The CRA, which is the Canada Revenue Agency, considers tax avoidance as any form of abusive tax planning. This happens when someone undertakes transactions which breach specific anti-avoidance provisions. An individual may also refer to when an individual eliminates taxes through transactions which comply with the letter of the law, but actually encroaches upon the actual intent of the law.
Tax avoidance is different from tax evasion in that the prior occurs when an individual tries to take actions to minimize tax, while the latter refers to the intent disregard for a specific part of the law or willingly refusing to comply with legislated reporting requirements. There is the consequence of criminal prosecution for tax evasion, but not for tax avoidance.
So if there are no criminal consequences for tax avoidance, what are some of the things that the CRA is doing to take action against this? We’ll show you.
• The CRA is adapting the way they audit in an effort to include reviews for potential tax avoidance issues.
• The CRA is monitoring the tax avoidance trends.
• The CRA ensures timely communications to their auditors in order to keep them updated on the strategies people are using to avoid paying their taxes.
• The CRA is consulting the Department of Finance on legislative changes which are relative to tax avoidance strategies that people are using.
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