OTTAWA -- Canadians who tip off the revenue agency on major international tax evasion cases could be rewarded with 15 per cent of the recovered money, Finance Minister Jim Flaherty announced in the federal budget Thursday, as part of an overall plan to boost "fairness and integrity" to the tax system.

The government hopes to raise $6.7 billion in additional revenue over the next six years through compliance programs, closing tax loopholes and improving fairness. Of that amount, $2.3 billion would be a result of the Canada Revenue Agency simply improving its effectiveness.

The new "Stop International Tax Evasion Program" would reward tips on significant international tax non-compliance -- either evasion or avoidance -- and the reward would be a percentage of the tax collected as a result.

So how much is a "major" case of international tax non-compliance? An amount exceeding $100,000 in federal tax.

"The contract will provide for payment of up to 15 per cent of the federal tax collected (not including penalties, interest and provincial taxes)," the budget says. "Payments will be made only after the taxes have been collected."

However, allegations of significant tax evasion would likely be appealed, meaning it could take "a substantial amount of time" for any tipster to see a reward, according to Fred O'Riordan, economist with Ernst & Young.

"It's not as automatic as it sounds. If there's an informant and the information appears genuine, the CRA can begin auditing, but it takes time for that work to be done," he said.

Once the CRA assesses the possible tax evasion, the accused has the right to object to the CRA's reassessment, which could take years.

At the end of that process, the accused can appeal the case in tax court, and the case could wind its way upwards -- even, in rare cases, as high as the Supreme Court.

For tax system integrity and loopholes, the government announced more than 75 measures, including:

  • Broadening capitalization rules to Canadian resident trusts and non-resident entities
  • Cracking down on corporations who work around anti-loss trading rules
  • Giving the minister of National Revenue the authority to withhold GST or HST refunds claimed by businesses that don't provide all the necessary information to obtain such refunds
  • New fines and criminal offences aimed at the use, possession, sale and development of "supression of sales" software designed to falsify tax records