Abusive tax schemes tackled by international tax administrations

The Canada Revenue Agency has issued a news release concerning the addition of Japan to the Joint International Tax Shelter Information Centre (JITSIC).

According to the news release, "the JITSIC was formed by the tax administrations of Australia, Canada, the United Kingdom, and the United States in 2004 to address a number of common challenges with respect to abusive tax activities."

"The inclusion of Japan and the opening of the London Centre are both part of the JITSIC's plans for a measured expansion to cover North America, Europe and Asia."

According to the CRA, the objectives of the JITSIC are:

To increase public awareness of the risks associated with abusive tax schemes;
To recommend changes in tax administration practices for addressing abusive tax schemes;
To enhance enforcement efforts through coordinated “real time” exchanges of tax information;
To use Internet and other techniques to track and identify promoters/users of tax schemes;
To identify emerging trends in anticipation of the evolution of abusive tax schemes; and
To improve members' knowledge of techniques used to promote cross border abusive tax schemes.

"Canada's participation in the JITSIC is producing real results. For example, in the summer of 2006, the exchange of information between the CRA and the Internal Revenue Service of the United States led to the unraveling of an abusive cross-border tax scheme involving hundreds of taxpayers and tens of millions of dollars in improper deductions and unreported income. The number of information exchanges has been steadily increasing. While the confidentiality provisions of the Income Tax Act preclude the release of any taxpayer specific information, Canada has had some 280 exchanges of information with JITSIC countries, involving issues such as financial products, tax shelters and offshore trusts. As collaboration between member countries continues to grow, more cross-border schemes will be uncovered, shared and addressed."

For more information on this news release, please see the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/releases/2007/may/nr070523-e.html