Cracking down on tax cheats raised more than $1-billion in new revenue over what Ottawa had hoped, The Globe and Mail has learned.

For the first time, the Canada Revenue Agency has disclosed the net impact of several enforcement measures announced in the 2013 budget. The results reveal a gain that is nearly three times what was forecast.

The 2013 budget estimated and booked $550-million a year by 2014-15 in additional revenue from added enforcement. The CRA now says the final net impact of the measures was $1.57-billion for that year. The agency did not provide forecasts for future years, saying amounts can vary based on the mix of files that are completed.

The CRA initially refused to provide the information, blacking out the figures in documents released through the Access to Information Act on the grounds that they involve confidential government operations and internal discussions.

However, the agency relented this week when pressed by The Globe and Mail.

The amount of owed tax that goes uncollected is called the “tax gap.”

The CRA has long been criticized for refusing to estimate how much it is, even as other countries regularly publish such data. For instance, the Internal Revenue Service reported on Thursday that the U.S. tax gap is $458-billion.

The 2013 figures come amid a heightened focus on the role of offshore tax havens by wealthy individuals and corporations seeking to reduce their tax bills using accounting methods that are often perfectly legal. The recent leak of information known as the Panama Papers triggered international attention on the way billions are diverted to tax havens.

On Tuesday, Statistics Canada released its latest figures for foreign direct investment and they showed significant increases in the amount of money flowing from Canada into known tax havens.

The Statscan data and the new revelations by the CRA show much more revenue can be gained by further tightening Canadian tax law and boosting enforcement, said Dennis Howlett, executive director of Canadians for Tax Fairness, an advocacy group.

“We’re talking about a huge pile of money there,” he said. “There’s a lot more there that could be raised in revenue.”

Others are not so sure.

“This is very difficult to forecast,” said Kevin Dancey, former president of the Chartered Professional Accountants of Canada. Mr. Dancey said initial enforcement efforts could be the most successful, and future efforts may not yield the same returns.

The enforcement measures announced in 2013 were estimated to cost $15-million over five years and came at a time of overall restraint at the agency in areas such as staffing.

The agency’s success at raising nearly $1.6-billion from a $15-million budget measure likely explains why the government moved aggressively in the most recent budget to crack down further.

The 2016 budget announced $444.4-million over five years for the CRA to boost enforcement and forecasts a revenue gain of $2.6-billion over five years as a result of these measures.

Countries acting through the G20 and the Organization for Economic Co-operation and Development have beefed up their efforts to share data on taxes and financial transactions in an effort to reduce the erosion of the tax base used to fund government programs.

Measures announced in the 2013 budget included amending federal tax laws so that financial institutions must report international electronic fund transfers of $10,000 or more. The 2013 budget also created a new rule forcing individuals or companies in Canada to file a more detailed Foreign Income Verification Statement if they own foreign income-earning property costing more than $100,000.

The previous tax form required a general explanation, but the 2013 changes required the disclosure of the name of the institution holding the foreign funds, the specific country where the property is, and the specific amount of foreign income that was generated.

David Walters, a spokesman for the CRA, released the new revenue figures to The Globe but declined to provide a detailed explanation on how the agency beat its own goal.

“The excess over targets are primarily attributable to a small number of very large files and enhanced risk assessment that allows us to focus on highest risk files,” he wrote in an e-mail.

OTTAWA — The Globe and Mail
Published Thursday, Apr. 28, 2016 8:13PM EDT
Last updated Thursday, Apr. 28, 2016 11:37PM EDT