Files program.
The RPI is ongoing with a number of audits throughout Canada at various stages of completion. We continue to develop the RPI, as follows:
- We are improving our ability to identify taxpayers who meet the criteria for this program as we build on our understanding of HNWI.
- We have enhanced our risk assessment of RPI groups by assigning this function to a specialized team of auditors and monitoring developments within the HNWI population.
- Our questionnaire referenced in last year’s question has been updated to be more relevant to the CRA while easing the burden on tax professionals, HNWI advisors and the HNWI by ensuring that there is no duplication of information provided.
- We are exploring ways of communicating effectively with HNWI to promote cooperative compliance for the benefit of all parties involved.
In addition, the CRA maintains a strong presence within the Organisation for Economic Co-operation and Development (OECD). Like many countries, Canada has serious concerns with respect to HNWIs. Commissioners of revenue authorities, through the work of the OECD Forum on Tax Administration (FTA), are giving particular attention to how tax administrations can cooperate more closely on identifying and addressing the HNWI population. Through our work with the FTA, the CRA has collaborated in increasing international cooperation. The overall aim of the network is to examine measures taken by tax administrations in the area of HNWIs and the extent to which tax administrations implement the recommendations given by the OECD studies and reports, new tendencies and strategies put in place to deal with HNWIs and combat aggressive tax planning. This participation provides global insights to improve our administration of this segment of the population.
Kim Duval (for CPB, Stephanie Henderson)
2012-044299