Canada moves to criminalise 'reckless' behaviour by advisers

Pedro Gonçalves
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Canada moves to criminalise 'reckless' behaviour by advisers

The Canadian federal government is pushing to criminalise 'recklessness' from tax professionals as it continues to bolster its tools and resources to detect and prosecute tax evasion and money laundering.

According to the 2019 budget, Canada is "cracking down on tax evasion and aggressive tax avoidance". It will do this through "significant investments" which will "strengthen the Canada Revenue Agency's (CRA's) ability to unravel complex tax schemes, increase collaboration with international partners, and ultimately bring offenders to justice."

This plan includes and amendment extending the offence of money laundering to include 'recklessness' as an alternative criterion for prosecution.

These proposals are relevant both to those who do not pay the amount of tax the law requires, and to tax professionals who either intentionally or inadvertently offer services to those who are offside the law"

"These proposals are relevant both to those who do not pay the amount of tax the law requires, and to tax professionals who either intentionally or inadvertently offer services to those who are offside the law", said law firm Thorsteinssons. Tax professionals will need to increase their vigilance to ensure that a client's wishes do not result in the professional becoming ethically or legally compromised, or perhaps even becoming the target of an investigation, the firm added.

"For tax professionals themselves, increased vigilance is needed to ensure that a client's wishes do not result in the professional becoming ethically or legally compromised, or perhaps even becoming the target of an investigation her or himself. More so than ever, tax professionals should be well acquainted with the definitions of "tax evasion", "proceeds of crime", "money laundering", "aiding", "abetting", "conspiring", "willful blindness", and now, "recklessness", to ensure that the services and advice that they offer to their clients cannot be construed as the commission or facilitation of a criminal offence," it said.

Further amendments will also be made to the Canada Business Corporations Act, to make beneficial ownership information on federally incorporated corporations more readily available to tax authorities and law enforcement. The Act has already been amended to require federally incorporated corporations to maintain beneficial ownership information, while the Budget 2018 proposed the introduction of enhanced tax-reporting requirements for trusts, effective from the 2021 taxation year.