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4. Update GST fraud

On September 20, 2024, the Commodity Tax, Customs & Trade Law section of the Canadian Bar Association made a submission to the CRA about various measures that the CRA could take to address GST/HST fraud. To date, no response to that submission has been received, nor are we aware of the CRA making any announcements about new policies regarding fraud.

Questions

Can the CRA please provide an update on what it has been doing to address GST/HST fraud, and what steps it plans on taking in the future to address fraud? What is the anticipated timeline for any such activities?

In particular:

  1. What steps are being taken by the CRA to stop denying input tax credits from taxpayers who are not involved in any sham or carousal schemes, and what is the CRA doing to go after suppliers who have failed to remit the GST/HST?
  2. What steps are being taken by the CRA to notify businesses of those taxpayers who are involved in carousal schemes and what steps is the CRA taking to allow a taxpayer to pay the GST/HST directly to the CRA instead of to the supplier, where the supplier is involved in a carousel scheme?

CRA Comments

  1. The CRA has made significant investments in the detection and prevention of aggressive GST/HST arrangements by expanding business intelligence and data analytics tools that identify and address wilful non-compliance. The ability to respond to threats in real time helps the CRA prevent suspicious entities from infiltrating our filing population, while ensuring everyone meets their filing obligations. Expanded business intelligence and data analytics tools, coupled with specialized auditors to identify suspicious transactions and patterns earlier and more accurately are allowing the CRA to better target potential areas of non-compliance while permitting CRA to promptly disburse low-risk credit claims.
    Additionally, as part of the Government of Canada's commitment to cracking down on tax evasion, in the 2024 Fall Economic Statement, the government announced that it is exploring options to combat carousel schemes from exploiting the tax system to obtain unwarranted GST/HST refunds. We cannot elaborate further at this time.
  2. The CRA is unable to disclose taxpayer information due to section 295 of the Excise Tax Act and therefore cannot notify businesses when taxpayers may be involved in carousel schemes. The CRA is exploring all administrative options available to us to mitigate the impacts of carousel schemes on the Canadian tax base.