The Canada Revenue Agency announced the launch of the Offshore Tax Informant Program (OTIP), on January 15, 2014. The measure is intended to crack down on international tax evasion and aggressive tax avoidance. The whistleblower program will pay cash rewards to individuals who give tips on international tax evasion.

Under OTIP:

  • the information an individual gives the CRA will be reviewed to decide if there is evidence of major international tax non-compliance that would ultimately lead to additional taxes being assessed and collected;

  • the CRA will enter into a contract with the individual if the potential additional assessment of federal tax, excluding interest and penalties, is more than $100,000;

  • a payment will be made to the individual after the tax debt has been collected and all recourse rights associated with the assessed tax have expired; and

  • a payment will not be made to an individual who has been convicted of tax evasion related to the information provided.

The rewards will only be paid if the tipster can show “major international tax non-compliance” such as undeclared Canadian taxable income that has been transferred outside Canada or undeclared foreign taxable income or property. Individuals convicted of tax evasion in connection with the non-compliance will not be eligible to collect rewards.

"A good first step. But the devil is in the details. The rewards must be mandatory if the whistleblower meets a reasonable criteria for eligibility," said Stephen Kohn the Executive Director of the National Whistleblower Center.

The United States Internal Revenue Service Whistleblower Program pays an award worth between 15 and 30 percent of the total proceeds that IRS collects could be paid, if the IRS moves ahead based on the information provided. Under the law, these awards will be paid when the amount identified by the whistleblower (including taxes, penalties and interest) is more than $2 million.

Reforms such as the OTIP are on the rise as international and domestic tax evasion becomes a greater problem for countries around the world, stealing potentially tens of billions of dollars every year from federal government coffers.