Compliance

Navigating Compliance: What Canada’s CRA Is Doing About the Tax Gap

The Canada Revenue Agency (CRA) is intensifying enforcement and modernizing its compliance strategies—especially for GST/HST refund schemes and tax evasion—to protect public revenue and fairness.

By NomadicTax Research Team • 5-8 min read • April 27, 2026

## Understanding the Tax Gap The **tax gap** is the difference between what the government should collect under ideal full compliance and what it actually receives. Causes include mistakes, deliberate evasion, aggressive tax planning, refunds and GST/HST fraud, and offshore income not declared.([canada.ca](https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/tax-canada-a-conceptual-study/tax-gap-brief-overview/federal-tax-gap-reduction-approach.html?utm_source=openai)) ## New CRA Compliance Priorities CRA’s 2026-27 Departmental Plan outlines several new measures aimed at bridging the tax gap:([canada.ca](https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/departmental-plan/2026-27-cra-departmental-plan.html?utm_source=openai)) - Targeting **GST/HST refund schemes**, such as carousel fraud, through enhanced audits and real-time validation tools.([canada.ca](https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/departmental-plan/2026-27-cra-departmental-plan.html?utm_source=openai)) - Combating **aggressive tax planning**, non-compliance, and fraudulent behavior with stronger penalties.([canada.ca](https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/departmental-plan/2026-27-cra-departmental-plan.html?utm_source=openai)) - Enhancing collections approaches—offering more flexible repayment for those in financial hardship, using data analytics, and improving digital services for managing tax balances.([canada.ca](https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/departmental-plan/2026-27-cra-departmental-plan.html?utm_source=openai)) - Strengthening cooperation with other jurisdictions and international bodies to address cross-border evasion and enforcement.([canada.ca](https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/tax-canada-a-conceptual-study/tax-gap-brief-overview/federal-tax-gap-reduction-approach.html?utm_source=openai)) ## How Recent Tax Measures Tie In Budget 2025 introduced and enacted multiple legislative tools to support CRA’s fight against the gap:([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai)) - **Global Minimum Tax Act (GMT)**: Canadian multinational corporations must ensure a 15% tax rate on profits in every jurisdiction—limiting the benefit of using tax havens.([canada.ca](https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/global-minimum-tax.html?utm_source=openai)) - **Excessive Interest and Financing Expenses Limitation (EIFEL)** and **Mandatory Disclosure Rules (MDR)**: strengthen enforcement and transparency on cross-border flows and financing arrangements.([canada.ca](https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/tax-canada-a-conceptual-study/tax-gap-brief-overview/federal-tax-gap-reduction-approach.html?utm_source=openai)) ## What Businesses and Individuals Need to Do - **For corporations**, ensure all global and cross-border operations comply with Pillar Two GMT rules. Collect, report and disclose required data (e.g. through GloBE returns) in a timely manner.([canada.ca](https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/global-minimum-tax/get-ready-file.html?utm_source=openai)) - **High-net-worth individuals** should review structures that might be caught by DINES, cross-border trusts, or undisclosed foreign assets. Consider whether any offshore arrangements comply with new disclosure and reporting rules.([canada.ca](https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/tax-canada-a-conceptual-study/tax-gap-brief-overview/federal-tax-gap-reduction-approach.html?utm_source=openai)) - **All taxpayers** should maintain strong records, backup documentation, correct filings, and anticipate audits especially in high-risk areas like large refund claims or aggressive deductions. Engaging qualified tax professionals can help avoid penalties. ## Example Case A mid-sized Canadian company operating in multiple countries uses a financing company in a low-tax jurisdiction to route interest payments. Under GMT and EIFEL/MDR rules, such structure might trigger top-up tax, require reporting, or become non-compliant. Correcting the structure and properly documenting operations is essential to avoid liabilities. ## In Summary - CRA is significantly stepping up its tools to ensure fairness, protect revenue, and discourage aggressive tax avoidance. The policy landscape is shifting rapidly. - Businesses should review their cross-border and refund-based positions now; individuals with substantial credits or foreign income or assets should ensure full compliance. - Avoid surprises during audits by being proactive, informed, and supporting your claims with clear documentation.